Partnership Strategies For Financial Stability in The Non-Profit Sector

Financial Resources and Non-Profits
PARTNERSHIP STRATEGIES FOR FINANCIAL STABILITY
IN THE NON-PROFIT SECTOR
By
CALVIN STACEY CRAWFORD
A thesis submitted in partial fulfillment of

the requirements for the degree of
MASTER OF ARTS
In
LEADERSHIP AND TRAINING
We accept this thesis as conforming

to the required standard
……………………………………….……………..
Karen Laing, Project Sponsor
………………………………………………………
Marilyn Hamilton, PhD CGA, Faculty Supervisor
……………………………………….……………..
Linda V. Coupal, PhD, Committee Chair
.
ROYAL ROADS UNIVERSITY
October, 2006
© Calvin Stacey Crawford

Financial Resources and Non-Profits 2
ABSTRACT
The non-profit sector is changing as non-profit organizations (NPOs) face reduced funding and
increased accountability measures within an increasingly complicated fiscal environment. As the
challenge to become more self-sustaining increases, the development of more entrepreneurial
means of generating revenue is emerging to meet non-profit social objectives. This action-based
research study utilized an on-line questionnaire and individual interviews to evaluate leadership
and internal financial management capacity while assessing the current and desired levels of
access to financial products, services and resources. The findings within this study determined
that NPOs would benefit from financial institution leadership that provides dedicated financial
management assistance and training, as well as products and services tailored to the unique needs
of the non-profit sector. Prospera Credit Union will use the findings of the research as a
component of their Corporate Social Responsibility mandate in an effort to support the
increasing fiscal challenges of sustaining non-profit service delivery.

DEDICATION
I dedicate this thesis to my wife, Laura, and my kids, Hayden and Jamie. Thank you for your
belief in me, your patience and understanding. This would not have been possible without your
support.
ACKNOWLEDGEMENTS
I owe a great debt of gratitude to the many individuals who assisted me throughout this
major project.
I am especially thankful to the research participants who gave so generously of their time
to take part in my project. The depth of response from participants across Canada to the online
questionnaire shaped the basis of my research study. I am particularly grateful for the
participation of the interview participants who volunteered of their own accord to further explore
and refine the questionnaire findings. They took the time to reflect upon and relate their
experiences and insights to me, providing the perspective upon which the findings are based.
Marilyn Hamilton, as my Faculty Supervisor, challenged me with some wonderful
questions and provided me with invaluable feedback when I needed it most. Prospera Credit
Union and my project sponsor representative, Karen Laing, who was always encouraging and
supportive. Stacey Corriveau of the Fraser Valley Centre for Social Enterprise for her support,
willingness to share resources, and for the help she provided in reaching out to non-profit groups
across Canada.
The faculty and support staff at Royal Roads University – your commitment to the
learning process was exceptional and has influenced me tremendously.
The entire MALT Cohort of 2005-1, who provided me with so many moments of
inspiration and insight. And of course my Royal Roads triad, Rochelle Winterton and Lorna
Thomson, who provided me with unwavering support in so many ways.
To my family, you are my source of strength and the most wonderful people in the world.
I look forward to making up for those moments when we couldn’t be together.

TABLE OF CONTENTS
...................................................................................................................................................1
ABSTRACT.....................................................................................................................................2
Table of Contents.............................................................................................................................5
Introduction................................................................................................................................11
The Opportunity.........................................................................................................................13
Significance of the Opportunity.................................................................................................17
Systems Analysis of the Opportunity.........................................................................................19
Organizational Context..............................................................................................................23
CHAPTER TWO – REVIEW OF THE LITERATURE...............................................................26
Non-profit Organizations...........................................................................................................26
Organizational Culture..............................................................................................................33
Corporate Social Responsibility.................................................................................................38
Organizational Leadership.........................................................................................................43
CHAPTER THREE – CONDUCT OF RESEARCH ...................................................................51
Introduction................................................................................................................................51
Research Methodology...............................................................................................................52
Tools.......................................................................................................................................55
Unobtrusive Tools...............................................................................................................55
Interactive Methods............................................................................................................55
Questionnaire..........................................................................................................................56
Individual Interviews..............................................................................................................56
Research Conduct.......................................................................................................................58
Project Participants..............................................................................................................62
Ethical Issues..............................................................................................................................64
Respect for Human Dignity....................................................................................................64
Respect for Free and Informed Consent.................................................................................65
Respect for Vulnerable Persons..............................................................................................65
Respect for Privacy and Confidentiality.................................................................................65
Respect for Justice and Inclusiveness.....................................................................................66
Balancing Harms and Benefits...............................................................................................67
Minimizing Harm ..................................................................................................................67
Maximizing Benefit................................................................................................................68
CHAPTER FOUR – ACTION RESEARCH RESULTS AND CONCLUSIONS........................68
Study Findings............................................................................................................................69
Questionnaire Findings...........................................................................................................70
Demographics.....................................................................................................................70
Organizational Trends.........................................................................................................73
Organizational Leadership..................................................................................................74
Entrepreneurial Traits and the Source of Organizational Vision...........................................81
Operational Mindset...............................................................................................................83
Strategic and Operational Planning and How it is Occurring................................................84
Challenges with Organizational Sustainability.......................................................................85
The Valuation of Goods and Services....................................................................................88
Non-profit Financial Management Capacity..........................................................................88
Non-profit Opinions of How They are Perceived by Financial Institutions...........................90

Study Conclusions...............................................................................................................91
Conclusion #1.........................................................................................................................92
The Ideological Difference.................................................................................................92
Differentiating Between Entrepreneur and Enterprising....................................................93
Conclusion #2.........................................................................................................................94
Conclusion #3.........................................................................................................................95
Conclusion #4.........................................................................................................................95
Desired Services..................................................................................................................96
Desired Products.................................................................................................................97
Conclusion #5.........................................................................................................................97
Conclusion #6.........................................................................................................................98
Operational Approach: Resource Management or Enterprise Development......................99
Conclusion #7.........................................................................................................................99
Scope and Limitations of the Research....................................................................................100
Methodology.........................................................................................................................100
Target Population.................................................................................................................101
CHAPTER FIVE – RESEARCH IMPLICATIONS...................................................................103
Study Recommendations..........................................................................................................103
Internal..................................................................................................................................104
Recommendation 1...........................................................................................................104
Recommendation 2...........................................................................................................105
Recommendation 3...........................................................................................................106
External.................................................................................................................................107
Recommendation 4 ....................................................................................................107
Recommendation 5 ..........................................................................................................108
Mechanisms and Leadership................................................................................................109
Recommendation 6...........................................................................................................109
Recommendation 7...........................................................................................................110
Recommendation 8...........................................................................................................112
Organizational Implications.....................................................................................................113
Implications of Recommendation 1..................................................................................113
Implications for Future research..............................................................................................119
chapter six – Lessons learned......................................................................................................121
REFERENCES............................................................................................................................127
Appendix A – Online Questionnaire............................................................................................132
Appendix B – electronic letter of invitation................................................................................141
Appendix C – interview consent form.........................................................................................143
Appendix D – interview questions...............................................................................................145
LIST OF TABLES
Table 1 ...................................................................................................................................63
Table 2 .........................................................................................................................................71
Table 3 .........................................................................................................................................73
Table 4 .........................................................................................................................................74
Table 5 .........................................................................................................................................74
Table 6 .........................................................................................................................................75
Table 7 .........................................................................................................................................78
Table 8 .........................................................................................................................................79
LIST OF FIGURES
Figure 1. A Four Step Action Research Approach (Adapted from Glanz, 1998).........................54
GLOSSARY
List of Definitions
Enterprising non-profits: Non-profit organizations who are interested in starting or expanding a
business or enhancing their programs or services through the development of revenue-
generating enterprises as a way to stabilize and diversify their funding base.
Mental Models: “Deeply ingrained assumptions or generalizations that influence how we
understand the world and how we take action” (Senge, 1990, p. 8)
Non-profit Organization: A nonprofit organization (abbreviated "NPO", or "non-profit" or "not-
for-profit") is an organization whose primary objective is to support social issues or
matters of public concern for non-commercial purposes. For this study “third sector” and
“voluntary sector” are used interchangeably to represent the non-profit sector in its
entirety, unless specifically addressed otherwise.
Social Enterprise: An organization that applies an entrepreneurial approach to addressing social
issues to creating positive community change, often through producing goods and
services for the market and redirecting its surpluses into the continual pursuit of its social
aims.
Social Entrepreneur: Creative individuals with innovative solutions to society’s most pressing
social problems.
CHAPTER ONE – FOCUS AND FRAMING
Introduction
“Although good, old-fashioned charitable assistance will always be a necessary part of
the lifeblood of many social organizations, it is widely acknowledged that new approaches are
needed to address growing problems” (Dees, Emerson and Economy, p. 13, 2001).
The non-profit sector is changing. Operations within the non-profit sector are becoming
increasingly complicated as non-profit leaders face reduced funding, increased accountability
measures and the need for lessened dependence on traditional funders, requiring non-profit
organizations (NPOs) to become more self-sufficient (Dees et al., 2001). This presents new
challenges to the operation of NPOs whether they are mental health, youth, or poverty reduction
programs. However, it also presents the opportunity for social entrepreneurism that addresses
ongoing sustainability of the organization while meeting non-profit social objectives. Different
from business entrepreneurs, social entrepreneurs are distinct in that, “social entrepreneurs set
out with an explicit social mission in mind … the best measure for social entrepreneurs is not
how much profit they make, but rather the extent to which they create social value.” (Dees et al.,
2001, pp. 4-5).
Recognizing that volunteers are at the heart of these organizations and are struggling to
adapt to the changing nature of the voluntary sector, past Prime Minister, Mr. Paul Martin stated,
“One of the best ways to do this is to get behind the remarkable people who are applying
entrepreneurial skills, not for profit, but rather to enhance the social and environmental
conditions in our communities right across Canada (Government of Canada, 2004).
This study will examine the potential for innovative solutions that encourage new
financial relationships between financial institutions and enterprising non-profit organizations.

As the call for “a new form of economic banking practice” (Buttle, 2003, p. 1) arises, NPOs
are becoming more sophisticated and entrepreneurial in how they generate revenue to meet their
social objectives. For example, the Enterprising Non-Profits Program (ENP Program) provides
development or expansion assistance to non-profit organizations interested in entrepreneurial
activities. In 2003, 14 organizations reported revenues to the ENP Program. One organization,
Public Dreams, reported that it raises 60% of its revenues from its Celebration Services business
(Gannitsos, 2003).
During my career as a community development practitioner, I have had opportunity to
work collaboratively with several non-profit organizations. As the levels of funding support have
decreased over time, I have become more active in helping groups develop innovative ways to
generate new funds in an effort to diversify their operational base and create greater
organizational stability. In 2001, I drafted a paper outlining the potential for a new program to
provide short-term loans and organizational expertise for the fundraising initiatives of NPOs. At
the time, this was specific to capitalization of fundraising initiatives; nonetheless, it equates to a
financial capitalization for the development of a product or service that generates revenue to
support social objectives.
Although funding support has diminished, the character and spirit of NPOs to address the
pressing social needs of our communities remains strong. Their endeavours are designed to
contribute to the social fabric of our communities and new ways to help them meet those needs is
required.
Research Question
What innovative financial solutions and resources are required to meet the emerging
needs of enterprising non-profits?

Sub-questions
1. What are the emerging challenges related to the financial sustainability of the non-profit
sector?
2. What are the organizational challenges NPOs may need to manage when addressing the
development of financial capacity within their organization?
3. What are the benefits to the organizational development and culture of financial
institutions in providing new financial products and resources to support the non-profit
sector?
4. What leadership characteristics are required within a non-profit to maintain social
objectives while employing an entrepreneurial approach to generate revenue?
5. How will financial sustainability be evaluated?
The Opportunity
Prospera Credit Union (Prospera) is a full-service community-based financial institution
with a strong history of supporting community initiatives and nonprofit groups. Membership-
based, their Annual Report states: “Our driving force is the enrichment of our members, and the
achievement of their life goals and community legacies” (Prospera Credit Union, 2004, p. 3).
After an unprecedented four years of market expansion, Prospera is now recognized as
one of the fastest growing credit unions in Canada, having just celebrated its most profitable year
in its 62 year history (Prospera Credit Union, 2004, p. 12). With this growth has come a
recognized responsibility and increased desire to work more strategically with the community.
As cited in the report of the Task Force on the Future of the Canadian Financial Services Sector
(Task Force) (1998), the Voluntary Sector Roundtable discussed the changing business
environment and asked us, “to look beyond traditional activities and consider new forms of
partnership between the financial and voluntary sectors that could help build stronger,
healthier and more caring communities” (Government of Canada, 1998a, p. 168).
It is within this partnership context that the opportunity to research innovative financial
relationships between financial institutions and non-profit organizations arose as a research topic.
Timing was also a consideration, as a community-based action research approach could become
an important component of Prospera’s latest initiative, which is the development of a corporate
social responsibility mandate. This important new initiative is largely conceptual at this time and
is being discussed in general terms to mean sustainable economic activity, not only in the
economic sense but also in the social and environmental sense (Laing, 2005). This major
initiative will create a vision upon which daily decisions are based, combining the skills and
expertise as a financial institution to engender a climate of positive change within the
community. One area of focus will be to address the Task Force recommendations, which is to
increase access to financial services that strengthen non-profit organizations (Government of
Canada, 1998c).
The Task Force also suggests that the time is right to examine the relationship between
financial institutions and the communities they serve:
Canadians should have confidence that their financial institutions are contributing to the
community in a positive, constructive way. The Task Force also believes that it is timely
to examine this relationship because it does not appear to be as healthy as it could or
should be. (Government of Canada, 1998c, p. 7)
Embracing corporate social responsibility as part of the operational mandate is a
significant step that recognizes the importance of a balanced operational perspective from which
everyone benefits. Focusing on the social aspect, “The voluntary sector is indispensable to the
ability of society to address community needs. It plays a critical role in strengthening
communities” (Voluntary Sector Roundtable, as cited by Government of Canada, 1998a, p. 168).

Philosophically it is important this occur; however, tangible mechanisms available to the
nonprofit organization for stabilizing its own future require further exploration and development.
In their book, Enterprising Nonprofits: A Toolkit for Entrepreneurs, Dees, Emerson and
Economy (2001) addressed current trends in the social sector and the emergence of social
entrepreneurism as, “more systemic ways of improving social conditions” (p. 13). Their
justification of why social entrepreneurship is important was captured in their statement:
The social sector has undergone massive change over the past several decades. Gone are
the days of charitable relief -- cash handouts and subsidies that do more to create
dependencies in program participants than to prepare them to take on the world
themselves. Gone, too, are the days of easy money from government and foundation
grants, for which results and accountability were rarely required or enforced. (Dees et al.,
2001).
As the challenge increases for the non-profit organization to become more self-sufficient,
the development of more sophisticated and creative ways to generate revenue is required to meet
their social objectives. This emergence of the social economy is represented by organizations
that produce goods and services on a not-for-profit basis with surpluses going to social or
community goals (Strandberg and Plant, 2004). For many, this may equate to accessing financial
support to facilitate this change from the traditionally based external funding source to a more
entrepreneurial approach, which is also causing a change in the language as we move from “non-
profits” to “social enterprise”. As recognized by Irene Gannitsos in her 2003 study of 33
organizations involved in the Enterprising Non-Profits Program, almost all reported that securing
sufficient financial support was a “significant problem” (p. 20).
Another challenge is the reluctance of financial institutions and NPOs to come together in
a financial relationship. Recognized amongst both groups as issues: differing values; lack of
business skills; and lack of management expertise are key limitations for most organizations in
their desire to become more self-sufficient (Gannitsos, 2003; Dees et al., 2001).
Perhaps a greater challenge will be understanding the regulatory framework and
complicated legal structures that will allow for a comprehensible financial relationship.
Fortunately, federal policy is now engaged in a dialogue on the risks of financing non-profit
organizations in an effort to combine social aims with financial objectives (Government of
Canada, 1998b, p. 119). These new relationships will not be for everyone. The view of raising
capital outside of the non-profit organization is contrary to the traditional reliance on government
and foundation funding for operations and special initiatives. This research initiative may lessen
the concern for some organizations as new understandings and fundraising alternatives for NPOs
with entrepreneurial outlooks emerge and become more widespread.
My challenge as a researcher will be to identify the complimentary values and strengths
of the two groups in an effort to develop mechanisms that allow both to come together in a
commercial relationship that is mutually beneficial. How the success of these relationships is
measured will be an important aspect of the research. Current monitoring and evaluation of
financial returns and social outcomes of enterprising non-profits is generally less than
satisfactory (Gannitsos, 2003). Tracking social and economic returns on investments will be
important facets of the research performed and tracking models will be discussed as a
discretionary tool to demonstrate ongoing sustainability beyond the time-related confines of the
research project.
My responsibility as a community-based action researcher is to maintain an awareness of
the research setting, paying particular attention to the social and personal dynamics of the
situation “so that it is noncompetitive and nonexploitative and enhances the lives of those who
participate” (Stringer, 1999, p.21). Although there is empirical research to support the
development of financial services for non-profit organizations, there exists a level of resistance
that NPOs should not enter into commercial relationships. Indeed, values systems of key
stakeholders may find the move toward entrepreneurial activities objectionable (Dees et al.,
2001).
Constructively addressing this resistance, the research concept provided an excellent
opportunity to develop a collaborative and inclusive research process involving the major
stakeholders (Glesne, 1999). Acting as an active facilitator within the process, I worked from the
assumption that “cooperation and consensus making should be the primary orientation of the
research activity” (Stringer, 1999, p. 21). I respectfully explored “the underlying value system,
including norms, and conflicts which may be at the heart of problems identified” (Holter and
Scwartz-Barcott, as cited by Mortin-Cooper, 2000, p. 20). In considering the potential benefits of
the research for both the sponsor and the non-profit sector, I am confident this research approach
respected the interests of the stakeholders while uniting what they hold as value in their
respective sectors into a model of cooperation that respects the strengths each brings to the
process.
Significance of the Opportunity
The non-profit sector in Canada is substantial, well positioned, and wonderfully diverse.
My concern is that without innovative solutions and practices that encourage new pecuniary
relationships between financial institutions and the non-profit organizations that deliver
important social needs, the sustainability of this sector will be difficult. As observed by Banting
(2000) in his edited works of the non-profit sector in Canada:
The non-profit sector suddenly finds itself at the centre of social and political debates in
Canada. Governments see nonprofit agencies as an alternative mechanism for delivering
public services to citizens. Activists see voluntary organizations as a means of mobilizing
local resources to tackle problems often ignored by others. (2000, p. ix)
For this reason, it is important to recognize that current trends in the non-profit sector
are calling for innovative solutions that address the shift toward more entrepreneurial delivery
models that allow for the sustainable provision of public goods and services (Dees et al., 2001).
The intent of this research will identify how Prospera can play an important role in providing the
financial resources and expertise required to stabilize the ongoing operations of enterprising non-
profits.
As Prospera explores the development of a corporate social responsibility mandate, there
comes with this a fundamental organizational transformation towards adopting values-based
social objectives that necessitate an alignment of their economic values with the values of the
larger community. As outlined in the Task Force findings, they believe that, “this is an opportune
time for leaders of the financial and voluntary sectors to explore how new ways of serving
Canadians can be developed” (Government of Canada, 1998a, p. 167). Prospera’s commitment
to enrich the communities they serve and their commitment to corporate social responsibility
places them in an opportune leadership position to shift an emphasis onto the blending of social
and commercial methods that meet the different needs of each unique non-profit enterprise (Dees
et al., 2001).
For Prospera Credit Union and its members, this is a values proposition that goes further
than pure economic gain. The value that they receive as a result of relating more closely with
enterprising non-profits in a community will be relative to what is provided in exchange for it
(Dees et al., 2001). For the enterprising non-profit organization, creation of an entrepreneurial
focus has proven to benefit their organization through greater visibility, creating enhanced
awareness and, more importantly, greater access to services and programs. Additionally, the
business development and business management skills have increased organizational
confidence and enhanced the approach to the organizations other activities (Gannitsos, 2003).
In exchange for providing financial resources and technical expertise to these social
entrepreneurs, Prospera will have demonstrated leadership and corporate social responsibility to
the benefit of the communities they serve, as called for by the Government of Canada (1998a).
Although this activity may not be as profitable in the traditional sense of direct economic gain,
the community does have expectations of financial institutions to play a leadership role in the
community beyond more narrow business imperatives (Government of Canada, 1998a). As an
example:
American Express donated $.03 to Share Our Strengths (SOS) hunger relief efforts very
time an American Express card was used during the holiday season…American Express
gave more than $16 million to SOS, while increasing its own transactions volume, its
card-holder satisfaction, and the number of merchants accepting its card. (Andreasen, as
cited by Dees et al., 2001, p. 243)
There is an incredible range of non-profit groups in Canada working to build a better
society by helping those who are illiterate, infirm, a new immigrant, environmentalists, and
countless other causes that are part of our society. The development of new financial services for
the non-profit sector that adds to the strength of traditional involvement will build stronger,
healthier, and more caring communities. In the end, the true benefactor of this project will be
those who utilize these services, therefore strengthening the social fabric of our society.
Systems Analysis of the Opportunity
In 2002, Charity Bank, the world’s first general charity and authorized bank opened its
doors in the United Kingdom to connect societal needs with the world of finance by using
financial tools and products for the common good. Charity Bank’s mission is “to change
perceptions of how personal wealth can provide finance for the benefit of society, rather than
just for the profit of business or self-interest” (Charity Bank, n.d., ¶ 2).
The International Association of Investors in the Social Economy (INAISE) believes,
“Charity Bank is a simple idea whose time has come” (International Association of Investors in
the Social Economy, Structure and Activity [INAISE], ¶ 4). Although few examples of this
nature exists, three private banks located in Denmark, the Philippines, and the U.S. have
purposely developed financial products that focus on creating a positive social impact in
traditionally underserved banking niches in their respective markets, and yet, they are also able
to produce positive real returns for shareholders: “Using conventional measures of financial and
social outcome, these banks have in fact achieved exceptional social impact while also
surpassing their mainstream peers in financial performance” (Porteous, 2005, p. 1). The
Canadian response to this emerging trend is encouraging. In 2004, the federal budget placed a
special emphasis on social enterprise as a specific component of the social economy that it
wishes to encourage (Government of Canada, 2004). The budget of that year assigned funds to
the area and by the fall of 2005, methods were in place to distribute and administer these funds.
As discussed in the introduction, developing new ways to become more self-sufficient is
an emerging reality for many non-profit organizations. Nonetheless, the challenge of bridging
the gap between a new vision of self-reliance to the current operational reality is largely viewed
as a difficult, if not impossible, bridge to construct. In many instances, the idea of implementing
a vision of self-sufficiency is simply unrealistic. Senge (1990) described this as a creative
tension, where the vision is clear but responded to with great difficulty “because we are aware of
the gaps between our vision and reality” (p. 150).

Of significant national interest are the efforts of Aaron Pereira, founder of Vartana
Bank, a Canadian charitable organization whose mandate is “to research and develop Canada's
first financial institution dedicated to meeting the needs of the voluntary sector” (Vartana, 2006,
¶ 1). Once established, Vartana Bank will provide financial products, advice, and support for
Canada's voluntary sector organizations to come together to further control their own future
(Vartana, 2006, ¶ 3). In Pereira’s case, Senge (1990) would suggest that he has recognized the
creative tension, the gap between the vision and the current reality, and utilized it as a source of
creative energy. It is a powerful source of energy that allows us to challenge existing
assumptions to reveal the true causes of problems being faced.
From a regional perspective, the well-being of our communities is in good hands as
financial groups, NPOs, and corporate interests continue to work together to provide significant
financial and non-financial support to those working for positive change in our communities:
In January 2005, a group of Canadian financial co-operatives, including five credit unions
(Coast Capital, First Calgary, Vancity, Meridian and Assiniboine), The Co-operators,
CUMIS, Ethical Funds Inc., Concentra Financial and Credit Union Central of British
Columbia, with support from Credit Union Central of Canada, joined forces to fund an
international scan of best practices, standards and trends in CSR or sustainable finance.
(Strandberg, 2005, p. 5)
In keeping with international perspective on the growth of sustainable finance,
Strandberg’s study (2005) states that the financial services industry “are key to sustainability as
they raise, allocate and price capital, and provide risk coverage, influencing access to financing
and risk protection and determining which government, business or individual activities get
financed or protected against risks” (p.5).
In addressing the important role financial institutions can play, the mental models of
financial institutions assisting NPOs appears within this research study as limited, from both
perspectives. Both NPOs and financial institutions will need to challenge their operational views,
confronting their assumptions and separate fact from fiction. It is a fundamental step to
working together, for if they fail to check out what each other is thinking, “they will be limited to
experimenting collaboratively with new ways of thinking” (Senge, 1990, p. 203).
Prospera Credit Union’s inclusion into the exploration of these important industry
developments will compliment the strong regional connections already enjoyed by them. Their
organizational mindset is already entrenched in responsible corporate citizenry. In fact, a
cornerstone of their policy is “to develop and maintain a grass roots connection with the
communities it serves” (Freund and Potter, 1999, p. 99). As Strandberg’s study points out, many
are already contributing resources to meet these objectives and, “it is only a matter of time before
CSR goes mainstream with the financial sector” (2005, p. 6). In the midst of developing a new
CSR mandate, Prospera is already well-positioned as a community leader to provide a valuable
contribution to the efforts of developing and providing support to the voluntary sector.
In this regard, non-profit organizations present the greatest analytical challenge. The
number of organizations and the social causes they serve are very diverse, and while these
organizations have the imagination, commitment, and enthusiasm needed to achieve their goals,
they often lack the solid financial infrastructure and advisory support required to expand and
sustain their work (Vartana, 2006, ¶ 3).
A logical model for the exploration of the growing number of social entrepreneurs was
the creation of the Enterprising Non-Profits Program. This Canadian initiative provides grant
funding for business planning, organizational development, or technical assistance (Gannitsos,
2003). Although helpful in increasing capacity, successfully analyzing business opportunities
and developing socially aligned business plans “is difficult to implement business and/or
operational plans without financing to support the initial months of business operation”
(Gannistsos, 2005, p. 20). Using the common denominator for both interests as the desire to
see non-profit organizations become more self-sufficient, this study will explore both
perspectives in an effort to better understand the changing roles and their relationship to financial
institutions and non-profit organizations.
Underlying issues associated with NPOs and this research is substantial as it relates to the
norms, values, and beliefs of traditional NPOs and the volunteers who provide the impetus for
the work they do. For instance, entering into a financial partnership for the development of a
product or service to generate revenue is contrary to the traditional values held by many
volunteers. As observed by Gannitsos (2003), “Many still rely heavily on grants or donations,
and the idea of borrowing money is not an option” (p. 20). This perspective needs to be explored,
as the acceptance or denial of this new entrepreneurial model could be important in
understanding the transformational complexity associated with developing new relationships
between the non-profit and business cultures.
For both sectors, the continued development of relationships and desire to understand one
another is the key: “Relationships are the very heart of an organization’s ability to get any job
done” (Short, 1996, p. 16). It is typical for individuals to want others to change before they do.
Nonetheless, the relational systems between NPOs and financial institutions will remain a
challenge until each recognizes that systems and structures are things, and that people are
ultimately responsible for how those systems function (Covey, 2004, p. 235).
The emergence of Corporate Social Responsibility (CSR), or sustainable finance, is an
important trend that is gaining significant international attention (Gannitsos, 2003).
Organizational Context
Prospera Credit Union is a full service community-based financial institution with a
rich 62 year history in the Fraser Valley of British Columbia (BC). Today, they have expanded
their presence within the province and are currently the 4th largest credit union in B.C., with
combined assets of more than $1.8 billion under administration. Operating in B.C. communities
from Agassiz to Vancouver and the Okanagan, they stand 60,000 members strong with 17
branches, nine insurance offices, a contact centre, six commercial banking centres and a virtual
banking division (Prospera Credit Union, 2005).
Governed by a member elected board of directors, Prospera is currently divided into three
operational areas, in addition to operating its wholly-owned subsidiary, Ubiquity Bank of
Canada, an online virtual bank. The three core functions will be included in the organizational
context and include branch, insurance, and corporate operations. Branch interests include
administrative duties, investments, lending, supervision and branch management. Insurance
interests involve customer service, account management, commercial lines, administration,
supervision and management. The generalized corporate duties involve branch operations, the
satisfaction of membership, and the engagement of employees.
Prospera’s grassroots beginnings were founded during the credit union movement by 14
individuals who came together to combine their talents and resources into one body that served
one another and the communities they lived in (Freund and Potter, 1999). In the words of past
Chairman Karl Noordam: “The Credit Union movement is a classic example of how this
cooperative spirit still thrives in the 20th century” (1999, p. 3). Indeed, Prospera proudly states
that “People are not only the strength of our foundation, they are also the stronghold of our
future” (Prospera Credit Union, 2005, p. 1)

Originally started in 1943 as Edelweiss Credit Union, the 14 members founded the
organization with assets totaling $58.50. Six years later Fraser Valley Credit Union was
established. More than fifty years after that, Edelweiss Credit Union and Fraser Valley Credit
Union announced a merger, and in 2001 Prospera Credit Union was founded.
Prospera’s vision as a community based financial institution is dedicated to helping
members attain financial freedom, through its unique blend of personal hi-touch service
excellence and high tech banking products (Prospera Credit Union, 2005, p. 1).
Prospera consistently demonstrates their values-based objectives, which include member
empowerment, mutual prosperity, and the enrichment of members and communities (Prospera
Credit Union, 2005). Through the empowerment of their members they empower the
community. Prospera demonstrates the value of empowerment to members annually, sponsoring
hundreds of community initiatives and non-profit groups. For example, Prospera was provided
title sponsorship of B.C.’s 2nd largest sports facility in Kelowna, B.C., and shortly thereafter
backed the new entertainment centre and recreational complex in Chilliwack, B.C., appropriately
named Prospera Centre (Prospera Credit Union, 2005). In 2002, Prospera pledged $135,000 to
the Gateway to Learning Project, a major initiative within the University College of the Fraser
Valley (UCFV) to enhance online access for students, faculty, and community (University
College of the Fraser Valley, 2002).
These examples represent some of the more evident levels of community involvement,
and are strongly indicative of Prospera’s ongoing commitment to maintaining the values upon
which its grassroots beginnings were founded.

CHAPTER TWO – REVIEW OF THE LITERATURE
This literature review examines four fundamental topics to create a context for the
research question: What innovative financial solutions and resources are required to meet the
emerging needs of enterprising non-profits? The literature review examines the themes from the
premise of academic study that has already occurred on each of these topics, the scholarly review
of current circumstances associated with the topics, and the application of these findings to the
major project.
The key topics reviewed are: non-profit organizations; the organizational culture of NPOs
in relation to financial institutions; the potential associated with corporate social responsibility;
and the leadership required to integrate the financial institutions and NPOs.
Non-profit Organizations
“For significant social change to occur, charities and businesses need to become more
each other” (Hirschberg, as cited by Wallace, 2004, ¶ 1).
In this review, I will examine the conventional role of the traditional non-profit
organization and explore academic dialogue that questions the emergence of enterprising NPOs
within the non-profit delivery model.
The knowledge gained as a result of this academic exploration on the changing role of
NPOs is directly related to the important societal need to continue these services and investigate
whether the approach to do so should follow a traditional non-profit delivery model or adopt an
entrepreneurial model that presents elements of risk. The reasons for the challenges confronting
NPOs are also explored, using scholarly reference to address issues associated with increasing
accountability, a growing need for financial self-sufficiency, and heightened service expectations
from government and the community. Finally, I provide an epigrammatic discussion on the
relevance and relationships between this topic and the topic of my major project.
Traditional Role
“Many nonprofit organizations are feeling less secure about their role in society at the
very time when it comes to occupy a more important role, particularly in service provision”
(Anheier, Carlson, and Kendall, 2001, p. 1).
Although funding and accountability are growing issues that are creating operational
uncertainty, the character and spirit of non-profit organizations to address the pressing social
needs within our communities remains strong. Their endeavours are designed to contribute to the
social fabric of our society and as the sector evolves we must acknowledge the important
contributions that NPOs have made.
Every part of the world has witnessed an intense growth in the number of non-profit
organizations during the last two decades. In fact, over 90% of nonprofit organizations currently
in existence were created since 1950. Worldwide, most non-governmental organizations have
come into being in the past 30 years. Nonprofits and NGOs are the most rapidly growing types of
organizations in the world (Hall, 2001, p.3).
The fundamental reason is that these are organizations “whose objectives are primarily to
serve the public, act as an expression of collective identity, or represent the interests of particular
social groups” (Miller, 1998, p. 3). In 1980, Indonesia had one environmental group; in 1995 it
had over 2,000. In Slovakia, citizen groups grew from 10 to over 10,000 from 1989 to 1999. In
the United States, non-profit groups have increased from 464,000 in 1990 to 734,000 in 1999
(Anheier et al., 2001). Reporting similar trends between 1960 and 1990, “the number of
Canadian registered charities tripled, with particularly sharp rises in those concerned with
welfare, education, and benefits to the community” (Browne, as cited by Miller, 1998, p.
407).
The significance of the increase during the past two decades is partly explained by
Drayton (2002) as a prior separation in productivity growth between business and the social half
of society. He explained that in the last century, business productivity grew well over 700% as a
result of competition and the entrepreneurial spirit. Unfortunately, according to Drayton, the
social half of society did not participate in this growth as it was easier to tax the wealth generated
by business to build social infrastructure, such as schools and social programming needs.
Nonetheless, Pal (as cited by Miller, 1998) explained that the social movements experienced by
Canada in the 1960’s and 1970’s were turning points in this regard, as they were significant in
the development of NPOs, social programs, and influencing social policy: “Where such
organizations did not exist the state saw no difficulty in creating and supporting them” (Miller,
1998, p. 405).
Decreased Funding
The 1995 federal budget marked a critical turning point for Canadian non-profit
organizations as “the federal transfer payments to the provinces were simultaneously restructured
and reduced. This, in turn, meant that provincial funds flowing to non-profit organizations would
also be cut, or terminated, and restructured as service contracts continued to replace grants”
(Miller, 1998, p. 401).
Miller (1998) explains that many of the NPOs at this time were “locked in the language
and culture of the 1970’s” (p. 405), causing non-profit organizations to lose ground against a
backdrop of changing government policy, competition, and ever decreasing budgets. As a result,
many were unprepared for funding cuts. In Ontario:

The [social] sector had experienced cumulatively reduced funding since the mid-
1980s…it expected something like “business as usual” with the return of the Liberals
(Phillips 1995). Instead, agencies were to be faced with a 20 per cent cut in grants for
1995/6, with further cuts, ranging between 10 and 25 per cent for each of the subsequent
three years. For some organizations, particularly those concerned with advocacy and
public education, this led to the immediate termination of their funding from federal
government. (Miller, 2002, p. 409)
Addressing the Call of Government and Community
What was changing that required the non-profit organization to adapt? The social sector
evolved sharply during the past two decades and NPOs suddenly found themselves at a crucial
juncture. Nonprofit organizations needed to begin searching for a clearer identity in an effort to
try and understand the specific competencies that set them apart from government, a mainstream
market economy, and the community. Dees, Emerson, and Economy (2001) identified the period
of change as one of heightened expectations of the non-profit sector:
The social sector has undergone massive change over the past several decades. Gone are
the days of charitable relief -- cash handouts and subsidies that do more to create
dependencies in program participants than to prepare them to take on the world
themselves. Gone, too, are the days of easy money from government and foundation
grants, for which results and accountability were rarely required or enforced. (2001, p.
12).
Fortunately the federal government, despite imperfect support, continued to recognize the
value of the social sector: “The voluntary sector plays a critical role in strengthening Canada’s
communities and, in light of reductions in governments’ role, its importance is increasing”
(Government of Canada, 1998a). The first step for NPOs was to recognize the expectations set
before them. The second was to accept the challenge of becoming more self-sufficient,
accountable, sophisticated and creative in how revenue was generated to meet their social
objectives. Thus, the emergence of social economy was represented by organizations that began
to produce goods and services on a not-for-profit basis with surpluses going to social or
community goals (Strandberg and Plant, 2004).

Meeting the Expectations
Miller (1998) observed a growing critique of NPOs as “unaccountable, unrepresentative,
professionalized, ‘special-interest’ groups, who used public funds largely to sustain themselves,
and pursued causes that should not be subsidized by government” (p. 401). As a result, non-
profit organizations have begun to explore new ways to deliver services with fewer resources
while countering the charge of being ineffective and unaccountable.
In their book, Enterprising Nonprofits: A Toolkit for Entrepreneurs, Dees et al. (2001)
address current trends in the social sector and the emergence of social entrepreneurism as, “more
systemic ways of improving social conditions” (p. 13). In exploring entrepreneurial
methodology, the approach taken by some NPOs was to look “beyond traditional activities to the
development of new, innovative partnerships that would help build stronger, healthier, and more
caring communities” (Voluntary Sector Roundtable, as cited by the Government of Canada,
1998a). Nonetheless, underlying issues associated with the norms, values and beliefs of
traditional NPOs and the volunteers who provide the impetus for the work they do presents new
challenges. Boschee (1995) observes the traditional perspective of NPOs that mixing of profit
motives and the moral imperatives is suspicious (p. 20). For instance, some non-profit
organizations allocating financial resources towards the development of a product or service to
generate revenue may be contrary to the traditional values held by board members and
volunteers. As observed by Gannitsos (2003), “many still rely heavily on grants or donations,
and the idea of borrowing money is not an option” (p. 20). Although not for all groups, the rise
of the enterprising non-profit and their achievements are hard to ignore.
The Emergence of Enterprising Non-profits

“Once in a rare while, the fundamental architecture of a significant part of society
shifts. Over the last two and one-half decades, the organization of the social half of society, led
by its social entrepreneurs, has done so” (Drayton, 2002, p. 120). Drayton also suggests that
“The changes now in motion have deep roots and have been building for a long time. They draw
strength from an historic logic so persuasive that it feels almost like a law of nature." (p. 121).
The non-profit sector is changing. Operations within the non-profit sector are becoming
increasingly complicated as non-profit leaders face reduced funding, increased accountability
measures and the need for lessened dependence on traditional funders, requiring NPOs to
become more self-sufficient (Dees et al., 2001). This presents new challenges to the operation of
NPOs, whether they are environmental groups, nursing homes, or community service programs;
however, it also presents the opportunity for social entrepreneurism that addresses ongoing
sustainability of the organization while meeting the NPOs social objectives.
Different from business entrepreneurs, social entrepreneurs are distinct in that they set
out with definite social mission, basing their success on the extent to which they create social
value, not on how much profit they make. For this reason, it is important for NPOs to recognize
that current trends in the non-profit sector are calling for innovative solutions that address the
shift toward more entrepreneurial delivery models that allow for the sustainable provision of
public goods and services (Dees et al., 2001).
The federal response to this emerging trend is encouraging. In 2004, the federal budget
placed a special emphasis on social enterprise as a specific component of the social economy that
it wishes to encourage (Government of Canada, 2004). The budget of that year assigned funds to
the area and by the fall of 2005 had entities in place to distribute and administer these funds.
The social economy transformation occurring represents a deep structural change.
Drayton (2002) suggests the social arena has been taken over by independent, competitive, and
competent social entrepreneurs who are changing the terms and pace of non-profit service
delivery. Still, there are those within government, business, and society who resist social
entrepreneurship. Boschee (1995) reminds us that this is uncomfortable territory for some
individuals and groups who are concerned that “making money seems to run against the
historical grain of ‘nonprofit’ activity” (p. 20).
The non-profit sector is indispensable to the ability of addressing societal needs. It plays
“a critical role in strengthening communities and, in light of reductions in governments’ role, its
importance is increasing” (Government of Canada, 1998a, p. 44). The social entrepreneur offers
a vision that looks beyond the traditional activities of the non-profit organization in an effort to
not only address social needs within the community, but to do so in a way that increases
accountability and provides sustainability to the non-profit.
Application to the Major Project
Exploring innovative practices and solutions that encourages relationships between
financial institutions and non-profit organizations is the foundation of this major project. As cited
in the Task Force on the Future of the Canadian Financial Services Sector (Government of
Canada, 1998a), the Voluntary Sector Roundtable discusses the changing business environment
and asks us, “to look beyond traditional activities and consider new forms of partnership between
the financial and voluntary sectors that could help build stronger, healthier and more caring
communities” (p. 168). The Task Force (1998a) also suggests that the time is right to examine
the relationship between financial institutions and the communities they serve.
This literature review on non-profit organizations provides us with an important first
step in understanding the critical role the non-profit sector has played over time in meeting the
needs of our society. It recognizes the value the social movement has had in forming social
policy and explored the traditional model for meeting those needs. It recognizes the challenges
associated with changing policy and the emergence of new ways to address these concerns. Most
importantly, it recognizes that the changing environment is providing an opportunity for NPOs to
determine their functional readiness to enter into new forms of connected partnerships that are
driven by an entrepreneurial mindset to meet their social objectives.
Organizational Culture
The purpose of this topic is to explore the organizational culture of NPOs and how the
norms, values and beliefs of this culture will support or detract from the understanding or
acceptance of working collaboratively with financial institutions in the development of financial
management resources and products that support the social objectives of the non-profit sector.
Defining Organizational Culture
Beginning with the individual and expanding to the organization as a whole,
organizational culture is defined by the collectively held norms, values and beliefs of its
constituents. More overtly, the fabric of the organizational culture is also influenced by its
“formal and informal policies and procedures, methods, practices, and ways of operating"
(Anderson and Ackerman-Anderson, 2001, p. 98). These behaviours provide the context within
the organization that influence or control how people communicate and interact, and how work is
completed within the various work-related responsibilities. The function of organizational
culture is to serve as "the basis for role expectations to guide behavior, let people know what is
proper and improper, and help people maintain comfortable relationships with each other" (Yukl,
2002, p. 157). This suggests that being aware of organizational culture helps us understand
the working atmosphere, whether positive or negative, and helps us determine how to
appropriately respond to the daily circumstances of different organizational settings.
Non-profit Organizational Culture
Specific to the non-profit sector, functioning as a culture within a milieu of reduced
funding and increased accountability measures has complicated the fiscal environment and
created new operational complexity. Some of these challenges can be attributed to attempts to
adopt more entrepreneurial means of generating revenue to meet non-profit social objectives and,
based on the academic literature, this has been determined as a significant cultural challenge
within the organizational structure, as most nonprofit organizations are governed and staffed by
individuals focused on meeting social purposes that meet the needs of their community. These
social missions are often at odds with the competitive realities of generating revenue through a
business venture (Oster, Massarsky and Beinhacker, 2004). Rick Aubry (2004) suggests that
"bringing a business venture to scale has proved to be one of the most difficult aspects of
nonprofit enterprise" (p. 297). He explained the reasons for this lack of integration as embedded
cultural and social expectations, "where social worker and community organizing types are often
uneasy with the ‘ruthless’ coldhearted analysis undertaken by business managers" (p. 297). The
transition, therefore, from the nonprofit mindset to a business perspective is a significant
transformation, yet; "having an organizational culture that affirms entrepreneurial approaches to
managing the challenge confronting the nonprofit is a crucial success factor to consider" (Dees at
al., 2001, p. 137).
The potential for internal organizational conflict exists for NPOs trying to address
financial challenges with more of a business lens. Explained to a greater extent in their follow-up
book, Strategic Tools for Social Entrepreneurs, Dees, Emerson and Economy (2002) explain
that running a business venture to generate profit requires a culture considered to be at odds with
the organizational culture found in many nonprofits (p. 207). They described the level of
discomfort felt by nonprofit employees as a concern that the business venture may “inadvertently
pull nonprofits away from their core social mission, especially if business success is not directly
aligned with the mission” (p. 207). Skeptical of the values and motives of people with business
objectives, non-profit employees are also uncomfortable with the language and practices of
business, offended by the idea that the non-profit organization is chasing dollars rather than
focusing on its social objective. There is also concern that an earned income strategy will detract
from core activities and negatively impact the current and future effectiveness of the social
mission (Brinckerhoff, 2000; Dees et al., 2002).
Where non-profit culture is largely defined by its social mission, the organizational
culture of financial institutions is predominantly defined by the calculation of risk and return.
David Bornstein (2004), of the Goldman Sachs Foundation recently, and very bluntly, stated that
"Banks are willing to take very little risk. As a result, a bank wants to be able to see into the
future and have several options to get out of the investment if things go wrong" (p. 134).
Nonetheless, community reinvestment provisions or strategies are emerging within financial
institutions that focus on assisting social missions, resulting in a "below market return in
exchange for some social return" (Bornstein, 2004, p. 135).
Integration of Organizational Culture
Like leadership, organizational culture is not a function of technique; it is a function of
attitudes and ideas (O’Toole, 1996). In keeping with international perspective on the growth of
sustainable finance, Strandberg’s (2005) study stated that the financial services industry “are key
to sustainability as they raise, allocate and price capital, and provide risk coverage,
influencing access to financing and risk protection and determining which government, business
or individual activities get financed or protected against risks” (p.5).
For the research study, it is important to recognize that the project sponsor, Prospera
Credit Union, is a full-service community-based financial institution with a strong history of
supporting community initiatives and nonprofit groups. As a credit union, they are more attuned
to community issues and are also more inclined to become involved as an active stakeholder in
supporting the resolution of social issues within community. Membership-based, their Annual
Report (2004) states: “Our driving force is the enrichment of our members, and the achievement
of their life goals and community legacies” (p. 3).
How the community is engaged and the type of support offered is important to the
organizational culture of both sectors. As NPOs work towards becoming more financially savvy,
their relationship with financial institutions is requiring a more sophisticated level of support.
Interestingly, the Federal Task Force recommendations recognize this transformation and
recommend increased access to financial services that strengthen non-profit organizations
(Government of Canada, 1998c). Furthermore, the Task Force also suggests that the time is right
to examine the relationship between financial institutions and the communities they serve:
Canadians should have confidence that their financial institutions are contributing to the
community in a positive, constructive way. The Task Force also believes that it is timely
to examine this relationship because it does not appear to be as healthy as it could or
should be. (p. 7)
Fortunately, these two differing organizational cultures can overcome the challenge of
collaboration and indeed work together towards mutually beneficial outcomes. The question
becomes one of determining what the relationship will be based on to create a foundation that
allows for the exploration of overlapping benefits.

Anderson et al.. (2001) note that a difficult relationship can be made worse by the
stress of entering into unknown territory together. In respecting organizational culture, one must
also respect the human dynamics. Amid the uncertainty of the new relationship, these dynamics
require development of a process to deal effectively with the unfamiliar territory experienced by
the individuals.
As explained by Covey (2004), the reason problems arise in such situations is because of
the lack of systems or structures – a process. As Covey (2004) further explained, systems and
structures are simply things. They are created by people who are ultimately responsible for those
systems and “all organizations get the results they are designed and aligned to get” (p. 235).
Consequently, the importance of process is that it provides the support the organization needs as
the future is determined. Structure follows purpose; yet, as the organization evolves so must the
individuals and the plan must also include personal transformation strategies. These will
generally include personal growth plans, patient dialogue, appreciative inquiry, coaching, team-
building, bench-marking growth experiences, and regular communication (Anderson et al.,
2001).
This topic explores the importance of recognizing cultural challenges to a non-profit
organization’s norms, values and beliefs while working collaboratively to support development
of resources that will help non-profit organizations become more financially self-reliant.
Furthermore, it identified that there are expectations of financial institutions to respond in a
leadership role that helps strengthen the abilities of non-profit organizations. Lastly, it
determines this relationship must have a defined process that aligns shared values to shared
objectives and that it will be most effective if this relational growth also includes personal
transformation strategies.
Corporate Social Responsibility
“To create new realities, we have to listen reflectively. It is not enough to able to hear the
chorus of other voices; we must also hear the contribution of our own voice” (Kahane, 2004, p.
83).
A new standard of corporate performance is emerging that encompasses both ethical and
financial dimensions. In the midst of the misdeeds of Enron, Worldcom, and several other U.S.
companies, a fundamental shift in values is colouring what we think of corporations and how we
expect them to conduct their operations (Paine, 2003). These new standards of performance are
consolidated into what is commonly referred to as corporate social responsibility (CSR).
Although there is no definitive meaning of CSR, it generally refers to an enduring commitment
to operate in an economically, socially, and environmentally sustainable manner (Canadian
Business for Social Responsibility [CBSR], 2001).
For many corporations, the implementation of CSR is a relatively recent phenomenon
and there are varying reasons for why it is being adopted. In the boardroom, opinion is divided
on the merits of CSR, with some corporate leaders believing it is nothing more than social
rubbish, while the general public is largely ignorant of CSR and would likely be amazed at the
efforts of companies that make becoming socially responsible a priority (Hilton and Gibbons,
2004).
The CBSR (2001) explained that for small and medium-sized businesses, the choice to be
a responsible corporate citizen is often the core philosophy of the owner and their desire to
operate responsibly. This focus is typically fundamental to whom they are and affects decisions
at all levels of the business; determining what a business does and how the business does it. For
large corporations, the interest in being a responsible corporate citizen appears to have grown
“out of a recognition of CSR as a strategic imperative” (CBSR, 2001, p. 11). This implies
that CSR is not at the heart of larger companies, but is part of the corporate identity that
influences business practices. It also indicates that corporations are beginning to understand the
internal and external benefits to the business, measured in both social and economic gains
(CBSR, 2001; Greider, 2003; Hart, 2005; Kanter, 2001).
Coming to the realization that there are benefits to commerce with a conscience is a
significant change from the traditionally profit-centric bottom line perspective. The realization
that CSR has commercial advantages may dishearten the values-based purist; however, the
advantages of improved corporate standards far outweigh the traditionally single-minded motive
of earnings per share. As supported by Hilton and Gibbons (2004): “either way, the overall
outcome is better for society and better for business” (p. 54).
As stated, the corporate benefits are felt both internally and externally and are manifested
as “a function of processes and practices as well as products” (Cohen, as cited by Hollender and
Fenichell, 2004, p. 11). The primary internal benefits of CSR to the business include improved
morale, resulting in increased productivity, higher operational effectiveness, and improved
communication. It is also important to point out that several studies convincingly demonstrate
that there exists a profitable connection between socially responsible business and long-term
shareholder performance (Greider, 2003; Hart, 2005; Hollender and Fenichell, 2004). Citing
Paine (2004), Hollender and Fenichell emphasizes the bottom line benefits of CSR by citing the
empirical evidence of Lynn Sharpe Paine and her recent review of 95 academic studies, of which
55 found “a positive correlation between better financial performance and better social
performance” (p. 30).

The external benefits to the corporation also provide compelling arguments
supporting the adoption of CSR best practices. Foremost amongst the academic literature, the
external benefits most observed include increased customer loyalty, market differentiation, and
an enhanced civic positioning (CBSR, 2001; Paine, 2003). Building loyalty is a complex
undertaking with significant benefits to the business. A socially responsible business is perceived
as “earning that loyalty and building trust with transparency and communication” (CBSR, 2001,
p. 19). Although loyalty is often measured by community and other stakeholder support, CBSR
research findings additionally state that a company will also strengthen internal loyalty through
work that aligns with the employees values. With this improved corporate culture, attracting high
quality employees and maintaining staff was another key loyalty building benefit of CSR
(CBSR, 2001).
Achieving market differentiation was recognized as a key benefit when guided by
socially responsible corporate values. The importance of values in shaping corporate identity and
reputation, developing brand identity, and earning the trust of customers, suppliers, and other
business partners are important determinants in positioning the company amongst its competition
(Paine, 2003). When considering the business case for the importance of CSR in market
development, a common observation of business owners is that it “provides a competitive edge
for their product or service” (CBSR, 2001, p. 18), resulting in increased financial benefit.
When the community is viewed as an important stakeholder in the operational direction
of a company, it enhances its civic positioning. Building relationships within the community
fosters an awareness that is sensitive to the community’s culture and needs. The motivating
factor appears to be less focused on economic considerations, and although meaningful
community connections have a demonstrated effect on the company’s standing and reputation in
the community, the behaviour appears to be more focused on making the community a better
place to live and conduct business (Paine, 2003; Goodell, 1999). Fully aware that their actions
were felt by the community-at-large, this behaviour is viewed by the as a model for other
businesses to follow (CBSR, 2001, p. 20).
In contrast, there are several points of view that conflict with the belief that business has
any moral obligation to society beyond their duty to maximize profits within the confines of the
law (Hilton and Gibbons, 2004). The prevailing themes of those who question the role or
function of CSR in business activities often include a refusal to accept any social responsibility
that goes beyond the obligation to shareholders. There is also a question of legitimacy and
motives of those who espouse themselves as good corporate citizens. This is based on the
suspicion that it is simply hype, public relations or window-dressing to make the corporation
look good through a few environmental or social initiatives as a means to generate positive
public attention (Hilton and Gibbons, 2004; Hollender and Fenichell, 2004).
Other views at odds with integrating CSR into the corporate world include the belief that
CSR is a substitute for more effective government regulations (Hollender and Fenichell, 2004).
The concern here is that corporate provision acts as a substitute to government provision (Hilton
and Gibbons, 2004). From a monetary perspective, there is a cost-based opinion that CSR
focuses the business on unaffordable luxuries that are “undermining the commercial performance
of corporations by saddling them with unnecessary costs” (Hilton and Gibbons, 2004, p. 70).
More of a drawback than a criticism, even when there is a corporate desire to become more
socially responsible, it is a difficult process for today’s company as it requires the development
of a business case to satisfy the multiple stakeholders. Should the stakeholders be satisfied, there
still exists the significant challenge of integrating and aligning the various best practices into
the fabric of the business (CBSR, 2001).
For some, the adoption of values needs no corporate justification. It is not about
becoming a bigger, more profitable company; it is about becoming “a better company, a more
values-driven company” (Roddick, 2005, p. 253). However, for most companies today, even if
the formalization of a CSR mandate is not rationalized using commercial advantages, the
literature suggests it is more palatable if supported by a strong business case. With so many CSR
case studies demonstrating improved risk management, better morale and productivity, superior
market position and enhanced civic standing, it is becoming an easier case to make. Nonetheless,
Paine (2003) cautions us that businesses who view CSR as a financial strategy are
misunderstanding the values proposition (p. 133).
CSR is an important tool for connecting the corporate world with broader community
issues. Many NPOs are addressing an overwhelming multiplicity of social issues and the
emergence of corporate interest is a welcome adjunct to an already difficult task. A true benefit
of CSR is that it creates a common framework and language for the two sectors to come together.
It opens the door to dialogue that reflects the social imperatives of the community and allows the
corporate citizen to act on its stated values. Indeed, action is the critical difference between the
traditional approach of making a charitable donation to a worthy cause to the new paradigm of
wanting to find ways to be actively involved to make a difference. To the benefit of all involved,
when a company approaches social needs in this way, “they have a take in the problems, and
they treat the effort the way they would treat any other project central to the company’s
operations” (Kanter, 2001, p. 156).

The recent commitment by Prospera Credit Union to develop a corporate social
responsibility mandate represents an attentive understanding of their community-based
membership; their clientele. It is also indicative of how their organizational objectives can be
strategically aligned to improve their financial performance while meaningfully connecting to
and supporting the social objectives important to the communities in which they operate.
The significant challenge identified as a result of the research was interfacing and
integrating objectives across both the non-profit and financial sectors and it is expected the CSR
initiative of Prospera will give both sides a values-based language and framework familiar to
both, upon which the integration of shared social objectives can be developed. Recognizing that
every community is different and that there is “no generic prescription for social responsibility”
(Goodell, 1999, p. 2), any focus external to Prospera will require dynamic leadership that is
capable of balancing the interests of multiple stakeholders.
Organizational Leadership
“The art of leadership requires us to think about the leader as steward in terms of
relationships: of assets and legacy, of momentum and effectiveness, of civility and values"
(DePree, 1987, p. 13).
In addressing the responsibilities of leadership, Max Depree (1987) espoused that people
"are the heart and spirit of all that counts. Without people, there is no need for leaders" (p. 13). In
the context of exploring relations between nonprofit organizations and financial institutions,
leadership collaboration from both sides will play a vital role in how these two organizational
perspectives come together into an alliance to meet with changing financial resource needs of the
nonprofit community. It is not possible to place the onus of leadership on one or the other; it is a
mutual responsibility that recognizes the importance of what each perspective contributes to the
relationship and to how this is a mutual benefit. In my opinion, relationships begin through
the identification of common interests and respectful appreciation. A relationship that transcends
this standard to work together towards effecting positive change can only happen when the
common elements of values and purpose of each is in alignment.
In this review I will examine the responsibilities and characteristics of organizational
leadership within the academic context of values-based leadership theory. I will explore how this
framework allows for the encompassment of both moral and financial dimensions as a result of
collaborative development that is mutually beneficial to both NPOs and financial institutions.
Within this context, I will also take into consideration complimentary and contrary academic
theories.
In examining leadership philosophies within the non-profit sector and with the project
sponsor, a shared desire to service the community in a responsible and sustainable manner can be
clearly identified within the social objectives of the non-profit, and the operational mandate of
the project sponsor. These observations are firmly planted in the ground of commonly held
values. And although it can be argued that there is not one best approach towards effective
leadership, there is significant quantitative and qualitative data to suggest that values-based
leadership makes a difference to the realizable potential of any organization. In the words of
James O’Toole (1996), “there is no alternative to the practice of values-based leadership” (p. 79).
To understand the values-based leadership approach, one must understand and deal with
the prime motivators of constituent behavior that determine performance. These motivators
include norms, values, and beliefs. In my opinion, a leader who is consciously and emotionally
aware of this relationship has a better understanding of the content and strength of the
organizational culture and is able to build a vision with the commitment and cooperation
necessary to create an environment for success.
Although the importance of creating and having a vision is a common theme within most
leadership philosophies, it is my opinion that this is often a leadership pronouncement devoid of
“consensus around shared values” (Kouzes and Posner, 2002, p. 80). A more pragmatic
perspective might counter that as organizational leaders, a non-profit executive director (ED) or
credit union manager provides the operational context and purpose for its personnel. However, it
is the assertion of Kouzes and Posner (2002) that regardless of the context, “strategies, tactics,
skills, and practices are empty without an understanding of the fundamental human aspirations
that connect leaders and constituents” (p. 23). In building a vision, "One is hard-pressed to think
of any organization that has sustained some measure of greatness in the absence of goals, values,
and missions that become deeply shared throughout the organization." (Senge, 1994, p. 9).
In the absence of a vision that does not have consensus on shared values, individuals
become confused about what they should be doing and how they should be operating.
Furthermore, leadership and constituent values may be incongruent, causing the loss of personal
effectiveness and productivity (Kouzes and Posner, 2002). This scenario is an inherent failing of
organizational leadership that does not incorporate constituent input and is likely to result in a
crisis situation.
Diametrically opposed to values-based leadership is the contingency philosophy. The
theory suggests that “How the leader acts to effect change will depend on the situation”
(O’Toole, 1996, p. 106). O’Toole (1996) also suggests that few leaders are successful at leading
change because so many are adherents, either consciously or unconsciously, of situational

leadership. The reasons for being unsuccessful are that situational leaders need a situation to
arise before they can apply their leadership solution.
When leaders take a reactive approach, they respond automatically and unconsciously to
the dynamics of transformation based on their conditioned habits, existing knowledge,
and dominant leadership style. Their lens is filtered, causing critical people and process
dynamics to go unseen. They can only apply their old management techniques, because
their limited awareness offers them no other possibilities. (Anderson and Ackerman
Anderson, 2001, p. 52)
This very reactive approach is often in response to a crisis. When we are being reactive
versus proactive, “the situational leader does not know where to look, what to look for, or how to
look – because they do not believe that such things are even there to be discovered” (O’Toole,
1996, p. 108). In my opinion, the missing component is a values-based point of reference.
Taking the time to build and affirm collectively held values and beliefs of a group or
organization before a situation arises “give(s) purpose to your daily decisions” (Kouzes and
Posner, 2002, p.394). This is the point of reference that allows a leader or constituent to make a
decision without wondering what the decision depends on, as in contingency theory. Kouzes and
Posner (2002) address the power of shared values as a common language upon which
“tremendous energy is generated when individual, group, and organizational values are in synch”
(p. 78).
Values-based leadership also shares commonalities with the theories of transformational
and servant leadership. Transformational leadership “appeals to the moral values of followers in
an attempt to raise the consciousness about ethical issues and to mobilize their energy and
resources to reform institutions” (Yukl, 2002, p.119). Servant leadership “encourages
collaboration, trust, foresight, listening, and the ethical use of power and empowerment”
(Greenleaf, as cited by the Greenleaf Center for Servant Leadership, ¶ 1). As a result of these
commonalities, I posit that the fundamental difference between these three philosophies and the
theories of contingency, relativism, and realism, which are generally aligned with the pursuit
of self-interest, are the significant long-term benefits of knowing at any point in time what to
base your actions on, namely the shared values of the organization.
This is not only a qualitative philosophical difference, but an important quantitative
benefit where “there’s actually a logarithm that predicts that relationship: For every 1 percent
improvement in the service climate, there’s a 2 percent increase in revenue.” (Spencer, as cited in
Goleman et al., 2002, p. 15). This paper, presented in 2001 by Lyle Spencer at the meeting of the
Consortium for Research on Emotional Intelligence in Organizations, quantifies that
improvement in the service climate drives increases in revenue. According to Kouzes and Posner
(2002), “Leadership decisions based on the collective values of the organization are investments
in the organization's future” (p. xix), and “when there's congruence between individual values
and organizational values, there’s significant payoff for leaders and their organizations" (p. 79).
As it relates to the values of strong morale and effective interrelationships, contingency,
and oft compared realist and relativist leadership styles, appear to garner short-term corporate
results as a consequence of using a variety of leadership styles determined on a situation by
situation basis. Perhaps more damaging, this inconsistency negatively affects the credibility of
the leader. This credibility is based on their perceived trustworthiness, expertise, and dynamism,
and when credibility is low, productivity, motivation, and dissatisfaction are significantly higher
(Kouzes and Posner, 2002).
In addressing the preferred leadership styles and their meaning, it is important to also
understand the characteristic traits and competencies that are required as a leader to gain
commitment from your constituents. Yukl (2002) summarized the requisite skills for leadership
success as “cognitive complexity, emotional and social intelligence, self-awareness, cultural

sensitivity, behavioral flexibility, and the ability to learn from experience and adapt to
change” (p. 79).
For leaders in non-profit and financial institutions who are trying to explore new ways of
working together, utilization of these skills begins with self-awareness and an honest reflection
and understanding “of one’s emotions, as well as one’s strengths and limitations and one’s
values and motives” (Goleman et al., 2002, p. 40). In this context, these two groups can bring
forth the best of themselves and the requisite skills mentioned previously to create an
environment open to interaction with individuals. Short (1998) abridged this perspective with his
statement: “At the heart of our expertise is awareness” (p. 3). This awareness also allows us to
“respond to the expectations of our constituents, underscoring the point that leadership is a
relationship and that the relationship is one of service to a purpose and service to people”
(Kouzes and Posner, 2002, p. 27).
Relationships and an emphasis on interconnectedness appear to be driving forces, or at

the very least, values that are being revisited in organizations today. As such, it is
predicted that the economy of the new millennium, fluid and technologically driven, will
be based on creativity and relationships. (RRU, 2005, p. 3)
Yukl (2002) suggests the foundation of these skills lies in our cognitive ability and that
these conceptual skills include “analytical ability, logical thinking, concept formation, inductive
reasoning, and deductive reasoning” (p. 71). These skills represent conscious reasoning, and to
support the importance of relationships, must be united with the appropriate mix of interpersonal
skills (Yukl, 2002). Conscious reasoning enjoys the support of most traditional and modern
management theories; however, the importance of interpersonal skills should not be
underestimated: “Deficiencies in interpersonal skills were a major reason for managers who
eventually derailed in their management careers" (CCL Study, as cited by Yukl, 2002, p. 73).
The fundamental interpersonal skills include emotional intelligence, social
intelligence, and the ability to learn. Emotional intelligence allows us to understand our own
feelings and the feelings of others. Social intelligence is the ability to determine the requirements
for a particular situation, while selecting an appropriate response. The ability to learn allows us
to analyze our own cognitive processes (Yukl, 2002).
In recognizing values-based leadership as a leadership approach that is the key to a
successful relationship between NPOs and Prospera, it will be important for the representatives
to clarify and be aware of the principles that govern their organizations. It will be these
principles will serve as the point of reference in the uncertain times that are all too prevalent in
organizational settings. In managing relationships Goleman et al. (2002), suggests that
“managing relationships skillfully boils down to handling other people's emotions" (p. 51).
This approach recognizes values-based leadership as a philosophy that has a constant
moral reference point when applying conscious reasoning to a leadership situation. It negates
situational thinking, for if it all depends, what does it depend on? For non-profit organizations
and Prospera, it will depend on a collaborative process to identify the collectively held values
held within each organization, along with the relational skills to build common objectives and
workable strategies to achieve those objectives.
Summary
In this literature review I have discussed the conventional role of the traditional non-
profit organization and the emergence of enterprising non-profits within the non-profit service
model. In the context of this emergence, the changing nature of non-profit service delivery and
its effect on the organizational culture of NPOs was reviewed. The topic of corporate social
responsibility was explored to analyze how the fundamental shift in corporate values could serve
as a common philosophy and integration mechanism to bring together Prospera Credit Union
and non-profit organizations in a mutually beneficial relationship. The final topic of leadership
examined the different philosophies of leadership, settling on values-based leadership as the
most appropriate approach to achieve a healthy integration.

CHAPTER THREE – CONDUCT OF RESEARCH
Introduction
In community-based action research, the role of the researcher is not that of an expert
who does research but that of a resource person. He or she becomes a facilitator or
consultant who acts as a catalyst to assist stakeholders in defining their problems clearly
and to support them as they work toward effective solutions to the issues that concern
them. (Stringer, 1999, p. 25)
This study was conducted to create a greater understanding of what innovative financial
solutions and resources are required to meet the emerging needs of enterprising non-profits. I
encouraged these research participants to share their experiences within the realm of their
organizational financial management capacity while also assessing their entrepreneurism and
current level of access to financial products, services and resources. The insights provided by the
non-profit leaders who participated will be used to inform Prospera Credit Union on ways to
better serve the financial needs of non-profit organizations. The study also intended to create
new knowledge that may be used to inform future policy relating to Prospera’s developing
corporate social responsibility initiative. The methodology applied to this study was action
research using a mixed approach that incorporated both qualitative and quantitative data analysis.
Research Approach
There are many different definitions of action research, which appear to be
conceptualized through different scholarly viewpoints. However, understanding what
distinguishes action research from other forms of research is the “process of inquiry” (Stringer,
1999, p. 5). He defined research as a meticulously thorough examination that helps those
involved to understand the characteristics of the current challenges being faced, with three
fundamental characteristics: a problem being examined; the process of examining and; an
explanation that helps us identify with the nature of the problem (Stringer, 1999).
Generally speaking, all forms of research exist to investigate problematic events or
phenomena; however, it is the process of inquiry that distinguishes the form of research. At the
end of the investigation are the explanations that enable us to understand the nature of the
problem. For instance, on its own, quantitative methodology would not employ a process that is
concerned about “underlying value system[s], including norms and conflicts which may be at the
core of problems identified” (Holter and Schwartz-Barcott, as cited by Morton-Cooper, 1993, p.
20). It is my opinion that these are the characteristics, in addition to an inclusive process, that
distinguishes action research from other forms.
To further support the mention of an inclusive process, I believe we are tasked as
researchers with the function of assisting stakeholders to define their problems and help them
develop solutions that overcome issues (Stringer, 1999). This was particularly evident in this
study, as I worked to understand the perceptible divide between non-profit’s and their financial
institutions. Furthermore, because the fundamental approach of action-based research is that
"cooperation and consensus making should be the primary orientation of research activity"
(Stringer, 1999, p. 21), it was imperative to make the effort to be as inclusive of the stakeholders,
the NPOs and Prospera, as was possible. The end result of this collaborative approach allowed
the representatives of both to define the complex challenges facing them, which then allowed us
to develop a systematic approach that helped address the problems (Berg, 2005, p. 197).
Research Methodology
This community-based action research approach primarily used a qualitative data
gathering method, though quantitative methods were also used to provide measurement and
ratings within the online questionnaire. The quantitative data gathering methods provided factual
and measurable information to address specific finance, resource, and organizational planning
questions. Within the context of the project sponsor, a financial institution, the use of both
qualitative and quantitative data gathering methods added credibility to the findings and
presented perspectives that would not be entirely possible by using a single approach (Palys,
2003). As stated by Palys (2003), the benefits of incorporating both types of data were beneficial
to the research, as it not only allowed me to explore the qualitative experiential finance-related
challenges, the quantitative approach allowed me to determine what the variables were for each
organization.
In order to determine what forms of financial products and services were required to meet
the emerging needs of non-profit organizations, four distinct areas were researched and
reviewed. The first area was to determine what the present financial needs of NPOs were and
how those needs could be most effectively addressed. The second area examined how Prospera
Credit Union, as a financial services institution, can serve in a leadership role to develop the
appropriate financial services to suitably attend to these emerging needs within the third sector.
The third area of research assessed the organizational proclivity of both parties to utilize newly
developed financial approaches through an introspective assessment of organizational culture.
The use of these multiple information-gathering approaches contributed to the trustworthiness of
the data (Glesne, 1999) and were used for the final stage where associations were drawn using
the results of the first three steps. From the results, recommendations emerged that are designed
to inform the development of the new policies to be integrated into the corporate social
responsibility mandate of Prospera Credit Union, which is under development as of the date of
this publication. The intent of this policy development will work to close the gap identified in the
literature review between the current and desired financial resources appealed for by enterprising
non-profits. It will also serve to fulfill the desire of Prospera to re-connect their corporate
perspective to their social, or cooperative, interests in the communities they represent.
The course of action abided by the cyclical nature of action research outlined by Jeffrey
Glanz (1998). As shown in Figure 1, the action research approach developed for this research
project included four steps, in addition to enriching the steps through continual reflection and
adjustment.
1. Focus
Ongoing
Reflectio
2. Data Collection
4. Take Action
n&
Adjustme
nt
3. Analyze &
Interpret Data
Figure 1. A Four Step Action Research Approach (Adapted from Glanz, 1998)
The four steps were:
1. Selecting a Focus
a. Knowing what you want it investigate
b. Question development
c. A plan to address the questions
2. Gather Data
3. Analyze and Interpret Data
a. How the data is collected and how it will be analyzed to determine the possible
answers to the research question

4. Take Action
a. The action phase addresses the challenges and accomplishments involved with the
development and implementation of a collaborative action plan
During all stages and prior to implementation the research team collectively reflected and
adjusted their analysis to ensure the recommendations reflected the most effective solutions
available in addressing the research problem.
Tools
The research study used unobtrusive data gathering activities as well as interactive data
gathering approaches:
Unobtrusive Tools
The unobtrusive data gathering for the research project originated with the literature
review (Chapter 2), where archival studies associated with the more recent financial challenges
identified by enterprising non-profits was completed. To further inform the unobtrusive data
gathering approach, data was collected through personal notes resulting from preliminary
research discussion with the project sponsor and the research advisory team. This approach
allowed me to capture personal thoughts and various anecdotal data, such as comments,
questions, or assumptions made by all research participants.
Interactive Methods
Utilizing the unobtrusive data gathering results, a preliminary assessment of limitations
specific to financial resources, as well as possible solutions was theorized. This data and the
proposed theories were shared and reflected upon by the research advisory team for further
refinement and eventual use in the composition of questions for the online questionnaire and the
individual interviews.
Questionnaire
The questionnaire was a mixed method of 33 closed and open-ended questions (see
Appendix A). The questionnaire was made available through an online invitation (see Appendix
B) that required acknowledgment of informed consent prior to completing the questionnaire. The
goal of the questionnaire process was to develop a context that eventually informed NPOs and
financial institutions about the different perspectives they hold. As stated by Stringer (1999):
The major purpose of the process is to achieve a higher level of synthesis, to reach
consensus where possible, to otherwise expose and clarify the different perspectives, and
to use these consensual / divergent views to build an agenda for negotiating actions to be
taken. (p. 45)
Within the online questionnaire were three main categories, defined as: organizational
information, organizational leadership, and non-profit financial information. The questions asked
were dichotomized into sub-categories that explored four areas related to organizational self-
sufficiency, organizational capacity, the acceptance levels of blending business-like revenue
generation with social objectives, and the general acceptance of capitalization of programs or
services through structured loan or investment products. Incorporated into the online
questionnaire, this framework helped to establish the different assumptions, values, attitudes, and
beliefs that form the understandings and realities held by the participants and the organizations
they represent. Furthermore, they established the foundation for the development of the
individual interview questions, which allowed me to further examine and refine a number of
online questionnaire findings.
Individual Interviews
The individual interviews were a one-on-one guided discussion involving seven EDs or
managers. Prior to the interviews, I informed the participants how I would use the information in
this research and that their participation was confidential. I also asked them to keep confidential
the conversation that occurred during the interview session. Before using the tape recorder, I
informed the participants of its use and asked for their consent. I also informed them that they
could abstain from questions or withdraw from the interview at anytime without prejudice. Upon
providing this information the participants were asked to provide their written acknowledgement
of having received this information on the informed consent form (see Appendix C).
The interviewees responded to seven questions, each having three to five additional sub-
questions (see Appendix D). All the questions related to findings within the online questionnaire
and were designed to further inform the research question and sub-questions. Serving as
interviewer, the interviews were conducted in person or on the telephone, depending on
geographic location and availability of the interviewee. For the in-person interviews I utilized a
tape recorder, as well as capturing key notes on each response to the questions. This allowed me
to maintain the conversational nature of the discussion while drawing out and ensuring a
comprehensive and balanced level of contribution from the interviewee. The maximum allotted
time for all the interviews was 45 minutes. The in-person interviews were held in locations
sensitive to the geographic disposition of the individual involved. Phone interviews followed the
same approach with the exception of recording equipment. This required a hands-free speaker
phone, which allowed me to take extensive notes.
The interviews addressed “a particular topic of interest or relevance to the group and
researcher” (Edmunds, as cited by Berg, 2004, p. 123). The questions that guided the topic of
conversation were designed around the research proposal and the aggregate data distilled from
the completed questionnaires. The questions themselves were developed in collaboration with
the research advisory team based on the collective analysis of the interview data. The individual
interview questions refined certain generalized findings within the online questionnaire and
provided data rich in views that provided insight on the norms, values and beliefs of the
organization and their relation to financial institutions. Through analysis I extracted questions,
observations, and assumptions that were explored during the interviews to distil a greater
understanding of what actions were needed in order for NPOs and the credit union to come
together with a common understanding upon which recommendations can be made.
This approach allowed me to hold a rich exploration of the stated beliefs, attitudes or
opinions of potentially divergent perspectives without identifying the original questionnaire
respondents. Patton (1997) supports the use of a one-on-one research approach, stating “the best
way to ensure pertinence and responsiveness is thorough direct interaction with evaluation
clients or stakeholders, facilitating their making decisions to represent their needs and interests”
(p. 247). This took the focus and potential pressure away from a group setting and allowed for an
unimpeded exploration of the stated opinions; opinions that may have originated from the
questionnaire but remained anonymous as it was raised with the interviewee.
Research Conduct
In order to implement the action research approach outlined above, careful engagement
of the processes was required as the potential for disturbing conscious or unconsciously aligned
social settings was a risk. Asking individuals to participate in a research study is not a common
occurrence and as outlined by Stringer (1999), “we are likely to engage approaches to work and
community life that are at odds with the general conventions of the institutions and agencies that
formulate the setting for much of our activity” (p. 62).
Balancing these situations while performing action research required a clearly defined
process for implementing the study. My approach incorporated and followed the principles
established by Stringer (1999) in order to build a clear understanding of the research focus while
developing critical relationships and trust that helped the participants move to a deeper
perspective on their organizational situation as it related to the research question (p. 62).
With a clearly articulated concept proposal as my discussion tool, I defined the purpose
of the research to familiarize the participants with the research context. The process for
establishing a connection with the appropriate research subjects required me to introduce myself
via e-mail. The participants were identified through their networked connection to the Fraser
Valley Centre for Social Enterprise, and were categorized based on the size of their operational
budget and social objective focus. I approached the EDs within these organizations and asked for
their involvement in the research (see Appendix B). During this process, I clearly established my
role as researcher, my position or bias as it related to the research and the individuals I asked, as
well as establishing the roles and expectations of the research participants. All groups contacted
who were willing to participate in the online questionnaire were also asked to participate in the
individual interviews. The interviewees were selected based on the sub-categories outlined in
Table 1 below, plus their interest and availability to participate in an interview.
Prior to completing the questionnaire, the participants were required to read and
acknowledge the free and informed consent page within the e-mail invitation (see Appendix B).
The acknowledgement of the informed consent was structured into the questionnaire as Question
1, which was a required response acknowledging consent. The online questionnaire would not
allow the participant to proceed without acknowledging this consent.
While the questionnaires endeavored to ascertain the norms, values and beliefs of the
organizations as they relate to the potential utilization of financial products and services to non-
profit organizations, the individual interviews explored the observations and assumptions
resulting from the questionnaire in an effort to determine the general levels of understanding
and acceptance of such a relationship between NPO’s and financial institutions.
Data Analysis
The data analysis phase of the research project was where I began the process of
organizing what the research advisory team and I observed, read and heard. As important
stakeholders in the analysis process, the intent was to collectively interpret the information
gathered to extend “their understanding of what is happening and how it is happening” (Stringer,
1999, p. 89), moving towards valued interpretations that resulted in a report that makes meaning
of what has been learned while allowing for significant action on the issue being investigated
(Stringer, 1999).
During this process I worked with the research advisory team to identify and describe
patterns, create explanations, pose hypotheses, develop theories about the data, and link all the
various components. This required categorization, synthesis, pattern making and interpretation
(Glesne, 1999).
Kirby and McKenna (1989) talked about data analysis techniques that can be used to
make meaning of my data:
The general analytical design consists of examining how data items and groupings of
data items generate specific and general patterns. This is done primarily through the
constant comparison of data items with other data items until sections that ‘go together
with’ or ‘seem to help describe something’ can be identified and located together in a
category file. (p. 130)
Based on the approach proposed by Kirby and McKenna (1989), I developed electronic
tags for the various components of the data to begin to map the themes and their connections,
“moving back and forth, between data and concepts, and between individual ideas and research
explanations to fully describe and explain what is being researched” (p. 129).
In order for the analysis to be manageable the data was divided into portions initially
based on the research question and later into bibbits. Kirby and McKenna (1989) suggested this
process and refer to it as: “The continuous process of comparison and linking of bibbits [that]
helps researchers to understand the specific and overall properties, patterns and relationships
between data and between groups of data. These form the initial bases of the analysis” (p. 135).
Once these bibbits were ascertained, I was able to define the connections and interpret how these
connections related back to the research question. After this information was assembled, I
utilized a data display approach to incorporate participant feedback into the analysis of the
qualitative work (Glesne, 1999). In order to make meaning of the data, presenting it to the
research advisory team helped to identify the elements that reflected potential cause and effect,
which “permits conclusion drawing and action taking” (Miles and Huberman, as cited by Glesne,
1999, p. 141). This allowed me to further theorize, map and develop themes that informed the
research question. The intent of this approach was to develop trustworthiness and a belief in the
outcomes that created a sense of ownership in them. This was important as the research then had
greater potential to be used and expanded upon within the organizational context being
researched.
The coding references were assigned to the research participants based on their
involvement with either the questionnaire or individual interview. For example, those
participants in the questionnaire received a code that began with the letter ‘Q’, indicating a
questionnaire participant, and were also assigned a numeric identity. For instance, the second
questionnaire participant that completed the questionnaire was assigned ‘Q2’. In order to
reference specific data, I added the number of the question to their personal tag, in addition to a
number designating which respondent within the question was associated with the specific
individual. I had to add this last designation, as not all respondents filled out every question,
and I had to be able to associate the individual to the appropriate response for each question
referenced. For example, Q2-27-1 tells me I referenced the second questionnaire respondents
statement in question 27, and the response happened to be the first comment.
The coding for those participants that were involved in the individual interview process
received one code that superseded the questionnaire code. This designation was also gender-
based, and was either an ‘F’ or an ‘M’. The second reference tag associated with their
designation told me whether I was referencing their questionnaire response, as in the
questionnaire, or if I was referencing their individual interview. The third tag tells me if I am
referencing a specific questionnaire comment, or a page number in the summation of the
interview. For example, F3-27-12 tells me that the third individual interview participant, being
female, is being referenced on Question 27 of the questionnaire, specific to comment number 12.
If the code was F3-S-4, I was referencing a statement made on page four of the individual
interview.
Project Participants
For the online questionnaire, the research participants were largely representative of non-
profit organizations in British Columbia; however, 37 total responses were received from
provinces across Canada. Response rate is discussed below in Chapter 4. Non-profit
organizations are diverse in their purpose and structure and to ensure the adequate representation
of this diversity in the subsequent interview process, nine non-profit organizations within the
group of respondents were selected and classified into three groupings based on their reported
operational budget levels and social objectives. As identified in Table 1, the categorization was
determined by classifying the social objectives of each organization into health, marginalized,
and poverty related reference groups. Their operational budget classifications were assessed
as those with an annual operating budget of less than $250,000; $250,001 to $500,000 and;
greater than $500,000.
Table 1
Categorization of Non-profit Organizations for Research Selection Purposes

Annual Operating Budget Health Marginalized Poverty
< $250,000 Group A Group B Group C
$250,001 to $500,000 Group D Group E Group F
> $500,000 Group G Group H Group I
In every instance the NPOs were represented by the ED or manager equivalent. The
selection was also based on expressed interest, availability, experience, knowledge and
appreciation of the research process. Applying Stringer’s (1999) criteria for inclusiveness, this
level of stakeholder involvement with individuals from each of these representative groups
ensured that the diverse views and experiences of these organizations was well represented as
they defined and explored the research question under investigation.
Through the creation of a research advisory team involving a non-profit sector
representative, a Prospera Credit Union representative and the researcher, the approach presented
a unique opportunity to link the social objectives of stakeholder interest within the two distinct
non-profit and financial services sectors. This afforded both a voice and created an advantageous
perspective that will develop a greater sense of trust, collaboration and ownership of the process
and its outcomes.
As summarized by Stringer (1999), “Community-based action research is a collaborative
approach to inquiry or investigation that provides people with the means to take systematic
action to resolve specific problems. This approach to research favors consensual and
participatory procedures” (p. 17). To develop a consensual and participatory approach, the team
assisted in all but the preliminary research orientation discussions. Following the initial
discussions, they assisted in all phases of the research, including questionnaire and survey
development, data compilation, analysis and action. This cross-sector representation was
essential to the successful acceptance and understanding of the research findings.
In the role of researcher, I was focused on facilitating and supporting these activities,
rather than determining their direction (Stringer, 1999). As well, it was my ethical duty to assure
that all research participants were treated with care. As the principle investigator who designs
and coordinates the research activities, balancing and combining these principles with the
advisory team required a mutual understanding both individually and collectively that ethical
considerations are the responsibility of all of us and can not be displaced onto the principle
investigator (Palys, 2003).
Ethical Issues
A number of ethical issues were considered with respect to this project. All are in
accordance with Royal Roads Ethics Policy (2000) and the Douglas College Research Ethics
Policy (2003c).
Community-based action research is a collaborative investigation that seeks to maintain
inclusive and full participation of an individual, community, or group while they extend their
qualitative understanding of a situation and move towards a specific action that will resolve the
problem (Stringer, 1999).
Respect for Human Dignity
As researcher, I was cognizant of this dynamic and was also mindful of the ethical
considerations associated with researching the commonly held values NPOs draw their intensity
from. Respecting these ethical boundaries while engaged in action research refers to the
principles “that guide the way we interact with research participants and the commitments to
safeguard their rights and interests” (Palys, 2003, p. 80). Respecting these boundaries was
critical to a successful interaction with the research participants and I was constantly aware that
my “ethical considerations should accompany plans, thoughts, and discussions about each aspect
of qualitatitive research” (Glesne, 1999, p. 113). Closely aligned with the values we espouse in
values-based leadership philosophy, an action-based researcher who is consciously and
emotionally aware of how these principles will affect the research participants has a better
understanding of how the social context will influence the responses during the process.
Respect for Free and Informed Consent
Working with the individuals in one-on-one situations presented some unique issues
relating to informed consent, confidentiality and inclusiveness. As mentioned, the complexity
and sensitivity of providing financial services to non-profit organizations covers a broad range of
traditionally held values-based opinions that may not support such services. In contrast, there are
proponents that support the emergence of enterprising non-profits and the exploration of
financial resources to support entrepreneurial growth. My ethical responsibility within these one-
on-one settings was to share these differing opinions identified within the questionnaire findings,
while encouraging continual communication and interaction in a manner that empowered the
research participant while respecting the right to their own individual opinion.
Respect for Vulnerable Persons
There were no vulnerable persons, as defined in the Royal Roads University Ethics
Policy (2000), participating in this study.
Respect for Privacy and Confidentiality

Associated with confidentiality, working with my project sponsor may have
presented perceived research issues associated with friendship. I have worked intermittently with
my project representative on a professional level for many years and our relationship has
strengthened due to overlapping activities within our community development work. This
relationship could have presented moments where “intimate information [may be] given…in the
context of friendship rather than researcher role” (Glesne, 1999, p. 121). Fortunately, this did not
occur as I was diligently committed to protecting confidentiality. I reiterated in at all stages of
the research activities what this relationship was, and stressed in writing and verbally in every
interview that confidential information relating to who the organization used for its financial
services was not needed. This was an important approach in developing trust. Confident that the
information I received at all stages was useful to the purpose of the research, I also consistently
stressed the meaningful value as a result of participation and protected that value "through a
shared understanding that their communication was, in fact, confidential" (Palys, 2003, p. 95).
This is particularly evident in the recorded interviews.
Respect for Justice and Inclusiveness
The research methodology I chose was effective in working with non-profit
organizations. In exploring sensitive organizational information relating to finance, using
individual responses and one-on-one interviews helped me avoid ethical concerns relating to a
group setting. Respecting that there was potential for ethical dilemmas as a result of sharing the
differing perspectives and organizational policy interpretations, it was an important realization
that regardless of the data collection method, complex challenges to my research required
flexibility in approach, guided by underlying principles consistent with non-profit organizations.

Addressing these challenges began with consideration of “the impact of our research
on the people whose lives we document” (Zeni, 1998, p. 14). In order to address these
challenges, my ethical perspective as a researcher was grounded in “an obligation to consider
things from research participants’ perspectives and to ensure participants’ rights are
safeguarded” (Palys, 2003, p. 83).
Although preparation and ongoing awareness are paramount, Smith (as cited by Zeni,
1998) broadened my point of view when he argued that “field research is different from the
usual experimental approach that many individuals, even responsible professional educators, do
not understand what…they are getting themselves into” (p. 15). As a result, I anticipated ethical
dilemmas associated with confidentiality, consent, inclusiveness, and balancing harm and
benefits.
Balancing Harms and Benefits
Participation in the online questionnaire or individual interviews were coordinated at the
participants convenience. The online questionnaire required approximately 20 to 25 minutes to
complete, and participation in individual interviews was limited to a maximum of one hour.
Follow-up e-mail correspondence and review of transcripts required no longer than 30 minutes.
All of these matters were taken into consideration when developing the online questionnaire and
individual interview questions.
Minimizing Harm
My personal bias is reflected in a desire to “produce knowledge that will benefit the
greater good” (Palys, 2003). Kirby and McKenna (1989) addressed the subjective nature of
action research in their reference to conceptual baggage and they emphasize the importance of
identifying when one’s own subjective thoughts, feelings and emotions “may be overly
influencing how your research is developing” (p. 51). What was important was to be able to
recognize when my own subjectivity might be harmfully influencing or interfering with the
research, rather than letting it unfold. While the research was unfolding, I maintained a conscious
awareness of my role as researcher and how I was interacting with the research participants. I
knew that if I was perceived to be influencing the research outcomes in favour of one sector over
the other, I was jeopardizing my objective position of neutrality and would have negatively
influenced the confidence of the research participants.
Maximizing Benefit
A copy of the research results will be given to all interested participants, made available
on the Fraser Valley Centre for Social Enterprise Website. As well, I have committed to
conducting a presentation for Prospera Credit Union once the study is completed.
Summary
In exploring the ethical considerations within community-based action research, I realize
it is not enough to look at a set of ethical guidelines; rather, it is important to be aware of our
own emotions, strengths and limitations throughout the research process. Although the
environment in which I operated as a novice researcher was uncertain, Palys (2003) reminded us
that our research must weigh the cost to participants against the benefits that may accrue (p.
104). Careful planning, conscious self-awareness and consistent reflection throughout the
research process helped minimize the potential issues and helped me ensure that ethical
principles were followed.
CHAPTER FOUR – ACTION RESEARCH RESULTS AND CONCLUSIONS

“There are five key variables that are absolutely critical in evaluation use. They are,
in order of importance: people, people, people, people, and people” (Halcolm, as cited by Patton,
1997, p. 39).
Study Findings
Despite the many challenges that were identified by the non-profit representatives, there is
no questioning the value of the contributions they make towards the betterment of our society
and the resourcefulness they display in doing so.
This study’s findings include data from 37 online questionnaires completed by EDs and
non-profit managers from across Canada, in addition to seven individual interviews where data
was gathered from EDs and managers within British Columbia. Following each stage, the
findings were reviewed with the research advisory team to discuss observations, synthesize the
data and identify themes. For the purposes of this summation, the ED and manager designation
in the NPOs will be used interchangeably.
Based on the research approach, the chapter is divided into two parts. Addressed first are
the findings of the online questionnaire, followed by a further exploration of those findings
during the individual interviews. In alignment with the structure of the questionnaire and the
interviews, the findings are contextualized within the broad categories of (a) organizational
demographics, (b) organizational trends, (c) organizational leadership, and (d) non-profit
finance-related findings. The findings are based on the contributions from both the questionnaire
and interview groups, with additional input from the research advisory team. Limitations of these
research findings are summarized to ensure subsequent discussion and recommendations are
practical, with consideration given to the methodology used and the demographics of the
population studied.
Questionnaire Findings
Utilizing the online network of the Fraser Valley Centre for Social Enterprise, the
questionnaire was e-mailed to 636 recipients across Canada. The dissemination of this
information and subsequent response was tracked using the e-mail tracking features of the
database management software. Along with the original e-mail invitation to participate, one
reminder e-mail was also sent at the beginning of the second week.
Of the 636 originally sent, 596 were delivered successfully. The difference of 40 represents
e-mails of addresses no longer in service. Of the 596 that were sent and received, 117 were
opened during the two business weeks the questionnaire was accessible for response. Of these,
37 respondents (N=37) completed the questionnaire using the survey link to Survey Monkey
embedded within the online e-mail invitation.
There was diverse representation of organizations that responded to the online
questionnaire, providing a balanced perspective for the research findings. Respondents had the
option of providing their name and organization and also had the option of responding
anonymously. Of the 37, 16 chose to remain anonymous and 21 provided their name and
organizational information. As a percentage of the whole (596), the response rate was 6.2%. As a
percentage of those who opened the e-mail (117), the response rate was 19.6%.
Demographics
The demographic data captured for each organization within the questionnaire responses
included their organization name, legal operating structure, location, number of employees,
segment of the population served, services provided, and annual operating budget. For those who
chose to respond anonymously, the organization name and location remained blank.
Registered charities and incorporated NPOs were representative of the majority of the
respondents. In reviewing the 21 identifiable responses, 19 were from B.C., with one from
Quebec and another from Ontario. The anonymous responses were not geographically
determinable.
The number of employees reported was categorized into full-time and part-time groupings.
There were 31 responses indicating full-time employees with 58% of these stating they have
greater than six employees. The remainder reported one to five employees. The part-time
employees have an opposite outcome, showing 66% of the 27 part-time employees were in the
one to five part-time employee categories, with the remainder showing greater than six
employees. The significance of this finding is that it demonstrates the majority of respondents to
the questionnaire are larger NPOs.
The segments of the population the non-profit organizations serve are all represented with
multiple responses (see Table 2), adding to a balanced perspective.
Table 2
Respondent Representation of Population Segments

Population Segment Response Percent Response Total
(N=35)
Community-at-large 71.4% 25
Youth 57.1% 20
Aboriginal 45.7% 16
People with Disabilities 45.7% 16
Women 45.7% 16
Business / Business Members 42.9% 15
People on Income Assistance 37.1% 13
People on Employment Insurance 28.6% 10
Senior 28.6% 10
Immigrant or Refugees 25.7% 9
People Involved in Criminal Justice 22.9% 8
Other 17.1% 6
Children and Family Services 11.4% 4
Francophone 8.6% 3
Total Respondents 35
(skipped this question) 2
It can be observed that the general needs of the “Community-at-large” received the greatest
level of overall response, followed by a relatively balanced response for all of the remaining
segments, with the exception of “Francophone” and “Children and Family Services”. There were
six responses in the “Other” category, where six additional segments were identified. They were:
Cooperatives; Tourism; Students; Health Professionals; Agriculture and Environment; and
Services for Men.
Similarly, every one of the 25 “Services Provided” category within the above population
segments have significant representation, as well as six additional services that the respondents
added in “Other”. Of note, three of the services provided were chosen at a level of approximately
3:1 over the remaining 22 services identified. In order, they were: Education and Applied
Training at 42.9%; Community Development Services at 42.9% and; Business Services at
34.3%. The respondents checked all services that applied to their organization which resulted in
150 selections amongst 35 respondents (two skipped the question), with a finding that signified
an average of 4.3 services per organization.
Within five possible ranges, the annual average operating budget was also determined.
Table 3 illustrates the ranges and the outcomes based on the respondents answers. Over one third
of the respondents report an annual operating budget of over $1,000,000. This finding
corresponds with the employee finding, where most organizations that responded are considered
larger in operational size.
Table 3
Average Annual Operating Budget

Operating Budget Response Percent Response Total
(N=32)
Less than $100,000 12.5% 4
$100,001 - $250,000 12.5% 4
$250,001 - $500,000 21.9% 7
$500,001 – 1,000,000 18.8% 6
Greater than $1,000,000 34.4% 11
Organizational Trends
The organizational trends were determined using 12 closed-ended questions (see Appendix
A). These questions include the demographic questions discussed previously, in addition to
asking questions about funding levels over time, their impact on program delivery, the sources of
funding received, and the changes in accountability associated with funding received.
Over the past ten years, 60% of the respondents thought their funding levels had declined
(see Table 4), with an additional 17.1% saying it has declined only somewhat. To the contrary,
22.9% felt funding levels had not changed.

Table 4
Confirmation of Perceived Funding Declines

Respondent Answer Response Percent Response Total
(N=35)
Yes 60.0% 21
No 22.9% 8
Somewhat 17.1% 6
I don’t know 5.7% 2
Organizational leadership was explored using categorization and rating systems in five
questions, in addition to one open-ended question on what EDs think is the most identifiable
organizational challenge today that non-profit leaders need to address when managing the growth
and development of their organization.
The EDs were first asked to share the frequency of organizational planning that occurs
within their organization. In answering this question 19 of the 31 (61.3%) respondents shared
that planning or operational reviews occur at least once per year, with eight of this group
performing reviews semi-annually and, in one case, quarterly. The remaining 38.7% shared that
planning occurs every three to five years, or as required. Five respondents skipped this question.
The questionnaire participants were also asked for their perception of what three
leadership qualities are the most important traits for effective leadership of non-profit
organizations (see Table 5). Choosing from a list of twenty traits, four of the traits in particular
were selected more frequently than the others. In order, they were: Team-builder (56.2%);
Entrepreneurial (50%); Visionary (43.8%) and; Integrity (40.6%).
Table 5
Identified Traits for Effective Leadership of Non-profit Organizations

Leadership Traits Response Percent Response Total
(N=32)
Team-builder 56.2% 18
Entrepreneurial 50.0% 16
Visionary 43.8% 14
Integrity 40.6% 13
Communication 28.1% 9
Resourceful 25.0% 8
Inspirational 18.8% 6
Competent 18.8% 6
Problem solving 15.6% 5
Financial expertise 15.6% 5
Trustworthy 15.6% 5
Politically savvy 12.5% 4
Goal oriented 9.4% 3
Empathy 6.2% 2
Disciplined 6.2% 2
Respectful 6.2% 2
Authentic 6.2% 2
Other 6.2% 2
Humble 3.1% 1
Decisive 3.1% 1
Demanding 0% 0
Using three separate tables, the participants were asked to rank themselves (see Table 6),
their board of directors, and their organization as a whole within six specific leadership situations
using ratings from poor to excellent, corresponding with a five-point scale. These six situations
provided a comparative association with the participants stated leadership, entrepreneurial
qualities, and financial management capacity to other areas of the questionnaire. In addition, the
responses provided a broader organizational context in relation to the capacity and operational
involvement of the organization as a whole.
Table 6
ED Leadership Capacity within the Following Leadership Situations

Leadership Situation Poor Fair Average Strong Excellent Response
Average
Fosters relationships with
philanthropic and public 0% (0) 0% (0) 21% (6) 55% (16) 24% (7) 4.03
partners – while balancing
authenticity and
professional development
Adapts to changing
management prerogatives 0% (0) 3% (1) 20% (6) 53% (16) 23% (7) 3.97
and techniques – while
honouring foundational
mission, vision and values
Ensures accountability and

lean operations – while 0% (0) 10% (3) 17% (5) 43% (13) 30% (9) 3.93
achieving significant
community impact
Anticipates and avoids

ethical dilemmas – while 0% (0) 0% (0) 20% (6) 67% (20) 13% (4) 3.93
implementing innovative
and often untried business
practices
Shapes a visionary future –

while responding 0% (0) 10% (3) 23% (7) 40% (12) 27% (8) 3.83
appropriately to emerging
challenges
Although the data shown only pertains to the self rating of the EDs, the situational
questions remained the same when rating the board of directors and the organization as a whole.
For every leadership situation, the EDs rank themselves highest in all categories. Of note, the
highest ED rating based on response average is related to the third situation of fostering
relationships with stakeholders. This corresponds with the most highly regarded leadership trait
of team-builder in Table 5. On the opposite end of the scale, the lowest self rating is the
shaping of a visionary future.
The EDs average rating for all categories is “Strong”. The range of responses to the six
questions, on a scale of one to five, is a low of 3.83 and a high of 4.03. The average response for
EDs and their leadership capacity within the leadership situations shown is 3.94.
The board of directors also received an overall rating of “Strong”. However, they are the
only group of the three to receive “Poor” ratings in all six situational categories. The range of
responses to the six questions, on a scale of one to five, was a low of 2.94 and a high of 3.44.
The average response for the board of directors and their leadership capacity within the
leadership situations shown is 3.29. The highest rated situational category was their adaptation to
changing management prerogatives and techniques while maintaining organizational values. The
lowest ranked situational category was related to fostering relationships with stakeholders that, in
comparison, were ranked highest with the EDs.
For the third leadership assessment, organizations as a whole, the ratings were all in
between the higher ED rankings and the lower board of director rankings. The average rating for
the organization as a whole is 3.68, with a high of 3.75 and a low of 3.53.
Non-profit Finance-related Information
Financial management is a complex issue within NPOs and the challenges associated
with the management of financial resources was explored in the online questionnaire (see
Appendix A). The questions consisted of 11 closed questions and three open-ended questions,
specifically designed to gauge perceptions relating to financial management ability within non-
profit organizations and the use of particular financial products and services.
Validating earlier findings that suggest the majority of respondents were larger
organizations, 34.4% of the respondents had annual operating budgets of greater than $1 million,
with an additional 18.8% operating at a level between $500,000 and $1 million per annum.
Furthermore, combined assets are greater than $500,000 for 41.9% of all respondents, with an
additional 22.6% of the participants revealing assets of $250,000 to $500,000.
The questionnaire participants identified several challenges relating to managing and
developing financial sustainability in their organizations today. Most evident was the uncertainty
of funding and the challenge of adapting to new funding realities through entrepreneurial
diversification while respecting the organizational mandate. Following closely to these two
findings, the lack of hard skills in financial management and planning was also identified.
Despite an indicated interest by the majority of EDs to explore loan products or other
repayable investments in the development or maintenance of products, services or programs (see
Table 7), a strong theme of resistance to funding diversification using products requiring
capitalization through loans emerged at the broader organizational and board level.
Table 7
Non-profit Perception to the Use of Loans

Response Response Percent Response Total
(N=32)
It might be appropriate under 28.1% 9
the right circumstances
I anticipate there would be 21.9% 7
strong resistance
We already utilize such 21.9% 7
services
Not appropriate at all 18.8% 6
We would seriously consider 9.4% 3
such an approach
Total respondents 32
In exploring the reasons for this perception of resistance, four identifiable themes
emerged from the consolidated data. First, a general lack of understanding of how such an
arrangement would work was cited. Second, a fear of indebtedness and the risk associated with
failure of the entrepreneurial idea. Third, the break from established or traditional non-profit
practices was remarked upon as a significant barrier. Fourth, the belief that non-profit services
should be free and not fee-for-service based.
In relation to services, one closed and one open-ended question (see Appendix A)
explored the current use of specific financial services and the products NPOs felt would be most
beneficial to their organization. Most organizations use what would be considered a standard
array of financial services. Demonstrated in Table 8, the most utilized services included
chequing, insurance, and credit cards. Of note, 37.5% of the participants have a mortgage, 9.4%
have a loan unrelated to the mortgage, and 40.6% of all respondents had a line of credit. Added
to the “Other” category were payroll services.
Table 8
Financial Services Currently Used by Non-profit Organizations

Financial Service Response Percent Response Total
(N=32)
Chequing 93.8% 30
Insurance (property, liability) 90.6% 29
Credit Card 68.8% 22
Line of Credit 40.6% 13
Investment Product (Term) 40.6% 13
Mortgage 37.5% 12
Overdraft Protection 34.4% 11
Staff RRSP Program 28.1% 9
Loan (not a mortgage) 9.4% 3
Other 6.2% 2
Equity Investment 3.1% 1
Identified by NPOs as the most desired offerings they would like to see from their
financial institution, the questionnaire findings showed four product and two service oriented
outcomes. Two products in particular were consistently mentioned: that being (1) low interest
and longer-term loans and no fees; or (2) low fee products such as chequing and payroll. On the
services side, the two most mentioned services included an account manager dedicated to
providing financial management advice and training, with packaged products and services
specific to each organization. The second finding was a desire to see greater interest on the part
of the financial institution to partner with the non-profit in conventional and unconventional
ways to help the non-profit meet its objectives. For example, providing services specific to the
needs of those with mental illness or who are less fortunate who need financial guidance and
assistance, in addition to more conventional support that includes greater sponsorship of non-
profit activities (F2-S; M1-S).
Interview Findings
Following the online questionnaire, seven individual interviews were conducted. The
individual interview data was gathered through two in-person interviews and five phone
interviews. The interviewees responded to seven questions, each having three to five additional
sub-questions, depending on the characteristics of their response. All the questions correlated to
findings within the online questionnaire and were designed to further inform these findings, as
well as the research question and sub-questions. The interview questions themselves were
developed in collaboration with the research advisory team based on the collective analysis of
the questionnaire data.
As part of the stated research approach, all of the interviewees represented at least one of
the population segments and levels of operating budget outlined in Table 1. All of the
interviewees were EDs or non-profit managers from within British Columbia. Six of the
interviewees were female and one was male.
The interview participants identified and refined several emerging challenges related to
the financial sustainability of the non-profit sector. The knowledge gained in relation to the
seven themes that emerged pertain not only to the NPOs, but to the perceived external
perspectives of NPOs and their relations with financial institutions. The seven themes are (a)
entrepreneurial traits and the source of organizational vision, (b) operational mindset, (c)
strategic and operational planning and how it is occurring, (d) challenges with organizational
sustainability, (e) non-profit financial management capacity, (f) the valuation of goods and
services, and (g) non-profit opinion of how they are perceived by financial institutions.
Entrepreneurial Traits and the Source of Organizational Vision
The first question posed of the interviewees asked what being entrepreneurial meant to
them. This question sought to refine the findings of the questionnaire where nearly all of the
respondents identified entrepreneurial characteristics as important leadership traits and had also
identified it as the second most important leadership trait in their ranking of 20 potential
leadership characteristics (see Table 5). The responses were consistent.
In four of the seven interviews the first response was that being entrepreneurial required a
business-like focus, with several statements similar to “when I think entrepreneurial…I think
business. And when I think business, along with that comes my notion of business owners and
what is required to make a business go” (F1-S-1). In all of the interviews the language was
consistent in supporting this mindset, suggesting in every instance that being entrepreneurial also
meant “looking for revenue generating opportunities” (M1-S-1). Revenue generation was a key
sub-theme related to sustainability and is discussed in more detail further on in the findings. In
addition to running the organization like a business and identifying new sources of revenue,
the participants also identified the management of existing resources as an important
entrepreneurial quality.
In my view, it means going beyond simply managing resources that somebody might
put in front of you. It's also not just taking the money somebody hands you and going and
spending it carefully, it's looking at what you can do differently with the money received.
(F6-S-1)
Discussion of entrepreneurism within NPOs also resulted in several descriptors that
helped recognize entrepreneurial qualities. For the participants, making the most of limited
resources required creativity, knowledge, innovative thinking, risk taking and vision. In relation
to vision, the source of organizational vision was a key finding associated with skilled
entrepreneurs and leaders, yet where vision is coming from within NPOs was divided. Three of
the interview participants felt that vision was a responsibility of the ED, while the remaining four
felt it was the board’s duty.
In all the interviews the participants felt the entire organization, and particularly the board
of directors, had a role in shaping the organizational vision. In one interview, the participant
suggested “the board provides the vision – I’m the one that has to be entrepreneurial and
implement the vision” (F3-S-16). Although three other interviewees support this in theory, their
organizational setting and those of the remaining interviewees suggests that in reality it is the
EDs, and sometimes the staff, that are creating the vision. A very straightforward assessment of
this finding comes from one of the interviewees:
Ideally, it comes from a combination of staff, board of directors, and members. In reality
it comes from the staff to the board for ratification, and then the expectation is that the
staff will ensure that the vision is maintained. (M1-S-4)
Other interviewees mirrored this opinion. “I struggle to even get the board to the
table to even develop a vision…If I asked the board members to recite to me what the vision
was, I don’t think they could do it” (F2-S-9).
Operational Mindset
The operational mindset was a distinct finding where the interviewee discussions evolved
from dialogue on the importance of entrepreneurial abilities and its relation to business aptitude
to more specific comments that NPOs have to operate as a business. One participant stated that
“Many non-profits are better run than for-profit businesses” (F6-S-5). In analyzing the
participant comments, the perceptions can be distilled into two distinct business approaches. The
first is a business-minded approach that is focused on operational accountability, financial
efficiency, and “knowing how to make the most of limited resources” (F3-S-1).
The second approach is more revenue-focused, looking to identify new opportunities and
ways to generate new sources of funds. This approach was associated with language specific to
addressing product and service accountability through the lens of marketability, other
competition, and customer service. Furthermore, these respondents were critical of NPOs who
fail to see the value of their products or services and suggest NPOs do not have a clear
understanding of this value and are too quick to give their services away.
They tend to want to give everything away, do everything for free, give more, and that
others should support what we're doing because it's a good thing to do. NPOs need to
understand that they have a product or service that they are selling to a particular
marketplace, and that they need to offer customer service and need to understand
positioning of that product or service. If your product or service is crappy, people stop
buying it. NPOs still have this notion that because we deliver the service, that's enough.
We don't have to offer customer service. We don't have to position a product. We don't
have to, because from a value perspective, we're doing a good thing, and I don't think a
good thing is enough. (F1-S-2)
More in line with the first approach and specific to NPOs that are health-related
service providers, a contrary opinion is the belief that core health providers should not be selling
their products or services to offset funding that they feel is a moral obligation of government to
provide. “I think that there is a moral responsibility of the government to pay for the service
because we are reducing the cost on the health-care system” (F2-S-8). However, this participant
supported the notion of a business-minded approach. “I’m a strong believer that not-for-profits
have to operate as a business” (F2-S-7).
Regardless of approach, all participants maintained that business and entrepreneurial
activities must be filtered through the lens of the operational mandate and adhere to the social
objectives of the organization.
Strategic and Operational Planning and How it is Occurring
Strategic and operational planning questions in the online questionnaire produced results
that showed 61.3% of the respondents did such planning at least once per year, and that the
remaining 38.7% did these planning activities every three to five years, or as required. This
finding stimulated discussion with the interview participants that suggested these findings were
erroneous. In exploring this view with the interviewees, it became apparent that strategic and
operational planning was occurring with all of them at least annually; however, not in the
traditional sense.
Two significant insights arose from these discussions. First, although the respondents
shared varying levels of concern about funding, all agreed that it was difficult to perform long-
term strategic planning activities as a result of the uncertainty associated with their short-term
funding agreements. “It’s most frustrating because you can’t really do any three to five year
projections on what else you need to be able to do if you can’t predict it [funding]” (F6-S-6).
The second finding was based on opinion that although formal planning sessions may
not be occurring in the traditional sense, short-term planning and operational objectives were
being captured on a regular basis through different methods and sources. Several interviewees
explained these views as follows:
I think most people are doing organizational planning multiple times per year. They may
not call it that because they didn’t have a formal facilitator on every occasion to do it. I
see it annually on a more formal basis, but also through informal processes throughout
the year. (F6-S-7)
I feel a little bit of a disconnect. It’s not that I am getting bad direction…I’m not seeing it
implemented in reality. With our organization, I find that the strategic planning
[objectives] come out in the minutes of our board meetings…and [annual] budget that we
do. (F3-S-10)
Although the feedback indicated that the process of planning “is not in a formal setting
with a paid facilitator” (F4-S-6), there was unanimous agreement that planning was necessary to
meet rising funding accountability requirements to maintain credibility with funders and
stakeholders. “It is critical. In my observation, it is more critical today than it was ten years ago.
Times are tough. Accountability is higher and resources, both human and financial, are less” (F1-
S-8).
Challenges with Organizational Sustainability
Organizational sustainability was a significant focus of much of the discussion with the
participants. Several findings arose that connect to all facets of non-profit operational activities.
Commentary focused heavily on funding and financial issues; however, prominent themes also
emerged around challenges within human resources, rising costs, accountability, and the impact
that becoming more entrepreneurial is having on traditionally held norms, values and beliefs.
Becoming more financially sustainable was described by one interviewee as “a continual
process of cultural adjustment” (M1-S-10). This adjustment aptly describes several issues
identified by the participants as challenges they are addressing when working to balance
funding requirements with non-profit ideology.
In cases where the participants have identified reduced funding as having a negative
impact on their programs and services, the pursuit of new sources of funding is causing
additional stress on the capacity of their organizations. They are spending a lot of time looking
for new opportunities, in addition to a lot time dealing with the administration of funding reports
for support they have already received; two activities that didn’t used to require so much
attention. “What happens is that person gets so immersed in all the financial stuff, because it’s
significant, that they don’t actually provide leadership for the service they exist for” (F6-S-4).
When asked how current demands on their time influenced the achievement of their
organizational objectives, the responses captured two additional, but different, impacts.
Yes, absolutely it is time. Not lack of interest or ideas – change takes time and effort that
we don’t have at the moment. Most of my time has to be focused on clients. I don’t have
as much time for program [and] project development as I used to. (F1-S-11)
Less focused on client delivery and more on meeting the expectations of funders, the
second participant responded to the question of demands on their time by stating, “That is a big
one with me, one hundred percent. I spend so much time doing administration and the reports
and writing proposals every year for the exact same thing, over and over” (F5-S-9).
The pressure to be more financially self-sustaining is also causing tension between those
with a traditional non-profit ideology and those who want to charge for their products or
services. One participant explained that, “we are fundamentally changing the kind of business we
do into something more sustainable” (M1-S-3). However, in the process of facilitating this
fundamental change, tension arose over non-profit ideology, causing a significant reaction.
“We’ve lost staff because they couldn’t embrace the idea that we shouldn’t be giving things
away free” (M1-S-2). In this particular case, the non-profit has now raised its earned revenue
to a level that represents 52% of their annual budget.
Discussion around reduced funding also clarified the challenges associated with funding
sources that are unpredictable, as well as the level of repetitive accountability associated with the
funding that is received. As mentioned, the challenge of strategic planning is made very difficult
when there are no long-term commitments from funders. “So here I am, my fiscal started April 1
and six months have gone by and I still do not have a commitment what my funding will be”
(F6-S-6). Without the ability to plan longer than 12 months at a time, the effort of trying to
become self-sufficient is a difficult task to accomplish.
The finding associated with accountability demonstrated a level of frustration with all of
the interviewees. In addition to the length of time previously discussed to deal with reporting in
general, several participants expressed dismay over having to report continuously to the same
funder over an extended period of time. “Why do you always have to justify your reason for
being, especially when your track record is so good for so long?” (F4-S-5).
Interestingly, a significant finding was that not all interviewees felt funding had
decreased. In fact, two participants felt that it had stayed static, or in some cases, increased. The
observation made by them was that although funding has definitely declined in some areas,
replacement funding is there if you look for it. Furthermore, they both pointed out that the
funding equation almost always overlooks the issue of rising costs. “Actually, it's very ironic,
because what's happening is we have been getting more money every year. The problem has not
been the dollars coming, the problem has been the costs rising faster than the dollars” (F6-S-2).
Combining the issue of costs with the desire to be more business-like, a second interviewee
shared with their board, “There has to be some changes, because the monies you have been able
to accumulate no longer support the services that you have [to deliver]” (F2-S-3). In this
case, a decision was made to shut down a program to address the increase in costs over funding
received.
The Valuation of Goods and Services
Another consistent finding with the interviews was that non-profit organizations that are
generating revenue on the sale of products or on a fee-for-service basis stated they could use
marketing and branding assistance, as well as help with the proper valuation of those goods and
services. Two observations in particular illustrate this finding.
[My] experience with not-for-profit has generally been that we like to think that we can
put something on the doorstep and because it is a good thing, people just snap it up
without realizing that there is a tremendous amount of competition with better products
and a better price. So, I think the discipline of marketing forces you to do the analysis of
the quality of your product and where it should fit in the marketplace. (M1-S-2)
NPOs need to understand that they have a product or service that they are selling to a
particular marketplace and that they need to offer customer service, and need to
understand positioning of that product or service. For a lot of NPOs it's about
understanding marketing and how you sell ideas and values. (F1-S-5)
Non-profit Financial Management Capacity
Addressing the development of financial capacity within their organization, the
participant responses were collated into two themes. First, the perceptible financial needs of
NPOs and, second, the non-profit skill sets required to lead and implement change.
In exploring the actual financial needs of NPOs, several important findings arose. Within
the interviews, discussion about loans to NPOs for the purpose of capitalizing or enhancing new
programs or services was met with a mixed response. Those participants supportive of such an
approach were nonetheless conservative in their views, suggesting that careful planning and
extensive risk assessments would need to occur in order to provide a “pretty good sense that the
borrowing the money would pay off” (F1-S-10). Nonetheless, if the business case was
convincing and the circumstances were right, another participant stated that they “would do
anything, even take out a loan” (F4-S-8), to secure the future of their organization.
For those organizations that were opposed to loans for such purposes, one finding
specific to a health services perspective was that they “don’t feel any type of circumstances
would justify taking out a loan” (F2-S-8). Furthermore, as was already stated, because they are
providing a core health service, they felt that “there is a moral responsibility of the government
to pay for the services” (F2-S-8). Unrelated to the health sector, a second interviewee felt the
best approach to capitalizing a program or service was “certainly not going and borrowing it”
(F3-S-4). They felt the development of financial resources needed to occur from within.
A second finding relating specifically to financial products was the provision of low, or
no cost banking services. This arose based on the perception that financial institutions do not
need to make the usual level of profit on financial services provided to NPOs serving the social
needs of the community. In one instance, a participant shared that they had taken out a
substantial mortgage and that over time they had paid four and a half dollars for every dollar of
principle they paid off during their term. “Financial institutions are making a fortune on these
mortgages. I really wish they’d identify . . . that they don’t need to make that much money on a
non-profit” (F6-S-8).
The second theme, non-profit skill sets required to lead and implement change, was
almost exclusively related to the financial management and analysis of non-profit operations.
The significant finding was that most NPOs are not able to properly account for their financial
situation and that this type of expertise is difficult for them to accommodate financially. Larger
NPOs that have this in-house expertise feel fortunate, with one participant sharing, “we could
hire someone who was virtually an accountant, and I don’t know how groups survive without
that resource” (F6-S-4). Similarly, a second interviewee stated, “that person is critical. When
we didn’t have that person it was impossible to make really clear management decisions” (F4-S-
4).
Another finding that was unearthed during the interviews was that most EDs thought
understanding the financials was not entirely their responsibility. The view was that different
levels of understanding were required at all levels of the organization. “It’s not just the senior
administrator or the board, it’s also the general staff. I think that if you can train your staff about
the financial operations of your organization, you’ll have a far stronger organization” (F2-S-5).
As a final point, the perception of these financial management findings and their
importance was also significant, in that the interviewee’s connected these responsibilities to their
operational accountability. “We have to be good financial managers because [there is] more and
more accountability for not-for-profits” (F3-S-6).
Non-profit Opinions of How They are Perceived by Financial Institutions
Pertinent to the research, several themes emerged when I asked NPOs how they think
their financial institution views their organization and their ability to manage their financial
resources. The majority finding of the interview participants was a sense of indifference from
their financial institution. Interestingly, a mirrored theme was discovered in the NPOs thinking
of the financial institutions.
In a representative context, the majority of the interviewees expressed a minimal opinion
of how they felt they were perceived by banks in general, simply suggesting “they are too big
and we are too small, and that is all there is to it” (F5-S-7). Or, more concisely, that NPOs “are
small potatoes and not worth the time” (F1-S-9). When further questioned as to why they felt this
was the case, it was stated that “I don’t think we are on their radar-screens, but I don’t think they
are on ours” (F1-S-9). More indicative of four interview accounts of negative interaction,
one interviewee stated; “I mean, the person we talk to is way off in [a city] and I hear from him
once a year asking for financials, and that is it” (F5-S-8). One decades-old non-profit
organization changed banks and withdrew hundreds of thousands of dollars when they requested
a mortgage approval and were told it would take two months to review because they were a non-
profit organization (F3-S-6).
When asked if there were any services that could be provided by a financial institution
that would be deemed beneficial to their non-profit organization, an important insight surfaced.
All but one interviewee had the view that financial institutions “could probably provide more
sensitive financial management support” (M1-S-4). This opinion was common and more
succinctly stated by another participant who stated, “I need a nonprofit account manager at the
bank” (F3-S-6). In exploring this finding, it was apparent to these participants that the financial
institutions are ignoring a key market segment, and that having a designated service
representative who understood the non-profit sector would be a valuable asset that would be a
financial benefit to both the non-profit organizations in this study and the financial institution.
Study Conclusions
The following conclusions are the result of maintaining a research focus on finance-
related resource needs and leadership skills within NPOs. This was achieved through a review of
literature on the traditional role of NPOs, corporate social responsibility, organizational culture,
and organizational leadership. These were in turn combined with the findings from the
questionnaire and interview responses, in addition to critical input and refinement from Prospera
and my research advisory team. There are six fundamental conclusions as a result of this study.
The conclusions of this study encompass organizational culture viewpoints, finance-related
perspectives, strategic and operational views.
Conclusion #1
Although all the research participants professed to have the need to run their organization
more like a business, not all NPOs have organizational cultures that want to be enterprising.
The conclusion is based on the difference in organizational culture between traditional
and enterprising non-profits. This becomes clear when one compares the ideology that supports
the findings of the traditionally held norms, values and beliefs of conventional NPOs and the
emerging values and entrepreneurial focus of enterprising non-profits.
The Ideological Difference
The research findings corroborate the literature (Dees et al., 2001; Paine, 2003), and
clearly show that those NPOs with an organizational culture based on traditional non-profit
values feel compromised when revenue generation through the sale of products and services is
suggested or introduced into the organization (F6-S; F3-S).
When the question of generating new sources of revenue through the sale of products or
services within a non-profit was raised, several of the participants stated they do not believe
NPOs should be required to earn revenue to meet their social objectives. “NPOs don’t generate
income from activities” (F1-23-1). The importance of this conclusion is recognizing that these
cultural challenges to a non-profit’s norms, values and beliefs do not preempt the desire to be
more business-like and develop resources that will help the NPO become more financially self-
reliant.
Differentiating Between Entrepreneur and Enterprising
The research demonstrates that regardless of the ideology, the desire to be
entrepreneurial exists within all the non-profit organizations in this study. As such, the
understanding and use of the word “entrepreneurial” must be defined for each approach in order
to gain a better appreciation of the differing organizational cultures. “There is a lack of
understanding of what it means to explore a more entrepreneurial approach” (Q9-23-4).
According to the findings, NPOs that believe they should not be generating revenue
through their own products or services nonetheless state that they have to be entrepreneurial in
their operational activities. For those with these traditional principles, an entrepreneurial business
approach equates to maximizing resources, as well as “advice on how to better utilize banking
services; advice on financial management policies and procedures; and funding for building
organizational capacity around financial management” (A-25-3). As such, this is a business
approach that considers being entrepreneurial as better utilization of existing resources and the
development of general and financial management skills to achieve greater operational
efficiency.
NPOs that are striving to become more self-sufficient through revenue generating
activities that include their own products and services also believe that they are being
entrepreneurial. The difference in this non-profit culture is that their understanding of being
entrepreneurial includes the identification of earned revenue opportunities that are independent
of external funders and directly attributable to their own revenue generating initiatives.
In summary, although both philosophies espouse their entrepreneurial nature, the
differentiator of the two organizational cultures lay in their operational approach. One is
entrepreneurial in how they maximize their resources to achieve optimum efficiency, and the
other is entrepreneurial as a result of being enterprising in their pursuit of new sources of
revenue.
Conclusion #2
As a result of the study and its correspondence to the literature review, there is no
uncertainty in concluding that there is reluctance for financial institutions and NPOs to come
together in a financial relationship (Dees et al., 2001; Scott, 2003). Regardless of the call from
the Federal Task Force (Government of Canada, 1998c) that identified that there are expectations
of financial institutions to respond in a leadership role to help strengthen the abilities of non-
profit organizations, some NPOs indifferently responded that they “simply don’t see them as a
resource in that way” (F6-S-9).
However, as the findings are unanimous that NPOs wish to become more business-
minded and financially adept, their relationship with their financial institution is going to require
a more sophisticated level of support and involvement. The challenge associated with this
observation is the perceived indifference of financial institutions to work with NPOs, in addition
to the mutual sentiments expressed by the NPOs in regard to the financial institutions.
Nonetheless, there were three examples within the study of NPOs working successfully with
their financial institution (F1-S; F3-S; F6-S).
Interestingly, the initiator of all of these arrangements came from the individual NPOs.
All were significant in financial commitment and had a significant impact on the community
they were serving. In addition to the worthiness of the proposed deal, the common denominator
was a willingness on the part of the financial institution to structure the appropriate products and
services to make the relationship work. In one example, the regional vice president of a major
bank flew to a community to structure the arrangement himself (F1-S-3). Although not a
common scenario, it is apparent in the research that this level of responsiveness is
recognition of a market opportunity beneficial to both parties.
Conclusion #3
Capitalization of non-profit ventures is less of a demand than identified in the literature
review findings.
This is a significant conclusion as it tempers the assertion in both the Canadian and
American academic literature that access to capital is a major barrier to the growth and
sustainability of NPOs (Gannitsos, 2003; Dees et al., 2001). The conclusion does not intend to
state that there is no need for such support; it is an assertion that the profundity of the need is
confined to enterprising non-profits that are fully engaged in revenue generating activity with the
understanding and support of their board and staff. For those that would consider it, the study
suggests that this type of financial support is a minor consideration for these respondents and
would only be acceptable under ideal circumstances (F1-S; F5-S).
However, within this observation it must also be noted that the results also show 37.5%
have mortgages, 9.4% have loans, and 40.6% have a line of credit (N=32). This supports the
finding that while external capitalization of ventures to generate new sources of revenue may not
be the most desired means to achieve self reliance, there appears to be a tolerance of loan-related
commitments for real estate and working capital. When asked why these were acceptable
vehicles for debt versus capitalizing a new product or service offering to create a new source of
revenue, the respondents were quick to point out the perceived risk of the enterprise failing, the
associated indebtedness as a result, the general lack of knowledge to start a venture, and the
perceived personal liability of directors associated with failure (Q9-23-4; Q13-23-9; Q15-23-11).
Conclusion #4
NPOs desire mainly service-oriented support from financial institutions versus
product-oriented support.
The literature review identified that lack of business and financial management expertise
presents key limitations for most organizations in their desire to become more self-sufficient
(Gannitsos, 2003; Dees et al., 2001). This study supports that contention, and identifies that this
expertise is a capacity building opportunity that NPOs would welcome from their financial
institution, as illustrated by the following findings:
They [NPOs] aren't getting appropriate analysis. They aren't getting appropriate guidance
on a regular basis, on terms of how they are structuring their expenditures, their methods
of delaying the processes they're involved in in an accounting fashion to show a more
accurate financial statement (F6-S-4).
Non-profits need to learn how to be more sustainable, how to come up with innovative
ideas, understanding financials themselves, and end one of the big wonders, how do the
banks actually even work to help you with making money on your money (F5-S-3).
Nonetheless, as outlined in the following paragraphs, the study adds other service-related
observations.
Desired Services
For the research participants, the services desired are delineated into two distinct types of
assistance. As stated above, the first was identified as training or a sharing of knowledge to
develop the financial management capacity of NPOs. The second is customer service from the
financial institution that understands that the non-profit sector has legitimate business
requirements and that the NPO requires guidance to structure the appropriate financial products
and services. “The number one thing is trained staff who understand not-for-profit needs” (F3-
25-11).
Desired Products
In addition to service, NPOs stated that the provision of financial products remains
relatively basic, yet all felt that low, or no fee products would help to maximize the resources of
NPOs as they try to address important social issues within the community. The majority of the
NPOs recognized that the provision of these products does not have to be free; nonetheless, they
question the current level of profit being made on services provided to the non-profit sector.
As an example, one participant shared that they had secured a mortgage of $5.6 million at
5.6% per annum. In the first 10 years, they will have contributed $4.5 million in principal and
interest on that mortgage and will have paid down their principal by slightly over $1 million. The
respondent questioned the financial institutions need to make $3.5 million in 10 years, while the
non-profit increased the equity in the property by only $1 million (F6-S-8). Interestingly, another
example repeated this scenario almost exactly, yet the financial institutions’ response in this case
was to provide the mortgage at 3.75% off the posted rate, while also packaging the agreement
with free chequing and payroll services (F1-S-6).
Conclusion #5
As a result of short-term funding and uncertainty with funding in general, strategic and
operational planning is occurring through more informal processes. The importance of this
conclusion relates to the research findings where it was indicated in the questionnaire that
strategic or operational planning is occurring infrequently with 38.7% of the respondents. Given
the importance of operational planning identified consistently in open-ended feedback, the result
appeared unusually high. Even the non-profit response to this finding was disparaging:
But first, let me just say that if I was in a financial institution that was providing any kind
of funding or loans to [non-profit] organizations, I would want to make damn sure they
were assessing their environment on a fairly regular basis and that I wasn’t funding a
dinosaur. (M1-S-6)
After several discussions with interviewees, it became apparent that although planning
was not occurring in the traditional sense of formal retreats and facilitated discussion, NPOs are
indeed assessing and capturing the strategic information they need to make critical operational
decisions. As discussed in the findings, it is occurring through less formal instances of budget
planning and monthly staff meetings (F5-S; F3-S; M1-S; F6). The reason for this approach is the
uncertainty of funding levels and the duration of funding contracts that do not allow for a long-
term perspective. As well, NPOs have a hard time justifying the time and cost of formal planning
sessions that are largely limited to a one year window of thought. “Every year they had to shake
everything down and sort of redesign the organization. It was a very chaotic planning process”
(M1-S-6). The result is a short-term operational focus versus a long-term strategic focus. As it
relates to the research approach, this is particularly challenging from a financial management
perspective and in the development of financial capacity within the organization.
Conclusion #6
The financial sustainability of non-profit organizations is being challenged by reduced
and uncertain funding, increased operational costs, increased accountability, and tension between
traditional and enterprising non-profit values.
With the majority of the research participants agreeing that funding support has decreased
and accountability has increased, it would appear that the literature is correct in stating that
NPOs need to become more self-sufficient as the sector becomes increasingly complicated (Dees
et al., 2001). Yet, the research study also shows that the move towards enterprising self-
sufficiency is not the only approach being adopted to respond to these operational challenges.
Operational Approach: Resource Management or Enterprise Development
The approach to dealing with sustainability issues encompasses many of the findings and
conclusions previously stated. For example, sustainability issues incorporate organizational
culture, strategic and operational planning, financial management, and financial products and
services because of the way it is being addressed operationally. As a result of the study, it is
apparent that non-profit organizations are addressing sustainability issues in one of two ways.
The first approach concentrates on resource management. In this instance, sustainability
is more an issue of maximizing resources, both financial and human. This is a response that also
pushes the integration of services, even collaborating with like-minded organizations to share
resources and infrastructure costs (F1-19; F6-27). In short, it is about maximizing existing
resources to increase operational efficiency.
The second approach is more of a sustainability issue associated with balancing the
operational mandate while creating new revenue generating initiatives. This is a delicate
adaptation that one participant described as a “broad approach to revenue generation in
accordance and respect to our mandate and mission” (Q3-27-11).
The importance of recognizing that there are two equally represented approaches is that
they both embody what the NPOs consider a business-minded approach; one characterizing
resource management qualities; the other more enterprising qualities. Equally important, the
opportunity to provide financial and business management assistance and specific products and
services is available to both, so it will be important to both the NPOs and the financial
institutions to recognize the business approach being utilized by each, as they will have different
needs.
Conclusion #7
Specific to enterprising non-profits, marketing assistance and the valuation of goods
and services is sorely needed. In the words of one participant, the creativity that comes as a result
of enterprise development must be “in tune with the marketplace” (F3-S-3). Although simple in
principle, the reality according to the research findings is that most NPOs have a poor sense of
the value of their goods and services, and an even worse sense of how there product needs to be
positioned in the marketplace (M1-S; F1-S).
The prevailing thought from the study was twofold. First, non-profit organizations don’t
have the skills to valuate and market their offerings and, second, that they don’t need to because
people will buy their wares because it is the right thing to do.
Enterprising non-profits that are enjoying earned revenue that represents a significant
portion of their operating budget strongly disagree, suggesting on behalf of all successful like-
minded groups that there is tremendous competition out there. Furthermore, they suggest that if
NPOs truly espouse a business approach, they need to create a business space that aligns them
with the correct market, offering competitive products and services, supported with appropriate
customer service, while providing the bottom-line accountability that goes along with running
any business (F1-S-2).
Scope and Limitations of the Research
Although this study has provided insight into non-profit perceptions of emerging
challenges within the sector, several limitations must be identified regarding the methodology
and target population.
Methodology
The online questionnaire and individual interviews were limited to four factors related to
non-profit organizations. Other factors, such as a financial institutions perspective of non-profit

organizations, communications, organizational change, and systems thinking may have
influenced a different outcome to the study.
The questionnaire was disseminated online through a social enterprise centre using the
database of a nationwide non-profit network. This largely impersonal approach may have
negatively affected the response rate. In the second stage of data collection, the individual
interviews were too loosely structured and allowed for a plethora of story-telling. Despite some
excellent data as a result, a more concise approach would likely have captured the same
information.
Target Population
The diversity of the non-profit organizations and the services they offer provided for
generalized findings that limit the scope of this study as it relates to the specifics of enterprising
non-profits. The study could have been targeted more specifically to enterprising non-profits,
which may have resulted in different findings.
Considering the sector being explored, the absence of research questions specific to the
impact of volunteer capacity, or expertise, as a leveraged resource within non-profit
organizations was a possible oversight. The significance of volunteers is important within NPOs
and exploring available capacity within the volunteers could have influenced the scope of the
findings.
A possible limitation to the study, the majority of the respondents represented larger non-
profit organizations. This may restrict the applicability of the findings to such groups, as the
influence of smaller non-profit organizations may have also resulted in different findings and
conclusions.
Conclusion
Although the data was representative of a generalized sampling of NPOs and not
specific to enterprising non-profits, the data gathered offered valuable insight into the
perceptions and views of the challenges facing the resource development of this sector. Some
data confirmed literature review findings and other data added new perspectives on the emerging
needs of NPOs.
These findings all addressed the research question and sub-questions, and will aid
Prospera Credit Union in designing sector specific financial resources that will maximize
resources, support enterprising interests, and build capacity to meet the complex needs of NPOs.
Financial solutions called for tailored products and services sensitive to the unique
circumstances of NPO operations. The resources identified pertained to dedicated account
assistance with access to financial management training to build NPO capacity. Beyond access to
capital, NPOs are looking to these resources as an answer to the long-term sustainability of their
organizations. This will allow the NPOs to overcome organizational challenges associated with
generally inadequate financial management aptitude. The efforts to build this proficiency will
involve close contact between NPOs and Prospera, and may build a greater understanding and
awareness of each that adds to the organizational culture of both. In both instances, the actions
and their outcomes will have measurable social and economic benefit to the organizations and
the community’s they serve.

CHAPTER FIVE – RESEARCH IMPLICATIONS
Study Recommendations
“When a company reinvents itself, it must alter the underlying assumptions and invisible
premises on which its actions are based” (Goss, Pascale and Athos, 1998, p. 86).
In addressing the research question: What innovative financial solutions and resources
are required to meet the emerging needs of enterprising non-profits? A series of
recommendations have been developed for Prospera’s consideration. These recommendations
concentrate on internal and external opportunities to the research question, in addition to
recommendations on potential mechanisms to do so. These recommendations are intended to
reflect only one of several components of Prospera’s developing CSR strategy.
As a financial institution, Prospera has a perspective on community that enjoys the
competitive advantage of being more attuned to local issues as a result of a credit union mandate
that is strongly connected to the values of the communities in which they operate. In order to
advance this perspective, Prospera’s adoption of a formal CSR mandate will provide the
opportunity for enhanced community engagement. However, this will require a new
organizational mindset, the introduction of new initiatives, and the tools and leadership to assure
meaningful implementation. The success of their CSR mandate will be determined by how
Prospera differentiates itself using its unique organizational capabilities to the benefit of the
community. Although the CSR mandate will encompass ideals beyond assistance to the non-
profit sector it is recommended, within the limited scope of this research, that their CSR
initiative leverage what they are already good at to strengthen the non-profit sector; that being
financial management expertise and the provision of financial resources.
Although the following recommendations are sequential, they are categorized into
internal and external applications, in addition to potential mechanisms and the leadership
required for achieving these objectives. The internal recommendations are specific to what
Prospera can do within their organization to facilitate the following recommendations, without
abandoning the systems and tools familiar to their operational context. The external
recommendations reflect how Prospera can connect their financial expertise and resources to
capacity building activities within the non-profit community. The recommendations within the
mechanisms and leadership segment represent the required tools and guidance that connect the
systems and theories with actionable strategies.
Internal
Recommendation 1
Create a non-profit or CSR account manager position within Prospera’s CSR operating
structure with the responsibility of developing the financial resource capacity of non-profit
organizations, as well as actively structuring financial packages and services specific to
individual non-profit needs. This recommendation originates from the overwhelming response
from NPOs specifically appealing for this level of support from their financial institution. When
participants were asked “If your financial institution was to provide financial management
training to your organization would that be of use, and what would your expectations of this
training be?” one respondent summed up the majority by stating: “If the financial institution
had it to offer, I think it would be awesome” (F4-S-4).
The capabilities of a non-profit account manager must match the needs of Prospera’s
CSR objectives, while also understanding and supporting the financial resource needs of the non-
profit sector. Although this role is related specifically to voluntary sector support and
involvement, it will be most effective when integrated into the organizational management
structure, where managers and leaders across multiple departments can learn and find ways to
integrate and support CSR objectives into their own departments. Developing the capacity across
several managerial roles simultaneously is described by Adizes (2004) as an optimal approach to
maintaining balanced organizational growth that mitigates against problems and eliminates
isolation felt by managers developing new roles on their own.
Recommendation 2
Create a new pool of capital through the establishment of a community investment fund
where individuals and organizations can make contributions to programs that support
investments in socially responsible community projects.
Often defined as the practice of socially responsible investment, the purpose of
developing this kind of investment vehicle is to promote investment that integrates
environmental, social and economic value with measurable returns (Emerson and Bonini, 2004).
Some unique suggestions arose as a result of asking research participants what financial
resources, services and products could be provided by their financial institution to help meet the
social and financial objectives of their NPO. For example, one questionnaire respondent
suggested financial institutions could “underwrite a percentage of customer service fees that
would guarantee long-term investments for these clients into our services and programs” (A-32-
15). The American Express example provided above is an example where American Express
donated $.03 to Share Our Strengths (SOS) hunger relief efforts very time an American Express
card was used during the holiday season, resulting in a $16 million contribution to SOS
(Andreasen, as cited by Dees et al., 2001, p. 243).
Similar mechanisms could be developed by Prospera. Limited only by imagination,
several examples exist across North America where communities and financial institutions have
developed collaborative community investment mechanisms where the benefits of financial gain
are invested into social projects either directly, or through non-profit intermediaries (Dees et al.,
2001; Hollender and Fenichell, 2004).
Recommendation 3
Develop appropriate social and economic measurement tools in order to monitor progress
specific to assistance provided to the non-profit sector.
In order to measure the activities and benefits of supporting the non-profit community, it
will be necessary for Prospera to understand what it is it wants to measure, or the process will
become vague and success difficult to determine. “If the principles of social responsibility define
our goals, then we need milestones to tell us how far along we’ve gotten in achieving them”
(Goodell, 1999, p. 66). The importance of measurement will allow Prospera to demonstrate its
commitment to its stakeholders through clearly illustrating how it has transformed its values
ideology into measurable outcomes that have resulted in a positive social impact.
Although there is no universally accepted tool for measuring social impact, several
methods exist to measure social return on investment. The selection of the measurement tool will
depend to a great extent on the final content of the CSR mandate that is created by Prospera.
Regardless, “performance measurement is about learning, and learning how to get better”
(Enterprising Non-Profits Program, 2005, p. 116). Also important, as pointed out in the
literature review on corporate social responsibility, several studies convincingly demonstrate that
there exists a profitable connection between CSR and long-term shareholder performance
(Greider, 2003; Hart, 2005; Hollender and Fenichell, 2004). Although deemed a long-term
benefit, the economic outcomes must be measured as well, as it will complete the measure of
performance to total investment made.
External
Recommendation 4
Support and partner with existing community-based organizations currently providing
financial management training. For example, in the Lower Mainland and Fraser Valley, the
United Way provides periodic financial management training to non-profit organizations.
Although the United Way is not the only organization to provide this service, it is representative
of an opportunity for Prospera to offer enhanced financial management training; an area deemed
by the research participants as vital to the future of running a successful non-profit organization
(F3-S). Prospera could add significant value to these non-profit training initiatives through the
provision of personnel and training materials, allowing Prospera to remain close to its functional
expertise and service interests while meeting its CSR objectives.
This approach allows Prospera to assist the host organization while helping to build the
financial management capacity of multiple NPOs. In the process, Prospera builds reciprocal
understanding and awareness within the non-profit community, while also promoting other
products and services designed specifically to serve the financial and operational needs of the
non-profit sector.
Recommendation 5
Within the province, become actively involved in existing economically aligned social
transformation initiatives related to new sources of financial capital and policy development for
the social sector.
As demonstrated by the literature and the research findings, the sustainability of the non-
profit sector is being challenged by unpredictable funding policies. Scott (2003), describes the
impact of changes in how NPOs are funded as a threat to the very future of many non-profit
services, describing many organizations as “financially fragile because they are now dependent
on a complex web of unpredictable, short-term, targeted project funding that may unravel at any
time” (p. 3). The majority of the research respondents within the questionnaire and interviews
stated that their non-profit organization does not have the financial management expertise and
resources to knowledgably address these issues (F5-S; F6-S). In one response to the online
question that asked respondents what financial resources, products or services could financial
institutions provide to help you integrate the social and financial objectives of their non-profit
organization, one respondent stated: “Advice on how to better utilize banking services, as well as
advice on financial management policies and procedures and building capacity around financial
management” (A-25-3).
In response, several initiatives and organizations have been formed to address the social
and economic challenges associated with their funding and operational strategies, such as the BC
Social Economy Roundtable. These formal institutions recognize that the development of non-
profit financial capacity requires new relationships that include stakeholders with the ability to
help develop operational and financial management skills (Dees et al., 2002; Scott, 2003). As a
result, these institutions welcome the interest and expertise of financial institutions as
important stakeholders to the development of non-profit capacity.
Involving itself in the exploration of new sources of investment for social innovation,
Prospera will put itself into the position of broadening its CSR position and understanding as it
relates to financial resources and the non-profit sector. Several important dialogues are occurring
within the province, including the Enterprising Non-Profits Program, the BC Social Economy
Roundtable, the Canadian Community Economic Development Network, and the Fraser Valley
Centre for Social Enterprise, to name but a few. These networks have forged strategic alliances
and developed a wide network of investment partners, leveraging more skills and resources into
the Province. The network includes government, social enterprises, financial institutions, NPOs
and businesses, and many would welcome the additional capacity offered by Prospera.
Mechanisms and Leadership
Recommendation 6
Provide customized loan finance to non-profit organizations and social enterprises that
have been excluded from other forms of mainstream finance.
Within this recommendation, Prospera will have to develop a context to assess the risks
of lending to non-profit organizations that have unconventional and inconsistent funding sources,
minimal assets, and a complicated legal structure. The problem is “not that there is a lack of
capital, but a problem with the system of capital allocation” (Strandberg, 2006, p. 4). This will
require a complex set of negotiations between Prospera’s social aims and its concern to remain
financially viable, while negotiating the tensions of developing new loan products that are
outside the realm of traditional risk acceptance.

Dees et al. (2001) and Gannitsos (2004) stated a heightened need for access to
finance-related capital, yet the research outcomes determined the need for loan finance was not
as widespread for this region as the literature suggested. However, several of the research
participants stated they would consider a loan product for the development of a social enterprise
activity should the loan have a flexible repayment structure and lower interest rate (F6-S-8).
Recommendation 7
Create a micro-loan program as a fundraising support mechanism to help organizations
who want to help themselves. Referenced hereafter as the fundraising assistance program, the
purpose is to provide short-term micro-loans and organizational expertise to the fundraising
initiatives of non-profit organizations active in the voluntary sector. This approach alleviates the
concerns of NPOs who do not wish to establish programs or services through borrowed working
capital, but who would entertain short-term financing to purchase more attractive prize offerings.
One study participant supported the short-term lending approach, as they acknowledged they
don’t have the extra resources to invest in more sophisticated fundraising initiatives: “How else
do you get started when you don’t have the money financially to start it?” (F5-S-4).
Most community based non-profit organizations lack the necessary monetary capital to
purchase a marketable and attractive item for their fundraising initiatives. In most cases,
volunteer-driven groups must therefore rely on less inspiring fundraising methods to raise money
for their group. As stated by one research participant: “When you’re going after funding, you
have to have a purpose for that request. If you can’t do that at a corporate level of understanding
or planning, you’ll fail. Bake sales and 50/50 draws don’t hack it today” (F2-S-5). Addressing
this need, the fundraising assistance program could provide financial assistance to purchase
items of greater value and marketability.

This is a service that currently does not exist in Canada. It would be an innovative
response to meeting social sector needs by Prospera, a financial institution, as called for by the
Task Force on the Future of the Canadian Financial Services Sector (Government of Canada,
1998c). Fundraising support of this nature would be a distinct service for non-profit
organizations and would allow the fundraising assistance program the opportunity to provide
competitive lending structures to suit each individual group while maintaining a focus on profit
for both the non-profit organization and Prospera.
As most fundraising initiatives require approval from the applicable provincial gaming
commission or licensing body, micro-loans could be structured around the available window for
marketing ticket sales for the fundraising project. For instance, most provincial gaming licenses
allow for ticket sales over four months. Micro-loans for this duration, plus processing and
administration time, could be structured for re-payment at project mid-point and project
completion. All micro-loans would be registered against the item through a legally registered
security agreement on the item being used for fundraising, such as a car, in addition to a general
security agreement on the licensed organization. As a lending program, loans are short-term and
repayable in full upon completion of the fundraising project. An extensive preliminary
assessment, community support measurement and thorough background and reference checks
would be mandatory to all applications, and could be performed by the aforementioned account
manager in Recommendation 1.
It could also be a consideration that the program be designed as a service provided by an
intermediary, such as a local community foundation or non-government community development
organization. This level of added community development expertise provides for enhanced local
understanding of the non-profit in question and also adds additional social capital and
administrative infrastructure that can provide ongoing technical support to these fundraising
activities (Dees et al., 2002). Pre-screening and micro-loan application processing could also be
the responsibility of the local community partner.
Recommendation 8
Develop an internal and external leadership communication and integration strategy
related to CSR. Internally, Prospera’s CSR initiative will engage management and staff in an
exercise that will develop a strategy that adds tangible value to society and the organization.
Externally, engaging community stakeholders and working closely with NPOs will require a
significantly different communications approach. Paraphrasing Dees et al., (2001), the two
cultures are quite distinct.
Prospera can provide leadership that is aware of these differences, sensitively integrating
both the internal objectives of Prospera’s corporate social objectives with the social needs of the
community stakeholders. According to this study’s participants, the assistance would likely be
greatly appreciated, provided it is actionable and meaningful and not deemed as a public
relations move.
This integration is perhaps the greatest challenge within these recommendations. As the
previous recommendations addressed policy, service, and product development and support, the
leadership structure during this organizational transformation will determine the success of the
CSR initiative, particularly as it relates to the non-profit component addressed in this study. “In
today’s business environment, significant transformation cannot happen without the
simultaneous transformation of a critical mass of leaders’ and employees’ mindsets and
behaviours” (Anderson et al., 2001, p. 27). This is a statement that stresses the need for new
leadership skills and strategies that expand the knowledge of old approaches into new mental
models that will shape the leadership style and behaviour to accommodate the unique
requirements of this new relationship with the non-profit community.
Organizational Implications
This study hopes to raise the awareness and understanding of non-profit challenges
relating to financial management, and how the individuals who will shape the identity of
Prospera’s CSR initiative can make a significant contribution to the social fabric of the
communities in which it operates. Prospera’s consideration of developing and implementing a
focus on meeting the financial resource needs of NPOs within their CSR mandate will be a
significant commitment that will require patience, strong leadership, and considerable
organizational input and support.
Implications of Recommendation 1
Recommendation 1 suggests the creation of a non-profit or CSR account manager to help
build the financial management capacity of NPOs, in addition to being empowered to structure
products and services specific to that sector. The implications of doing so would address the
most commonly called for need of NPOs of their financial institutions, as identified by research
participants, who identified training and advice on financial management and how to better
utilize banking services through an assigned account manager as the most desired approach to
assisting NPOs (M1-S; F1-S).
Having an account manager for such purposes will play an important role in stabilizing
the operations of NPOs. Equipped with the appropriate resources, this will have a positive and
immediate effect on the capacity of the non-profit sector, as well as the corporate reputation of
Prospera. For the NPOs, having access to this level of financial involvement and guidance will
add awareness and understanding around their financial situation and will provide them with the
training they need, as discussed in Recommendation 4, to help them make important
financial decisions.
An investment in hiring an individual who understands the unique requirements of both
the non-profit sector and financial institutions will be required, in addition to the realization of
the potential for lessened returns on the packaging of financial services and products to the non-
profit sector. As the focus shifts to service solutions that will build long-term sustainability for
NPOs, Prospera will need to be aware that the short-term returns on these products and services
may be less. However, the long-term benefits should demonstrate increased non-profit clientele
and higher use of services to offset losses (Kaplan and Norton, 2004). It is also possible this
investment may be partially offset on returns gained through the community investment fund, as
mentioned in Recommendation 2.
Not implementing this recommendation will result in a lost opportunity to meaningfully
engage the entire membership and staff of Prospera in efforts that will result in a positive social
impact. Furthermore, not implementing an account manager to work with NPOs is deemed by
several of the research participants as “ignoring a key target audience” (F3-S-17). This is an
implication that mirrors the observation by Porteus (2005) that financial institutions underserve a
banking niche that will help them achieve social and economic gains.
The purpose of recommending the creation of a community investment fund is to
encourage innovative thought around the capitalization of programs and projects through unique
financial mechanisms that address the social needs of the community.
The implications of doing so would be to galvanize Prospera and its members towards a
common cause to meet the social needs identified, utilizing the community investment
mechanism. Appealing to a common cause is meaningful and purposeful. Kouzes and Posner
(2002) describe it as “a deep human yearning to make a difference. We want to know that we’ve
done something on this earth, that there’s a purpose to our existence” (p. 152). Contributing
positively to the improvements of the community meets this purpose, and is also an opportunity
to connect with local members and stakeholders to promote the entirety of Prospera’s CSR
objectives. Furthermore, as an innovative approach to raising, pricing, and allocating capital, it is
recognition that financial institutions are an important key to the future of NPO financial
sustainability (Strandberg, 2005).
Not implementing this recommendation will result in Prosper maintaining the status-quo
while NPOs continue the struggle individually to develop meaningful vehicles to raise funds to
meet their social objectives. Based on current initiatives, such as those being discussed by the
Canadian Business for Social Responsibility (2001) and the Enterprising Non-Profits Program
(2005), it will only be a matter of time before other institutions evolve within Prospera’s
geographic area of interest with programs and projects to address these opportunities.
The implications of developing appropriate social and economic measurement tools in
order to monitor progress specific to assistance provided to the non-profit sector will be critical
to the continuation of any level of support from Prospera’s members and corporate leaders. It is
an action that confronts assumptions about the blending of social and economic principles, using
metrics that will help separate fact from fiction.
In the words of Kaplan and Norton (2004), “You can’t manage what you can’t measure.
You can’t measure what you can’t describe” (p. xiii). The development of tools to measure
Prospera’s impact on the non-profit community will clearly demonstrate the social,
environmental, and economic benefits of their commitment. Corresponding roughly to the
financial audit undertaken by public companies, an independent social audit is an example of one
such measurement tool to demonstrate the commitment of Prospera and its CSR impact on the
community (Goodell, 1999). As well, being able to share this impact with the community will
create awareness, and encourage continued investment and support of Prospera’s successful CSR
efforts.
A failure to implement a measurement tool to determine the impact of these strategies
will cause a loss of interest and support, and potentially credibility, as the outcomes of
Prospera’s CSR objectives will not be clear.
Based on the research, the implications of supporting and partnering with existing
community-based organizations that currently provide financial management training recognizes
the most important need identified by NPOs, that of “understanding financial management” (F5-
S-3).
The additional resources of an expert financial manager will be a welcome addition to the
organizations that currently provide financial management training to NPOs. This added capacity
will improve the quality of training opportunities and allow Prospera the opportunity to make
known first hand any new products or services that are available to the NPOs.
Not implementing this recommendation will result in lessened accessibility of the NPOs
to Prospera, with little to no access to this valuable training. It would also result in lost
networking opportunities and the loss of product, service, and CSR marketability.
The intent of this recommendation is for Prospera to become actively involved in existing
economically aligned social transformation initiatives related to new sources of financial capital
and policy development.
If this recommendation is adopted, the benefits of sitting at the same table as the leading
innovators of social transformation will improve Prospera’s knowledge and understanding of the
potential associated with CSR and the benefits of working with NPOs. It will also provide
opportunities for Prospera to make important contributions, as well as team up with like-minded
collaborators who wish to value-add their contributions through partnered efforts.
Choosing not to adopt this recommendation will cause Prospera to work in isolation,
bringing into question its understanding of stakeholder involvement and level of impact they can
obtain on their own.
There are significant implications to providing customized loan finance to non-profit
organizations and social enterprises that have been excluded from other forms of mainstream
finance.
For the most part, Prospera would be associated with a very small group of financial
institutions that have met the call of the Task Force on the Future of the Canadian Financial
Services Sector to address the role financial institutions must play in creating greater access to
financial capital for NPOs (Dees et al., 2001; Gannitsos, 2003; Government of Canada, 1998a).
It also meets the call of those NPOs that would consider such a service if there was easier access
to loan products with more flexible terms relating to repayment schedules and lower rates (Q1-
25-2; Q9-25-5; F6-25-10).

Although the profile this support would generate would be substantial, there are
potential negative implications that may challenge the successful implementation of this
recommendation. As stated by Banting (2003) and Dees et al. (2002), most financial institutions
view NPOs as high risk, which may cause a cultural conflict based on skepticism around the
social motives and management capability of NPOs. Nonetheless, dismissing this
recommendation will not dismiss the growing need for capital within more enterprising non-
profits, and Prospera would do better to explore lending mechanisms that would allow it to feel
more comfortable with the risks that are of concern.
The creation of a micro-loan program as a fundraising support mechanism to help
organizations who want to help themselves.
The potential implications of this micro-loan program may be that it is an acceptable
compromise to longer-term loan relationships that may be deemed more risky. It may create a
greater level of comfort for Prospera as it is secured against a marketable asset, such as a car, and
has the potential for a quick return on investment while helping to meet the social aims of a local
non-profit. Within the study, NPOs felt that fundraising initiatives needed to become more
sophisticated, and felt financial institutions could play a role in helping this occur (F1-S; F5-S).
Although this recommendation is untried at a financial institution level, if the
recommendation is not adopted, the anticipated implications are the hesitant development of
more traditional loan-related resources, with the potential for less of a return on investment over
a longer period of time.

The implications of a communications and integration strategy are important, as they will
determine the success of the entire CSR initiative.
The implications reside in both internal and external factors. Internally, the leadership of
Prospera will need to coordinate and integrate the activities and outcomes associated with the
development and implementation of the CSR strategy and the recommendations associated with
this study across all levels and departments.
Externally, the implication will be an enhanced corporate profile that will enjoy the
benefits of a newly minted identity that embraces CSR. Not sustainable on its own, this new
identity will require significant human resources and financial investment to sustain.
In today’s business environment, significant transformation cannot happen without the

simultaneous transformation of a critical mass of leaders’ and employees’ mindsets and
behaviour. Conscious transformation means attending to the consciousness of the people
in your organization, including your own. (Anderson et al., 2001)
The task of changing culture is immense. In this instance, commitment must parallel the
long-term difficulty of turning the idea into a viable strategy. If the recommendation is adopted,
it will be the lack of commitment that will destroy the initiative. (Adizes, 2003). Adizes further
states that “if you want to gauge the viability of your organization, you should assess the
commitment of all who are related or associated with it” (2004, p. 22).
Implications for Future research
Given the depth of the non-profit sector, the range of funding sources, the diversity of
services, and the operational complexity, the resultant outcomes have only demonstrated that
there are many potential paths that require further exploration. Many of the findings and
conclusions confirm the observations in the literature, yet they also raise a number of matters
whose exploration would significantly advance the dialogue on the resource needs of the non-
profit sector. The following questions would help create a greater context for understanding
the perceived and actual challenges facing NPOs:
1. What are the views of the non-profit sector from the financial institution’s perspective?
2. How is the resource capacity of NPOs enhanced through like-minded partnerships and
alliances?
3. What are the actual financial institution policies relating to financing a non-profit?
4. How is policy research related to strengthening the non-profit sector impacting the
enterprising non-profit?
5. What capacity do volunteers add that could be utilized to develop the resources of the
non-profit organization?
CHAPTER SIX – LESSONS LEARNED
Personal Learning
Aside from the mechanics of the research study and the lessons I have learned as a result,
the most significant learning occurred off these pages. I learned more about myself than I ever
expected and I am grateful for the personal growth I have experienced.
My journey began at RRU with a leadership philosophy that was largely based on
integrity, fairness, a willingness to share my vision, and a lead-by-example approach. What I
never thought to explore was why those principles were important to me, how they could be
utilized to serve the values of those I was leading and, more importantly, how to utilize the
knowledge in the manner intended. What I have come to learn is the importance of expanding
and grounding these principles within a rigorous theoretical framework, recognizing the
collective values of those I am working with, and how to consciously apply these principles
within a socially and emotionally responsible manner.
I have also learned that there is a responsibility with this new awareness. The awareness
heightens my responsibility to own my behaviour and my assumptions in an effort to lessen
misunderstandings and improve communication. I have a new understanding of how my actions
often contribute to the very environment with which I struggle. During this learning and research
process, I have grown to understand myself and those around me with a deep appreciation
that all of our actions have absolute meaning and purpose.
Allocation of Time
The scope of the work as a neophyte researcher and the limitations associated with the
timeframe were not expected. It became apparent with about two months left in the process that
there was no possible way to incorporate all of the dimensions of the research I felt were relevant
to the study. A frustrating realization, it was important for me to clarify and refine the objectives
as they related to the research questions and sub-questions and stay focused on the activities that
moved me through the requirements of each chapter.
The Inevitable Setback
Although previous graduates had warned us of the unforeseen setbacks, I was completely
blind-sided by a complete lack of response to my focus group invitation. In the hopes of securing
seven to nine individuals, I sent out 14 invitations, which included all of the online questionnaire
respondents who had expressed an interest in continuing with the focus group process. The best
response to the request was two individuals at any given time, despite three different attempts to
re-schedule.
Compounding the time issue discussed previously, I had to change my methodology to
individual interviews. This had a domino effect, as I had to re-design and re-write the
methodology section, in addition to restructuring the questions to accommodate one-on-one
interaction versus a guided focus group discussion. The lesson learned was significant, in that I
could have started this process approximately three weeks earlier, had I remained a little more
disciplined with my studies. This error on my part caused a two week delay in my data collection
and a lot of avoidable stress.

Timing: The Online Invitation and Focus Groups
As mentioned, the focus group never occurred due to lack of response, and I had a similar
concern immediately after sending out the online questionnaire.
I was fortunate to have the assistance of a social enterprise centre that was willing to
disseminate the questionnaire to approximately 600 recipients across Canada. I had scheduled
with the centre to send out the online questionnaire in the last week of June. However, I was
having a difficult time getting feedback and finalizing the questions and ended up sending it out
two weeks into July.
It was ready to go on July 12th, and I asked to have it sent on the following Monday, July
17th. Unfortunately, the individual who was sending it for me was going to be away that week, so
it ended up being sent out on Friday, July 14th. The e-mail sat in inboxes all weekend and was
likely just one of many e-mails for individuals to read on Monday morning. The response to the
questionnaire was poor and it wasn’t until a follow-up e-mail reminder was sent out the
following Monday that a more significant response occurred. The lesson learned was one of
appropriate timing as it related to my methodology; not only the time of year (summer), but also
the time of week communications are most effective.
Maintaining Realistic Expectations
In mentioning the difficulties associated with getting feedback on my questions, it was an
important lesson learned when I realized my schedule and my passion for the research were not
in synch with all of the individuals helping me out. I also believe part of the problem was the
volume of information I was sending. Had I scheduled more frequent opportunities to connect,
providing smaller sections of information for feedback, I think it would have helped lessen what
I perceived as an information dump on my advisors. Making time for more frequent interaction
will allow you to focus in on important topics, as well as help you avoid stressful moments
involving people you are going to be communicating with for some time.
Testing Your Questions
It is very tempting to draft your questions and think that they are completely appropriate
to your audience. Although this topic is likely covered by every student in the program, it can not
be stressed enough that beta testing your questions before they are put into use is a very
important exercise. Even after testing them, it amazed me how many times I had to rephrase a
particular question to make it understood.
Data Collection
Although I had only one unforeseen minor problem with the online data collection, I
spent a combined 46 hours re-writing notes and transcribing tapes from the seven individual
interviews. I had two in-person interviews and five phone interviews. Only the two in-person
interviews were taped, as I had forgotten to mention a request to tape the phone conversations
when I had to revise my methodology. This lesson was significant as it was difficult to maintain
a smooth phone conversation as I was writing so much, and it was difficult and time-consuming
to transcribe my notes for the interviewee’s verification of the content.
The one minor problem mentioned with the online data collection was a respondent who
replied to all of the open-ended questions in French. This required translation for me and
although not a significant problem, is something you should be prepared for should you be doing
a broadcast invitation to participate in your research.
Design of the Invitations to Participate in Research
These documents have a lot of important requirements and the wording and structure are
critical. I believe that the design of my invitation, although very professional according to one
participant, was dry and not terribly engaging. This may have also contributed to lessened
response. It is possible to design more interesting invitations and this may result in greater
participation.
The Research Outcomes
It is interesting when you think you have couched your bias and all of your pre-conceived
notions, only to be surprised when what you thought would be a certain outcome turns out quite
differently. This was a very tangible lesson for me, as I learned the true significance of how
difficult it is to remain impartial, and how my views could potentially impact the data. In fact, I
had to review one conclusion for this very reason, as I was concerned my pre-conceived notions
had influenced my interpretation of the data.
Conclusions
The most compelling lesson I have learned as a result of my journey in the MALT
program and the action research process is the power of communication. I continue to learn that
how we communicate and the social and emotional awareness required of ourselves and our
surroundings are the foundation of successful relationships. Although we communicate daily on
many different levels, we may not take the time to review how our interaction is affecting those
around us. Removing my assumptive approach and taking the time to appreciate, understand, and
accommodate the participants and their perspectives during the research process improved my
ability to communicate and reach mutual understanding. For me, this heightened awareness
equates to a responsibility to own my behaviour and my assumptions in an effort to lessen
misunderstandings and improve communication.
Prospera Credit Union will be involved in many new relationships as they develop their
interests in the service of NPOs within the development of their broader CSR mandate. This may
require a transformative departure from their traditional operational approach, yet the
potential to add value to the communities in which they serve will be greatly enhanced through
the active inclusion of local interest. The leaders within Prospera should seize every opportunity
to communicate and learn from these community stakeholders, as many will provide important
contributions. How these contributions are received and responded to is the communications
lesson I have consciously incorporated into my ongoing personal and professional leadership
journey.
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APPENDIX A – ONLINE QUESTIONNAIRE
Partnership Strategies for Financial Stability in the Non-profit Sector

On-line Questionnaire
Thank you for your interest in the questionnaire and for helping to explore important leadership
and financial capacity development issues within the non-profit sector.
To review:
As Executive Director or designate of your organization, you are invited to participate in a

research project I am conducting as partial requirement for a Masters Degree in Leadership and
Training at Royal Roads University. My affiliation with Royal Roads University can be
confirmed by contacting Dr. Gerry Nixon, Committee Chair, School of Leadership Studies, Ph.
xxx-xxx-xxxx.
The purpose of this study is to explore and examine emerging leadership and financial challenges
associated with the operation of enterprising non-profits. The research will evaluate leadership
capacity and internal financial management capacity while assessing the current level of access
to financial products, services and resources.
My intent is to provide recommendations to Prospera Credit Union, my research sponsor, that

look beyond traditional non-profit funding activities to allow for the consideration and potential
development of mutually beneficial financial resources to the non-profit sector.
You are not obligated to take part in this research project. If you do elect to take part, your
responses will remain confidential and information collected will be presented as aggregate data
only. You are free to withdraw at any time with no prejudice and your decision will be respected
and maintained in confidence. The final report will be housed at Royal Roads University and will
be publicly accessible.
Organizational Information
1. As the Executive Director or designated respondent for your organization, please indicate
your understanding and consent to participate in this research questionnaire by checking the
consent box below:
I have read the foregoing Letter of Invitation and research overview and I fully
understand the contents and hereby acknowledge informed consent.
2. Please indicate how many full and part-time employees your organization has.
Full Time Part Time
1
2
3–5
6–9
10 +
3. Please indicate which segment of the population your organization works with. Check all that
apply:
Aboriginal Seniors
Francophone Youth
People with Disabilities Children and Family Services
People on Social Assistance Women
People involved in criminal justice People on Employment Insurance
Business / Business Members Refugees or Immigrant
Community-at-large
Other (please specify):
4. Please identify the goods or services that are provided by your organization. Check all that
apply:
Health care Wholesale / Retail products

Social support Services Youth Services
Housing Children and Family Services
Employment Services Services for women
Fundraising Services Environmental Services
Recreational Services Transportation Services
Legal Services Agricultural Services
Educational / Applied Training Technological Services
Government Services Community Development Services
Business Services Manufacturing Services
Finance Arts and Culture Services
Personal Services Tourism Services
Addiction/substance abuse counselling
5. Please describe your organizational structure.
Registered Charity
Incorporated Non-profit
Incorporated Co-operative
Association (unincorporated)
Other - please specify:
6. Do you think that levels of funding provided to your non-profit have declined during the past
ten years?
Yes No Somewhat I don’t know
7. If you answered “Yes” to Question 5, in which of the following areas has funding
contributions declined the most for your organization?
Provincial Government
Federal Government
Foundations and other charitable organizations
Philanthropic contributions
Individual donor contributions
8. How have accountability and reporting measures for funding that has been received by your
organization changed during the past ten years?
Increased Decreased No change I don’t know
9. Has your non-profit organization’s programs or services been negatively impacted during the
past ten years as a result of changes in funding levels?
Yes No I don’t know
10. If you answered “Yes” to Question 9, how have the delivery of services or programs within
your organization been affected as a direct result of decreased funding levels? Check all that
apply:
We have experienced minimal change to programs and services

We have had to consolidate some programs and services
We have eliminated components of certain programs and services
We have had to eliminate certain programs and services
We are now collaborating with other organizations on program and/or service
delivery
11. Does your non-profit organization currently generate revenue through membership fees?
12. Does your non-profit organization currently generate revenue through the sale of products or
services?
13. If you answered “Yes” to Question 12, does this revenue generating activity occur through an
independently registered business entity that is owned by your non-profit organization?
14. How often does your organization conduct organizational planning sessions?
At least once a year (annually)

Twice per year
Every three to five years
Never
15. In your opinion, what three leadership qualities are the most important traits for effective
leadership of non-profit organizations?
Visionary Integrity
Communication Inspirational
Empathy Competent
Entrepreneurial Disciplined
Problem solving Team-builder
Financial expertise Politically savvy
Goal-oriented Humble
Resourceful Decisive
Respectful Authentic
Trustworthy Demanding
16. How would you rate your Executive Director or Manager’s leadership capacity within the
following leadership situations? Please check the appropriate box:
Organizational Role: Manager / Executive Poor Fair Avg. Strong Excellent
Director
Leads with expertise and decisiveness – while

sharing responsibilities with a diverse team of
staff and volunteers
Shapes a visionary future – while responding
appropriately to emerging challenges
Fosters relationships with philanthropic and
public partners – while balancing authenticity
and professional development
Adapts to changing management prerogatives
and techniques – while honouring foundational
Ensures accountability and lean operations –
while achieving significant community impact
Anticipates and avoids ethical dilemmas –
while implementing innovative and often
untried business practices
17. How would you rate your Board of Director’s leadership capacity within the following
leadership situations? Please check the appropriate box:
Board of Director’s Poor Fair Avg. Strong Excellent

18. How would you rate your Organization’s leadership capacity as a whole within the following
leadership situations? Please check the appropriate box:
Organizational Role: Manager / Executive Poor Fair Avg. Strong Excellent
Director

19. Briefly describe what you think is the most identifiable organizational challenge today that
non-profit leaders need to address when managing the growth and development of their
organization?
Comments:
No-profit Financial Information
20. Please select the appropriate box below to indicate your average annual operating budget:
Less than $250,000 $250,001 to $500,000 Greater than $500,000
21. Of the five following choices, how do you think your non-profit organization would respond
to the use of commercial loans or other repayable investments in the development or
maintenance of products, services or programs?
Not appropriate at all

I anticipate there would be strong resistance
It might be appropriate under the right circumstances
We would seriously consider such an approach
We already utilize such services

22. At the Board or staff level have you experienced, or are you aware of, organizational
resistance as a result of adopting or exploring a more entrepreneurial approach to generating
revenue?
23. If you answered “Yes” to Question 22, please describe the reasons for the resistance
experienced.
Comments:
24. Which of the following financial services does your non-profit organization currently utilize?
Check all that apply:

Line of Credit
Overdraft Protection
Loan (not mortgage)
Equity Investment
Investment Products (e.g. Term Deposit)
Staff RRSP Program
Mortgage
Insurance (vehicle, property, liability, etc.)
Chequing
Credit Card
Other please specify:
25. What financial resources, products or services could financial institutions provide to help
integrate the social and financial objectives of your non-profit organization?
Comments:
26. Which of the following funding or revenue generating methods best describes your current
organizational approach to revenue generation, as well as future approaches you would
consider?
Check all that apply:

Current Funding Approach Future Approaches
Government Funding/Programs
Foundation Support
Individual Donations
Loan Products
Fee-for-service
Corporate Sponsorship/Support
Fundraising Activities
Sale of Products
27. What do you think is the most identifiable organizational challenge to your organization
today that other non-profits may also need to address when managing the development of
financial sustainability within their organization?
Comments:
28. In which of the following areas does your organization have assets in? Check all that apply:
Real Estate (land & buildings)

Investments
Inventory
Cash
Machinery / Equipment
Other please specify:
29. What is the approximate value of all of your organization’s assets?
Less than $25,000

$25,001 to $50,000
$50,001 to $100,000
$100,001 to $250,000
$250,001 to $500,000
Greater than $500,000
30. How would you rate your organization’s ability to manage financial resources within the
following organizational roles?
Poor Fair Avg. Strong Excellent
Manager / Executive Director
Board of Directors
Staff
Organization as a whole
31. Please share any additional thoughts about this research topic:
Comments:
32. To help further the research, a representative group of approximately nine questionnaire
participants will be asked to participate in two additional Focus Groups to explore and further
refine the findings of this questionnaire. Would you be interested in participating in these
Focus Groups?
Yes No
33. I would be pleased to keep you updated on the research process and to provide you with the
results of the research study. To do so, please provide your name and contact information in
the space provided below. If you answered “Yes” to Question 22, be sure to provide your
contact information here. You are reminded that all information provided will be kept
confidential and that you are able to withdraw your involvement at any time.
Name:
Organization:
Position within the organization:
Phone:
E-mail:
Thank you for participating!

Stacey Crawford
APPENDIX B – ELECTRONIC LETTER OF INVITATION
Letter of Invite to On-line Questionnaire

Partnership Strategies for Financial Stability in the Non-profit Sector
http://www.surveymonkey.com/s.asp?u=857762194034
Dear Potential Participant, July 14, 2006
As Executive Director of your organization you, or a designate, are invited to participate in a

research project I am conducting as partial requirement for a Masters Degree in Leadership and
Training at Royal Roads University. My affiliation with Royal Roads University can be
confirmed by contacting Dr. Gerry Nixon, Committee Chair, School of Leadership Studies: Ph.
xxx-xxx-xxxx.
The purpose of this study is to explore and examine emerging leadership and financial challenges
associated with the operation and capitalization of non-profit organizations. Your participation in
this 20 minute research survey will help to evaluate leadership capacity and internal financial
management capacity while assessing the current level of access to financial products, services
and resources.
My intent is to provide important recommendations to Prospera Credit Union (Prospera), my

research sponsor, that look beyond traditional non-profit funding activities to allow for the
consideration and potential development of mutually beneficial financial resources to the non-
profit sector. Meeting this objective may help build stronger, healthier and more self-sustaining
non-profit organizations while also developing the social and corporate objectives of Prospera.
Your participation is very important, as your responses will form the basis of these
recommendations.
My research relationship with the research sponsor, Prospera, may present perceived issues of
conflict associated with access to financial information where research participants are actual
clients of Prospera, presenting moments where there is a concern from research participants that
financial information about a client organization may be disclosed. To ensure this situation does
not arise, I assure research participants that the provision of data is participant based and that I do
not require, nor desire, any non-profit based account information from the project sponsor. I have
also personally discussed this issue with my project advisor and project sponsor to make sure this
concern has been addressed and is properly managed.
You are not obligated to take part in this research project. If you do elect to take part, your
responses will remain confidential and information collected will be presented as aggregate data
only. You are free to withdraw at any time with no prejudice. Similarly, if you choose not to take
part in this research project, your decision will be respected and maintained in confidence. The
final report will be housed at Royal Roads University and will be publicly accessible.
For the on-line Questionnaire, information will be recorded on-line through Survey Monkey.
Because Survey Monkey is a US company subject to the Patriot Act, you need to be aware that
in the event that your survey response is processed and stored in the United States, you are
advised that its governments, courts, or law enforcement and regulatory agencies may be able to
obtain disclosure of the data through the laws of the United States. The risk is low and is
restricted only to the time that the data is retained on the survey site. On July 31st, 2006, I will
download the data file to my own computer and all responses will be removed from Survey
Monkey, thus erasing it permanently from the server site.
If you would like to contribute to this important research project, please click the following
hyperlink and you will be directed to the questionnaire:
http://www.surveymonkey.com/s.asp?u=857762194034
Thank you in advance for your participation!
Sincerely,
Stacey Crawford
Master of Arts in Leadership and Training 2005-1
Ph. xxx-xxx-xxxx
Stacey.crawford@community.royalroads.ca
APPENDIX C – INTERVIEW CONSENT FORM
Interview Participant
Free and Informed Consent Form
Partnership Strategies for Financial Stability in the Non-Profit Sector
1. Purpose
The purpose of this study is to explore and examine emerging leadership and financial
challenges associated with the operation of enterprising non-profits. The research will evaluate
leadership capacity and internal financial management capacity while assessing the current level
of access to financial products, services and resources.
My intent is to provide recommendations to Prospera Credit Union that look beyond traditional
non-profit funding activities to allow for the consideration and potential development of
mutually beneficial financial resources to the non-profit sector. Meeting this objective may help
build stronger, healthier and more self-sustaining non-profit organizations while also developing
the social and corporate objectives of Prospera Credit Union.
2. Process
An outline of the complete process will be reviewed with participants prior to signing this
agreement:
 A Letter of Invitation to participate to be provided via e-mail through the contact
database of the Fraser Valley Centre for Social Enterprise.
 The purpose of the study is included (above).
 A time-frame of approximately 30 minutes for the Questionnaire is required.
 45 minutes for individual interviews is scheduled. The interviews will be scheduled based
on participant availability.
 A second follow-up discussion will occur to validate findings, which will be sent prior,
and is scheduled for an approximate duration of 15 minutes. This is outlined in Item 3,
below.
 Assurance to research participants that the provision of data is participant based, and that
I do not require, nor desire, any non-profit based account information from the project
sponsor, should your organization be a member of the financial institution.
 I intend to act as interviewer utilizing a tape recorder and taking notes for in-person
interviews, and note-taking only for phone interviews
 If you are participating in an in-person interview, I will ask if you are comfortable being
recorded. If there is no agreement, we will rely solely on my notes.
 Audio tapes will be personally transcribed by me. I will keep the tapes in a locked cabinet
until November 30th, 2007. I will ask for your permission to destroy the tapes at that time.
 I will assign pseudonyms to the data collected to ensure your anonymity. Only I will have
access to the data.
 You are assured confidentiality with what you share.
 If you feel uncomfortable at any time, you have the option to decline to participate
without prejudice.
 If you are under the impression that standard ethical research protocols are not being
adhered to at any time throughout this study, and you are not comfortable talking with me
about your concerns, please feel free to contact Dr. Gerry Nixon, Committee Chair, School
of Leadership Studies, Ph. xxx-xxx-xxxx; Dr. Wendy Rowe of the Research Ethics Board,
Ph. xxx-xxx-xxxx; or Dr. Marilyn Hamilton, my Faculty Project Supervisor, Ph. xxx-xxx-
xxxx .
3. Data Summary
 The completed summary of the tape recorded interview and hand-written notes will be
shared with participants approximately two weeks after the final interview. I will then
arrange a mutually agreeable time for the follow-up discussion to go over the summary
with the participants to verify the content, providing opportunity to further discuss, change,
add or delete anything you deem necessary. This will take approximately 15 minutes.
 The results of the study will be included in my final report to Royal Roads University in
partial fulfillment of a Masters Degree in Leadership and Training. My final report will
also be shared with Karen Laing, 2nd Vice President – Board of Directors, Prospera Credit
Union who will be using the outcomes of my report to inform Prospera’s strategic planning
process regarding corporate social responsibility. I am also planning to offer a brown bag
session for interested employees and non-profit staff upon project completion.
 Upon project completion, I will provide you with a copy of the analysis and results section
of my final report, or a copy of my full report, if requested.
 The final report will be housed at Royal Roads University and will be publicly accessible.
4. Contacts
1 • Researcher: Stacey Crawford, Ph. xxx-xxx-xxxx
2 • Royal Roads Research Ethics board: Dr. Wendy Rowe, Ph. xxx-xxx-xxxx.
3 • Project Faculty Supervisor: Dr. Marilyn Hamilton, Ph. xxx-xxx-xxxx.
4 • My affiliation with Royal Roads University can be confirmed by contacting Dr. Gerry
Nixon, Committee Chair, School of Leadership Studies, Ph. xxx-xxx-xxxx.
5
I, ____________________, hereby consent to participate in this interview with the above set
guidelines and I will only provide my initials or first name for anonymity and confidentiality
reasons. A copy of this consent form was provided to me. Any questions I had have been
answered to my satisfaction by the researcher.
I have read the foregoing agreement before affixing my signature or initials below, and warrant
that I fully understand the contents thereof.
__________________________
Signature or Initials / Date
APPENDIX D – INTERVIEW QUESTIONS
Interview Questions
All percentages rounded to the nearest whole number

A.(Q. 15) In the on-line questionnaire, half of the respondents (50%) identified
“Entrepreneurial” as the second most important leadership quality within a non-profit
organization.
1. What does being entrepreneurial mean to you?
2. Do you think that your non-profit organization is acting in an entrepreneurial
manner? Why/Why not?
3. Why do you think being entrepreneurial was identified by NPO’s as being so
important?
4. Can you provide an example of how your organization has acted
entrepreneurially?
5. Where in your organization does the leadership for entrepreneurial activities
originate?
B. (Q. 6 & 9) In the on-line questionnaire, 62% (nearly 2 in 3) say funding levels have
decreased over the past ten years, and 68% say their programs or services have been
negatively impacted as a result.
1. Will the current levels of funding received by your organization allow your NPO
to meet its service goals in five years?
2. If not, what steps will your organization take to meet the service levels? If so,
what steps have you taken to assure the sustainability of your service delivery?
3. Are these changes in funding levels limiting the services that could be provided
by your NPO?
C. (Q. 25) The most commented on financial development needs within non-profit
organizations included financial management training, the need for help with business or
financial planning activities, and the development of entrepreneurial or innovative revenue
generating activities to offset the unpredictability of current funding sources.
1. If your financial institution were to provide financial management training to
your organization, who would take the training and what would your expectations
of this training be?
2. If you could make one change within your organization to make it more
financially self sufficient, what would it be?
3. Who does your organization rely on for financial direction or advice?
4. In what way could your financial institution help you develop or sustain an
innovative revenue generating strategy?
D. (Q. 26) 97% of respondents identified government funding as a current source of support,
yet this figure decreases by 44% when respondents consider it as a future funding source.
1. Is there a desire to move away from dependence on government funding within
your organization? Can you explain the reasons why?
2. If so, what new or existing sources of funding would you pursue? How would this
direction be determined?
3. If your organization lessened its dependence on government funding, at what

level of the organization would this decision be made?
E. (Q. 14) Approximately 60% of all questionnaire respondents said they conduct
organizational planning or an operational review at least once, or multiple times, a year.
Conversely, approximately 40% conduct these activities no more than every three to five
years, or as required.
1. In your organization, what are the most significant challenges in developing an
operational plan?
2. How does operational planning influence your organization’s success?
3. Whose responsibility is it within your organization to determine operational risk?
What tools are used to make this determination?
4. How does this planning help your NPO judge operational risk?
5. Can you provide an example of a decision that was made that involved financial
risk within your organization? What made that level of risk acceptable?
F. (Q. 21) The questionnaire showed that 40% already have an operational loan or
mortgage, and 38% stated that it might be appropriate or that they would seriously consider a
loan under the right circumstances.
1. Does your organization currently have a loan or mortgage? What made that
financial decision acceptable to the organization?
2. How do you think your financial institution views your NPO and your ability to
manage your financial resources? Why do you think your financial institution
thinks of you in this way? (if negative perception) What could your NPO do to
change this perception?
3. If no, under what circumstances would it be appropriate for your organization to
take a financial risk involving a loan?
G.(Q. 15 & 16) Vision was identified as a top three leadership trait, but was the lowest
scoring trait demonstrated by ED’s when asked to rate their ED leadership capacity within
five different leadership situations. However, ED’s did rate themselves higher in this capacity
than Board members and staff.
1. When you look ahead five years, do you think that your organization will
maintain its current course or will it need to adjust its approach in order to reach
its long-term goals?
2. What resources could your financial institution provide you with to help you
achieve your long-term goals?
3. Is shaping a vision an expectation of your role as ED?
4. What are the expectations of the ED to make these goals a reality?
5. What leadership role does the Board play in achieving the vision?
6. How do current demands on your time influence your movement towards these
goals?
7. How will you know if you have succeeded? Does the organization have a
strategic plan with measurable accountability?

Partnership Strategies For Financial Stability in The Non-Profit Sector

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Partnership Strategies For Financial Stability in The Non-Profit Sector

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Financial Resources and Non-Profits

PARTNERSHIP STRATEGIES FOR FINANCIAL STABILITY

IN THE NON-PROFIT SECTOR

CALVIN STACEY CRAWFORD

A thesis submitted in partial fulfillment of

We accept this thesis as conforming

© Calvin Stacey Crawford

increased accountability measures within an increasingly complicated fiscal environment. As the

challenge to become more self-sustaining increases, the development of more entrepreneurial

component of their Corporate Social Responsibility mandate in an effort to support the

increasing fiscal challenges of sustaining non-profit service delivery.

Marilyn Hamilton, as my Faculty Supervisor, challenged me with some wonderful

learning process was exceptional and has influenced me tremendously.

Thomson, who provided me with unwavering support in so many ways.

I look forward to making up for those moments when we couldn’t be together.

Significance of the Opportunity.................................................................................................17

Systems Analysis of the Opportunity.........................................................................................19

CHAPTER TWO – REVIEW OF THE LITERATURE...............................................................26

Corporate Social Responsibility.................................................................................................38

CHAPTER THREE – CONDUCT OF RESEARCH ...................................................................51

Respect for Human Dignity....................................................................................................64

Respect for Free and Informed Consent.................................................................................65

Respect for Vulnerable Persons..............................................................................................65

Respect for Privacy and Confidentiality.................................................................................65

Respect for Justice and Inclusiveness.....................................................................................66

Balancing Harms and Benefits...............................................................................................67

Minimizing Harm ..................................................................................................................67

CHAPTER FOUR – ACTION RESEARCH RESULTS AND CONCLUSIONS........................68

Entrepreneurial Traits and the Source of Organizational Vision...........................................81

Strategic and Operational Planning and How it is Occurring................................................84

Challenges with Organizational Sustainability.......................................................................85

The Valuation of Goods and Services....................................................................................88

Non-profit Financial Management Capacity..........................................................................88

Non-profit Opinions of How They are Perceived by Financial Institutions...........................90

The Ideological Difference.................................................................................................92

Differentiating Between Entrepreneur and Enterprising....................................................93

Operational Approach: Resource Management or Enterprise Development......................99

Scope and Limitations of the Research....................................................................................100

CHAPTER FIVE – RESEARCH IMPLICATIONS...................................................................103

Mechanisms and Leadership................................................................................................109

Implications of Recommendation 1..................................................................................113

Implications of Recommendation 2..................................................................................114

Implications of Recommendation 3..................................................................................115

Implications of Recommendation 4..................................................................................116

Implications of Recommendation 5..................................................................................117

Implications of Recommendation 6..................................................................................117

Implications of Recommendation 7..................................................................................118

Implications of Recommendation 8..................................................................................119

Implications for Future research..............................................................................................119

chapter six – Lessons learned......................................................................................................121

Appendix A – Online Questionnaire............................................................................................132

Appendix B – electronic letter of invitation................................................................................141

Appendix C – interview consent form.........................................................................................143

Appendix D – interview questions...............................................................................................145

Enterprising non-profits: Non-profit organizations who are interested in starting or expanding a

business or enhancing their programs or services through the development of revenue-

generating enterprises as a way to stabilize and diversify their funding base.

Mental Models: “Deeply ingrained assumptions or generalizations that influence how we

understand the world and how we take action” (Senge, 1990, p. 8)

Non-profit Organization: A nonprofit organization (abbreviated "NPO", or "non-profit" or "not-

for-profit") is an organization whose primary objective is to support social issues or

entirety, unless specifically addressed otherwise.

Social Enterprise: An organization that applies an entrepreneurial approach to addressing social