A behavioral perspective of search in nonprofit organizations: How programmatic aspirations drive fundraising efforts
Most work on aspirations and organizational behavior focuses on how performance relative to aspirations triggers search activities in for-profit firms. In this paper, we extend the behavioral theory of the firm to nonprofit, non-government organizations. Nonprofits hold multiple goals and aspirations, both financial and nonfinancial. We term that latter programmatic aspirations, because they relate to program spending directed to serve social demands. We hypothesize that, while performance above financial aspirations decreases the need for fundraising, performance above programmatic aspirations increases fundraising. Performance above programmatic aspirations drives fundraising because, unlike for-profit organizations, demand for output in nonprofits often has little connection to revenue. Because nonprofits often serve individuals who do not, and often cannot, pay the service’s full cost, program success leads to fundraising. We also explore moderators in the relations between programmatic performance and fundraising levels. Specifically, we theorize that factors that reduce external dependency (i.e., obtaining commercial revenues) or increase confidence on fundraising success (i.e., board size and environmental munificence) will influence the extent of fundraising as a response to attainment discrepancies. We test our hypotheses using a panel dataset of 12,399 nonprofit organizations operating in 376 U.S. communities and find support to most of our predictions. We also discuss implications for studying how multiple organizational goals influence search.