literature theorizing the external environment of organizations in general, and of nonprofit associations and SMOs in particular. The ‘open system’ perspective has dominated the organizational literature since the 1970s, arguing that the viability, structure, operations,
effectiveness, and success of organizations is influenced by, and should be examined in relation to, the broader external environments with which the organizations interact (Aldrich, 1999; Schmid, 2004; Scott, 2002; Yuchtman & Seashore, 1967). Organizations, according to this perspective, cannot be studied and understood without considering their relationships with other stakeholders such as constituents, competitors, funders, and regulators. Key theories in this area are population ecology (Hannan & Freeman, 1977), neo-institutional theory (DiMaggio & Powell, 1983) and resource dependence theory (Pfeffer & Salancik, 1978).
3.3.1. Resource Dependence Theory
The resource dependence theory contends that organizations are resource-poor, and that the key to their survival is a successful acquisition of resources from the external environment
(Pfeffer & Salancik, 1978). The external environment is composed of other stakeholders, including organizations, people, materials, information, and recognition. The theory stresses the importance of the source of the acquired resource as a critical determinant of organizational structure and behavior; for example: donors may make demands on the recipient organization, or attach strings and conditions to their financial support (Barman, 2008). In other words, resource dependence sees the environment as composed of elements, which impose market and
efficiency demands on organizations (Bielefeld, 1992).8 In addition, the flow of external resources might be unstable and unreliable, creating challenges for the operations of the organization. Unlike for-profit organizations, the timing of receiving the revenues is oftentimes not in the hands of the nonprofit, but in the hands of its donors (or intermediary paying service users).
8 This is in contrast to the neo-institutional theory that emphasizes the social and normative demands that environments
impose on organizations (DiMaggio & Powell, 1983). The theories have been developed largely as alternatives, but it is more useful to think of them as complementary.
3.3.2. Resource Mobilization Theory
In the social movement literature, the resource mobilization theory (RMT) has been a central theory, stressing the importance of mobilizing financial, social, organizational, and political resources for the emergence of SMOs (McAdam, 1982; McCarthy & Zald, 1977; Tilly, 1978; Zald, & McCarthy, 1987). Movement collective behavior is viewed as a rational response of social change activists, which can only occur when adequate resources and infrastructures are
available and mobilized. Professionalized SMOs are the critical element that supplies an enduring organizational infrastructure for the mobilization of resource (Edwards & McCarthy, 2004;
McAdam, McCarthy, & Zald, 1996; Zald & Ash, 1965). SMOs are the meso-level institutions that stand between macro movement operations and the micro individual activist. One major critique of the RMT is the lack of reference to ideas, identities, and social/cultural contexts (Benford & Snow, 2000).
Both perspectives emphasize the importance of access to the external environment – mobilizing it (McCarthy & Zald, 1977), or depending on it (Pfeffer & Salancik, 1978) - in shaping organizational structures.9 Resources often come with strings attached and, as such, these inputs may control ENGOs’ organizational structures.
3.3.3. ENGOs, Resource Dependence, and Foundation Philanthropy
A nonprofit’s cash flow is an ongoing challenge. Generally, nonprofits can generate revenues from three main sources: government (grants, contracts), private donors (individuals,
philanthropic foundations, and corporations), or self-generated resources (membership dues, selling of goods, fees for service, capital investment, and volunteer labor) (Ebaugh, Chafetz, & Pipes, 2005; Froelich, 1999). In the case of SMOs in general and ENGOs in particular, several reasons suggest that the focus should be placed on philanthropic foundations as the key source of funding.
9 The influence of external forces – resource mobilization and resource dependence stands in contrast to internal forces
that may shape NGOs’ organizational structures – such as oligarchization (Michels, 1915/1959) and bureaucratization (Weber, 1922/1968).
Due to a weak membership base, only a few SMOs, including ENGOs, are financially self- sufficient (Oser, 2010). Research on human service / service provision organizations tends to focus on the relationships with and dependence on government actors (Bielefeld, 1992; Froelich, 1999; Saidel, 1989; 1991; Smith & Grønbjerg, 2006; Smith & Lipsky, 1993). However, for many SMOs and ENGOs that work against the status quo and advocate for change in government policies (i.e., addressing the systemic causes of social inequality), mobilizing government resources is a real challenge, or they are simply opposed to soliciting it.10
As an alternative to government funding and self-generated income, more often than not, ENGOs are seeking revenues from private donors – individuals, corporations, or philanthropic foundations (Hunsaker & Hanzl, 2003; Jenkins, 1998; Rabinowitz, 1990). Nownes and Cigler (2007) viewed big-donor individuals as an important source of funding for ENGOs because, compared to foundations, they come with fewer interests at hand and fewer strings attached. Lowry (1999) made a similar argument with reference to corporate donors that “seek to purchase good will” (p. 758) as opposed to private foundations that bring more of their interests onto the table.
Data, however, show that, from the array of private philanthropic sources, foundations are the most prominent. ENGOs have a different funding mix than nonprofits as a whole. In the US, a 1992 survey of American ENGOs found that foundation support made up 21% of ENGOs’ funding, second only to membership dues at 24% of revenues (Snow, 1992). Brulle (2000, pp. 251-255) found that foundations contribute 15–25% of the total revenue of the 87 leading national ENGOs. Similarly, Straughan and Pollak (2008) estimated foundation grants to be 12% of the ENGOs’ total revenues in 2005. Cracknell, Godwin & Williams (2009, p. 11) estimated that foundation giving to UK environmental groups covers only 9% of their total revenues. These studies suggest that while it is not necessarily the main source of revenue for ENGOs, foundation funding is still instrumental.
10 Still, the relationships of ENGOs with government actors cannot be completely invalidated. Empirical studies have
suggested that ENGOs do receive some government funding through indirect general assistance, granting tax-exempt status, supportive legislation, or subsidy, and also directly through grants or contracts (Chaves, Stephens, &
Galaskiewicz, 2004; Child & Grønbjerg, 2007; Ju, 2011).. Nonetheless, even those groups that do enjoy direct public
support find there is little room to use those funds for social change agenda, because the funds are normally earmarked, i.e., tied to specific programs or initiatives (Smith, 2002; Smith & Lipsky, 1993).
Seeking funding from philanthropic foundations can be based on ideological grounds – because grantees may share similar values and ideology with supporting foundations (Brulle & Jenkins, 2005; Hunsaker & Hanzl, 2003). Furthermore, if power relations and underlying interests do exist in foundations’ grant-making decisions, as Lowry (1999) has suggested, this in fact makes research on foundation-grantee relationship more relevant, stimulating, and noteworthy.
Indeed, a handful of works have been written on foundation philanthropy to ENGOs (Barker, 2008; Bartley, 2007; Brulle, 2000; Brulle & Jenkins, 2005; Delfin & Tang, 2007, 2008; Dowie, 2001, Ch. 5; Faber & McCarthy, 2005; Lowry, 1999; McCarthy, 2004; Snow, 1992; Wing, 1973). Foundations have been involved in conservation and preservation issues since the early 20th century (Brulle & Jenkins, 2005; Dowie, 2001). Among the early foundations to support such issues were the Andrew W. Mellon Foundation and the Ford Foundation (Brulle & Jenkins, 2005). Over time, the diversity of issues addressed and funded, and the number of foundations involved in environmental issues, has grown significantly. This growth is reflected, for example, in the fact that from 1987 – when the Environmental Grantmakers Association was formed – until today, its membership grew from 12 to over 200 foundation members from North America and around the world.11