Tell me your financing and I tell you who you are: Organizations’ strategies and project funds’ effectiveness

Abstract

Purpose

This paper aims to identify criteria for the better targeting of public funding for private social activities and organizations. As a starting point, it proposes that financing strategies can characterize organizations which are positioned on a for-profit/non-profit continuum. The paper then analyses how far the effectiveness of public support systems depends on recipients’ general financing strategies.

Design/methodology/approach

The study is based on data from a standardized small-scale survey. The analysis applies latent class analysis for the creation of a meaningful organizational dimension and applies them in an ordered logistic regression.

Findings

Despite their variety along a for-profit/non-profit continuum, organizations in the sample can be described by three meaningful dimensions, and the focal role of organizations’ financing strategies can be confirmed. Repeated project-based public support might create a harmful dependence on this kind of funds. To be effective, it needs to be targeted at nascent socially effective organizations with non-solvent clients.

Practical implications

Recognition of different financing strategies as meaningful characteristics of organizations with consequences for their long-term development is of direct practical relevance for a better design and targeting of financing systems in general and public support systems in particular.

Originality/value

Although the focal relevance of financing for the characterization of (social) organizations has been stressed before, the paper is able to operationalize the idea and to demonstrate its value in an application to the evaluation of project based support.

Citation

Margarian, A. (2017), "Tell me your financing and I tell you who you are: Organizations’ strategies and project funds’ effectiveness", Social Enterprise Journal, Vol. 13 No. 1, pp. 53-77. https://doi.org/10.1108/SEJ-08-2016-0040