That being said, I’ve recently come across a term called ‘participatory philanthrophy’. This concept has a number of institutional forms which vary according to the organization. On one end of the continuum the public has an opportunity to comment or ‘vote’ on potential grantee applications. A great example of this is The Case Foundation’s work http://miyo.casefoundation.org/

On the other end of the contiuum are situations where the public serves as a ‘board’ for the philanthrophic organization making site visits, scoring applications and often times recommending final grant award amounts to a committee of ‘experts’ or outsiders.

Although this topic is recently catching hold in philanthrophic organizations we would be remiss not to acknowledge the public participation literature, where citizens are involved in decision making in the public and private sectors (like budgeting, economic development, environmental risks, etc.)

 One of the main findings in public participation literature to date is that not only do the goals of involving the public need to be articulated up front, but establishing exactly how public participation can lead to those goals signals certain process and procedural requirements that will ensure its effectiveness.

So how can philanthrophic organizations use this literature to their benefit?

1) Involving the public can be linked to goals in a few different ways (this is not an exhaustive list)

a. Impact on citizens

b. Impact on acceptability of decisions

c. Ability to acquire additional information

I am hypothesizing that most philanthrophic organizations would use citizens in order to acquire additional information from individuals who live, work and play in the areas where potential grantees are doing their work. Perhaps their perspectives lend themselves to new information or better insights.  However, this is just my hypothesis and until explicit information is garnered from the few philanthrophic organizations who do this type of work, we are all speculating. To date, all we have are many normative and ancedotal statements that involving citizens creates ‘better decisions’.

Secondly, if the goal of involving the public is to acquire new and additional information from citizens who are ‘on the ground’ experts how can ‘participatory philanthrophy’ be structured in order to achieve this goal?

How can philanthrophic organizations ensure that the information they require is representative of citizens in the community, and not just those citizens who have the resources and time to participate? More importantly, how will they know if they have achieved a group who’s interests are representative of citizens in the community?

As you can see from just this one example, there is quite a bit of work to be done in really implementing successful participatory philanthrophy programs. I’d love to have feedback on what you think the goals of these programs are and how philanthrophic instituations can achieve these goals through involving the public?

Despite all of my questions, I’m quite happy that this is starting to take place in our philanthrophic institutions. Yet, that is likely because of my own normative beliefs that involving citizens in grantmaking can create ‘better grantmaking decisions’.

I’m hoping my dissertation work can explain exactly what that is.

There is a second equally important trend occurring within the same period– the federalization of higher education. Despite the fact that the potential impacts of this trend are similarly significant for this industry it has received less attention from the literature thus far. Evidence of the trend of federalization within the higher education industry can be found in the increased pressure for accountability from Congress as well as the increases in the accountability requirements imposed by the Department of Education and the IRS.  For example, the recently proposed changes in the Education Departments’ rules for for-profit and nonprofit colleges and universities increase the federal and state oversight of for-profit and nonprofit colleges and universities financial and recruiting practices while also imposing a standard definition of a credit hour at a federal level (see recent articles in The Chronicle of Higher  Education here and here).  There have also been numerous calls for increased oversight of endowments and requirements for increased levels of endowment spending as reported in The Chronicle of Higher Education here, here and here. Both of these examples point to the increasing role of the federal government in the higher education industry as a force of increasing accountability.

The potential impacts of the federalization of higher education are just as significant as the potential impacts of the privatization of higher education. Both of these trends result in a shift in the key stakeholders of the organizations within this industry which in turn can dramatically impact the behavior of these organizations.  The role of stakeholders is heightened in an industry like higher education where the organizations lack clear measures of success or failure. This is especially true in the case of the nonprofit and public sector organizations that form the majority of this industry.

Organizations which lack clear outcome measures are more subject to external referents of accountability rather than internally defined measures of success or failure. In other words, because there are not clear measures of success these organizations are more accountable to their various stakeholders to define the success or failure of the organization in terms of the goals and interests of the stakeholder groups. This if further complicated by two things: (1)the more stakeholders an organization has the more the more groups they have to please and (2)the extent of the influence of any particular stakeholder group is strongly related to their level of involvement in the organization.

Therefore if either the makeup of the organizational stakeholders shifts (groups are either added or subtracted) or the relative power of the existing stakeholders shifts, this has the potential to dramatically influence the behavior of the organizations. For example, if privatization is occurring we would anticipate that the power of state and federal government stakeholders is declining and the power of the consumers (students, parents, and other educational consumers) and the private stakeholders (donors) is increasing. This would have distinct consequences for the behavior of the organization because it would be more responsive to the wishes of the private stakeholders and consumer stakeholders instead of the government stakeholders. The story would be different in the case of federalization where we would assume that the federal government stakeholders would be increasing in power relative to the private, state government and consumer stakeholders.

Regardless of which trend is stronger within the higher education industry, or which trend will eventually prevail, the basic conclusion is the same: We should focus more attention on the implications of both of these trends for the stakeholders of these organizations and the subsequent impacts of these changes on the behavior of these organizations in the short and long-term. Utilizing the unique conditions of the higher education industry, and the changes currently happening within this industry, researchers can shed light on how organizational behavior changes in response to alterations in stakeholder makeup and power. This can then shed light on how organizations more generally respond to these changes in stakeholders and if these responses are different for organizations in different sectors.

Because of President Obama’s and the federal government’s imprint on this initiative, I have often wondered where the funds would be awarded and subsequently distributed, and how far of a reach they would have on a national level. Does geography matter in this case? It may be a while before we can truly tell, but in the interim, I have constructed a map using Google Maps that lists the donors providing matching funds, as well as the eleven intermediary groups who will further disperse funds to subgrantees. I will be working to update the map to also reflect the subgrantees that receive funds. It is my intent to collect as much data as possible through the map and throughout the duration of the Social Innovation Fund to see the extent of the Fund’s impact across the nation.

So, back to my original question: does geography matter? A brief look at that map will show you a couple of interesting things:

• Four of the five major matching donors are located in California; three of them are based in Silicon Valley (two involve the founder and first president of eBay), and one in Los Angeles. The other major donor is based in New York City.
• All but two of the intermediary organizations are located east of the Mississippi River: Three organizations in New York City, two in Washington, D.C., two in the greater Boston area, one in Louisville, Kentucky, and one in Cincinnati, Ohio. REDF of San Francisco was the only West Coast grantee, and though the Missouri Foundation for Health in St. Louis is technically located west of the Mississippi, it is still geographically closer to all of the grantees in the East.

These are just some basic observations. Perhaps geography doesn’t matter, and this is only an interesting, if maybe coincidental, markup of the locales of donors and grantees. But, we won’t know for sure for a while. In any case, with the addition of subgrantees and future inceptions of the Social Innovation Fund, hopefully the map will diversify. I hope the map will eventually serve as a tool for those who wish to apply for grants in the future, as well. In any case, I appreciate your commentary and feedback here or on my personal website for how the map can be improved.

For more information and different points of view on the Social Innovation Fund and those serving as intermediary organizations, I highly suggest the following reads:

• “Analysis of Social Innovation Fund Results” at Adin Miller’s blog.
• “Social Innovation Fund Announces Grantees” at Sean Stannard-Stockton’s Tactical Philanthropy Blog
• “Congratulations to the Social Innovation Fund’s inaugural grantees!” at the Public Innovator’s Blog
• “Federal Government Awards $50-Million in First Set of Innovation Grants by Debra E. Blum at the Chronicle of Philanthropy
• “Wise Picks? Commentators Weigh In on the Social Innovation Fund Grants” by Nicole Wallace at the Chronicle of Philanthropy (with links to blog posts by Nathaniel Whittemore, Marcia Stepanek, and Sara Mead)
• And, of course, the Corporation for National and Community Service’s Press Release announcing the grants

To this end, I remembered that Diane Grams, now at Tulane (profile), did some research that was incorporated into a report for the Illinois Arts Alliance (report description here). In her work on executive compensation in the arts sector, she found that only 10% of respondents reported that their organizations contributed to a retirement fund, and of course we should interpret this even more carefully, because it is often the case that arts organizations employ many casual employees, who would not have any benefits at all. In a different research paper she presented, she pointed out that sadly, having a spouse or partner who was well paid was the main predictor of people staying in the arts area. (I’m too busy to track that one down at present.)

What concerns me is that it seems that in the US, then, people who go into the cultural areas are not only lower paid, but they are going into an area without a social safety net or provisions for retirement. Without going into any type of political discussion about the fairness of pay or whether we should value the arts more highly, it concerns me to think about people who by default in their career will have no provision for health care, and little provision for either retirement and unemployment issues. The way that these issues are handled relies on an assumption of long-term employment conditions that seem outdated even for workers outside the arts today, where job switches and contract work have become quite frequent. The erratic and contract based nature of creative jobs is even more dissimilar to our traditional views of working for one firm who would provide for health care and retirement. (Firms themselves find retirement and health care costs increasingly difficult to bear, even if they might want to, but that is a topic for another time.)

But there are now also a few interesting programs that are being set up to try and provide for the welfare of artists. In the case of visual artists, we have the Artist Pension Trust which is attempting to provide for artists in the future through donations of their work over time. (Interestingly, they incorporated as a for-profit financial services firm, currently private, although if one thinks about compensation structures for people in finance, a nonprofit structure might not have been able to attract as many financial experts.)

It is also interesting to think about what happens when these provisions are not via a firm, but are instead handled by the government, as we see with the quite different situation in the UK and EU. Although they are having similar pension struggles with older workers, in the UK working artists can use the benefits of the National Health Service (NHS), pensions via the national insurance scheme, and more flexible unemployment benefits that are more compatible with the flexible, short-term contract based work of artists and performers.

We only have to look at the vibrant contemporary arts production in cities like London and Berlin to realize that artistic work might not be well paid, but that it does not necessarily have to mean that you should not be able to have health care, unemployment, disability or basic retirement provisions.  Well, if I were an artist, I think you can imagine where I might be looking to move.

Let’s face it, we all want to believe that our organizations, or we as individuals, have a high capacity to innovate (and for the sake of humanity, let’s hope we do,) but let me pose a rhetorical question here: is it safe to say that things we think are innovative sometimes aren’t? It’s been the go-to descriptor of products and services in business and marketing for years, and has expanded to various other niches such as organization innovation, ancillary innovation, and so on. For the past year, the White House Office of Social Innovation and Civic Participation and the Social Innovation Fund have been on the radar of just about anyone connected to, or having an interest in the third sector. Beyond this, it has attracted a renewed interest in the ways government works with nonprofit organizations and socially conscious businesses. And, thus, we’re enamored with innovation all over again.

My friend and colleague Jasmine McGinnis offered her take on the pros and cons of the Social Innovation Fund and concluded with this statement:

…I fear that without changing the process of awarding these funds to innovative nonprofits, the Social Innovation Fund risks falling into a trap of being just another organization that provides grants–and that my friends, is simply not that innovative after all.

She’s right. Doing something that another organization has done before–time and time again–is anything but innovative. Research on innovation has told us that in order for something to be innovative, it has to be novel, unprecedented, or even groundbreaking, as it were. We have yet to see this from the Office of Social Innovation, but some, including Harvard Business School professor Clayton Christensen, believe it will be a “new paradigm for solving social problems.” Professor Christensen wrote last year that the “social sector in its current form…fails to foster, support, and scale innovation. Fundamental shifts need to occur in the structure of the social sector in order for systems of innovation to truly take hold.” Now, because I study innovation–specifically organizational environments that foster innovation–I am a fan of Professor Christensen and his work. We even share a few things in common. However, I take slight umbrage with the first part of his statement. The social sector has indeed fostered, supported, and depending on your perspective, scaled innovation. That’s not to say that the nonprofit sector hasn’t confronted a fair share of challenges, though as much as Christensen claims “innovation in the private sector has been the key to our nation’s longstanding economic prosperity,” I dare say current times aren’t prosperous enough for me to be too enthusiastic about this statement. We will all wait with great hope that the White House Office of Social Innovation and Civic Participation and the Social Innovation Fund provide the paradigmatic shifts Professor Christensen outlines.

Here is a list of three simple things I try to keep in mind when thinking of innovation and how we can put the accompanying minutiae in perspective:

1. We need to quit playing the “my sector is better” game. If you think about it long enough, you’ll realize that there are good components to any type of organization. Businesses, nonprofits, and yes, even government, all have the capacity to innovate. Facebook CEO Mark Zuckerberg recently garnered some press when he claimed that nonprofits can’t change the world. There is marginal truth in that statement, but only as it applies to nonprofits whose mission it is to change the world. Most of them, however, are much more grounded in reality and recognize that they do better by focusing on specific areas within their realm of control. As for the other part, he’s quite wrong. Nonprofits have already changed the world in the way goods and services are delivered. They provide an alternative to commerce and government, and fill in gaps that those two sectors leave open. Zuckerberg believes that “building a company is the best way to change the world, because it’s the best way to align the interests of a lot of smart people…to build something that’s great and serves people.” There are plenty of smart people in the other sectors, too, Mark. Their interests are aligned, and they serve people, too. The takeaway here is that each sector is important in its own right, as since collaboration among organizations of differing sectors is common, we would do best to look for strengths within a given sector and how they match with others.
2. Innovation has a life cycle. This is pretty simple. As innovations become more diffuse over time, they evolve into standard practice (or even “best practices”…more on that in a second), and thus their saliency as an innovation diminishes. Or, in some cases, what was once an innovation in one respect, is taken over by something else even more innovative (in fact, you may want to look up Professor Christensen’s concept of disruptive innovation.) This, quite obviously, forces an organization to look to continually innovate, even if only to maintain legitimacy. What is innovative today won’t be innovative tomorrow, especially if you come up with something more innovative next week.
3. “Best practices” should be used carefully, and re-evaluated often. I am not necessarily against best practices, but I share a view espoused by Sandford Borins in one of his books: do not become beholden to them. An unwillingness to deviate from the comforts of best practices could diminish an organization’s capacity to innovate. The failure to evaluate on a constant basis perpetuates the stereotype that governments and nonprofits can’t sustain innovation. Governments and nonprofits can and often do sustain innovation. There’s a great book by Paul Light for those who might be curious as to how they innovate, called–wait for it–Sustaining Innovation.

Innovation may be a buzzword, but at least it’s one that keeps us talking and thinking.

NOTE: For those newly interested in social innovation, I would suggest a new book by Stephen Goldsmith called The Power of Social Innovation. I haven’t read it yet, but it quickly captured my interest and it’s on the top of my reading list. Goldsmith himself is a great example of a social innovator, so I look forward to reading it and discussing it with anyone else who reads it as well!

I like many others have been closely following the unveiling of the Social Innovation Fund under Obama’s Administration, not only watching ‘who’ is advocating and supporting this Fund, but also what the process will be like. As someone who is especially interested in better understanding how supply side aspects of grantmakers impact both intended and actual outcomes of grantmaking there are so many reasons that I’m excited about this fund but also extremely cautious. Since many bloggers, practitioners, and academics are writing about this I would love to get some general feedback on perspectives about the process as perhaps this advice could be taken into account in the actual distribution and administration of funds. So please feel free to leave comments or contact me offline.

I’ll start with the positive and really what I’m excited about. . .

1. The explicit recognition by government that real, long term solutions to complex social problems in the United States require collaboration between ALL sectors. This in itself is tremendous and an acknowledgment linking back to Salamon’s theory of nonprofit and government as complementary partners

2. A focus on evaluation (I’ll discuss my extreme hesitation about why I’m cautious about getting excited about this below). However, the fact that this fund will provide monies for nonprofits beyond operations while also having nonprofits COMMIT to data collection and evaluation is HUGE. I hope this  has a signaling effect to ALL nonprofits that evaluation is a necessary component of doing ‘good’ work

3. It’s use of intermediary grantmakers instead of using the government to distribute these funds. Not only is there an American distaste for more government involvement in any sort of decisions, but truthfully if these funds were solely distributed by the government, we can all imagine the bureaucratic red tape that would exist. Additionally, it is likely that the intermediary grantmakers who specialize in particular focus areas while also having overall expertise in grant making provide a better conduit to distribute these funds

Everything so far sounds good, but again I’m most excited about the overall signals the social innovation fund creates but extremely concerned about  the actual process.

Here are my initial concerns

1. A focus on evaluation =) Yes, I know I mentioned I was excited about this above but when it really comes down to it, several of my favorite evaluation questions emerge. What are you measuring? How? With what resources? Will this fund taken into account already established metrics like The Urban Institute’s Outcome Indicators Project or The United Way’s outcome metrics? Will it consult academics or experts in evaluation about how, why and what to measure within these nonprofit organizations?

2. This idea of growth capital. Plainly stated – I’m confused. I keep reading it but can’t figure out why the Social Innovation Fund is considered growth capital? The fund almost seems like a recognition by government that what most nonprofits need to grow is access to equity capital so they can scale up to size, but still not allowing a legal form that accommodates this within the U.S.  (see literature on social enterprise for more info. on this and how successful these legal forms have been internationally, particularly in the U.K.)

Scholars have found that many of the difficulties associated with nonprofit organizations scaling up to size is a lack of access to capital. In fact, many social enterprises and innovative nonprofits are funded by foundation grants, which ultimately ‘expire’ after 3 years of funding. So how is this fund any different?

Why do we continue to think that innovative organizations need more grants, more evaluation, more data? What exactly is innovative about this fund? Is it government working explicitly with philanthropists, because that has been occurring since the beginning of American philanthropy and still occurs to date.

3. Finally, how can we ensure that local, community based organizations who are doing great work CAN actually scale up without risking their mission. Scholars have found that some of the reasons nonprofit organizations work, and work well,  is because they are local and community based.

More importantly, for those nonprofit organizations who do receive funds won’t they be the larger, more established, more professionalized nonprofits? These organizations will likely  have the capacity to not only go through the administrative process of applying for grants, but also the financial and operational capacity to accept a large grant.

Overall, I fear that without changing the process of awarding these funds to innovative nonprofits, the Social Innovation Fund risks falling into a trap of being just another organization that provides grants – and that my friends,  is simply not that innovative after all.

It is in this last category, which I am interpreting here to broadly mean those individuals, groups and organizations that fund the non-profit organizations, where the complexity arises. When a nonprofit organization is funded primarily through government grants and donations they have two constituencies– the government and the donors; if they are funded primarily by private donations then it is only one constituency. However, what if they get government grants, donations, private contracts and they also charge a fee for some of their services? At this point you have four constituencies not including the employees or volunteers and some of those who are receiving the goods or services (assuming not all of the services are fee-for-service). The example of a large public research university, though not a nonprofit institution, will be useful in illustrating the issue at hand. Many of these organization receive significant amounts of funding from state governments (appropriations and financial aid), donors (additions to the endowment as well as donations to operating expenses), students and/or their parents (tuition income), the federal government (research grants and financial aid in the form of both grants and subsidized loans) and occasionally private companies (private research grants or contracts). So when you have constituencies that hold a significant amount of power within the organization but also are “external” to the organization, for example the state and federal governments and private donors, how do we define the boundaries of this organization?

Historically organizational researchers have conceptualized the wider environment as interacting with and influencing the organization at the organizations’ boundary, without really impacting its core. But in the case of the research university the only constituency that is clearly “internal” to the organization is the students (note that this does not include their parents); the others would generally be understood to be part of the environment that surrounds this institution. However these constituencies still exert a huge amount of influence on the internal workings of this organization. This can be illustrated by looking at the role of state governments during the 2009-2010 academic year. There have been numerous accounts in The Chronicle of Higher Education as well as other media outlets about layoffs, restructuring, departmental elimination, course cancelations, and imposed furlough days in response to the budget cuts enacted by state legislatures across the country. In these cases the environment, specifically the state governments, are having a significant impact on the core of these institutions.

So the question I raise is how do we as researchers deal with the fact that in the case of nonprofit organizations, or really any organization that is subject to multiple diverse constituencies, there are powerful constituencies that are in the environment (traditionally considered “external” to the organization), and yet have significant impacts on the operations of the organization? In effect how do we define the boundaries of the organization and study the role of the environment when we are dealing with organizations which are not internally independent, and instead are reflections or sub-units which have internalized key aspects and forces of their environments?

I do not currently have a clear answer for this question. Preliminary evidence from my dissertation research suggests that a more accurate picture of organizational behavior and finances can be achieved by ignoring the black and white distinction between organizational and environmental characteristics and viewing the situation as a continuum. Constituencies are either more internal or more external to the organization or constituencies have more or less influence. This is probably not that surprising; more information is generally seen as a good thing. However, how do we conceptualize the organization without clear boundaries? How do we say this piece of the federal government support is part of this university and this part is part of this university? How do we redraw the lines? Or, the larger question, are there still lines or are they something else?

There are different ways to make a financial investment in artwork, but due to the complicated nature of the art market and the many expectations that differ from traditional financial market exchange, I usually suggest that novices with investment goals start by searching for an art investment fund, rather than buying work outright. Most of gallerists whom I have spoken with recognize that artwork does have investment value, but they tend to prefer someone who will buy works that have an emotional resonance, or aesthetic appreciation value. Given the recent troubles with people who have thought of their houses as too much of an investment, I also share this caution. Furthermore, being able to pick artwork at a low price that will go up in value over time requires some expertise, and a greater return is necessary to compensate for the relatively high transaction costs of buying and selling at auction.

Art funds, however, usually provide this expertise in-house, the same way that a hedge fund manager has expertise in stocks, bonds and other investments. Although this type of securitized art investment is fairly new, there are a number of established and upcoming funds with different goals. The best funds will offer the benefits of a diversified portfolio of artwork, expert advising, financial expertise, and transparency about management costs, goals and other factors. When you put money into one of these funds, which are usually structured as private equity, you are essentially buying a ‘share’ of their portfolio. Many of the funds have the added benefit of annual dividends, which could be preferred to a direct purchase of art, where the investor only sees money at the end of a fairly long holding period.

But is this socially responsible investment (SRI)? Well, if we think about the meanings of sustainable investing, through screens and filters, as well as other types of socially responsible investing, such as faith-based goals, artwork would be considered acceptable for many of these goals. For example, according to one expert in Islamic finance, the fact that the funds are backed by real assets means that they could be a type of Islamic investment. Another consultant that I spoke with laughed at the idea that artwork was socially responsible, but he said they could be seen as a type of passion investment. Artwork is not usually associated with sin products, environmental pollution, or other areas typically associated with negative screens. Credible fund managers  will also carry out due diligence on any work purchased, to make sure that it is not stolen property or under dispute.

While some people oppose the idea of treating artwork as a financial investment, a good number of those involved in the art market welcome new buyers, even if they are investors rather than traditional collectors. Purchasing shares in an art fund is not the same thing as donating to a museum, but it is a way of directing money toward arts and culture.

Potential investors with an SRI agenda should know that this type of (fund-based) investment does not usually benefit the artists directly. This is because living artists are paid for their work when it is sold for the first time through a gallery, but unlike film producers or musicians, they do not typically enjoy profits on future sales of their creations. Intellectual property rights protect them others profiting from the unauthorized use of the images or ideas, but artists are not paid from future sales of the actual piece. The exception is that in the European Union, and a few other places, auction sales are taxed by the droit de suite, or artist’s resale rights, which provide a form of royalty to the artist or their estate. Nonetheless, while the artists may not benefit directly if funds are purchasing work in the secondary market, it is possible to make the argument that for an artist to gain a greater following in the secondary market does improve their career prospects, at least indirectly.  (There are a few funds that have goals of providing income to actual artists, but these typically have a different structure, so I will not discuss these here.)

With these considerations in mind, my personal opinion is that we can think of art funds as socially responsible investing, but you have to think about your goals. This type of (fund-based) investment can provide some benefits to artists and those in the market, but bear in mind that it is not the same thing as directly “investing in the arts” by donating to a museum or other nonprofit engaged in arts and culture.  It might be more accurate to say that you are investing in the art market, as opposed to the arts. However, if you want to invest your money according to your values and interests, this seems to be a reasonable way to go about it.

As with all investment advice, be sure to do your research and due diligence.

Over the past 30 years or so the argument that public higher education is becoming privatized has become an accepted fact. However, less attention has been focused on how, why and to what extent these colleges and universities are actually pursuing more “private” means of sustaining themselves as various types of government support has declined. Preliminary evidence from my dissertation research indicates that though there is evidence of privatization among public colleges and universities between 1970 and 1995, however, concluding that this is occurring for the entire industry would be an oversimplification.

Using a new methodological technique I empirically derived five different organizational funding strategies that are being pursued by a sample of 164 colleges and universities from 1970-1995. These strategies range from very public funding models (no endowment income, very little if any endowment and low levels of private contributions) to funding models that closely parallel the private colleges and universities within this industry which are characterized by high levels of endowment income and wealth as well as high levels of private gifts, grants and contracts.

Overall the field is shifting towards the private end of the spectrum with increases in private and hybrid strategies over the time period, with declines in the strategies at the public end of the spectrum. This gives the picture of an industry characterized by dynamic changes over time. This shift is, primarily, being driven by the movement of a small subgroup of institutions, predominantly the branch campuses of the large state systems (University of Texas-San Antonio, University of California-Davis, and University of Wisconsin-Platteville for example) and smaller public colleges and universities that are not affiliated with the large state systems (Southwest Texas State University, Evergreen State College, and Coastal Carolina University for example). This indicates that this industry, rather than being dynamic, is actually relatively stable with significant movement by a small but important contingent of institutions. This finding is contrary to the depiction of the higher education industry in the popular press and in some academic literatures.

This evidence indicates that the privatization of higher education is not an industry-wide phenomenon but instead is occurring in a smaller subpopulation of colleges and universities within this very diverse group. The majority of institutions that are seen as pursuing privatized strategies in the literature have not drastically changed their funding strategies in the past 30 years. These larger state institutions have consistently been pursuing endowment income, donations and higher tuition levels as means for sustaining their mission. Therefore to say that privatization is occurring across the board and at much higher rates than in the past is not supported by the empirical evidence.

This has led me to several questions (particularly as I think back to my former life as a fundraiser in the nonprofit sector). If (as network theory and a good deal of anctedotal evidence would suggest, ) getting grants from foundations is truly about “who you know” and what “social circles” you’re a part of – how does that impact nonprofits who are likely “outsiders”, like social justice or advocacy organizations?

There’s almost a chicken and egg question that results from this train of thinking.  Many scholars and funders are trying to understand what a ‘better performing’ nonprofit looks like. But the subsuequent question this leads me to ask are if nonprofits thought of as ‘better performing’ are really just those organizations with better reputations.

In the economist tradition of studying nonprofits, performance would be a measure of the”efficient production” of goods/services. So how does reputation impact a nonprofits production? Are funders associating reputation with high performance or are they truly using some of their own measures to construct their image of a ‘better performing’ nonprofit.

In my own work I hope to “answer” some of these questions by conducting a survey or an experiment with foundation board members (at least these are my hopes!) to better understand how and why funders make their decisions.

I also hope to advance our understanding of terms in the sector that are constantly used, but always misunderstand. Supposedly financial health, collaboration, and organizational performance are the ways that funders make grant decisions but empirically we really don’t know a good deal about these decisions. In fact, we don’t really understand how funders view these concepts. Again thinking back to my work experience there is likely a gap that exists between the way funders view collaboration and the way nonprofit managers and staff view these terms.

I hope this provides everyone some food for thought and would love to hear feedback from anyone who has any thoughts on this!