CHAPTER ONE: BACKGROUND

• 1.1 - Introduction
• 1.2 - Organization Description
• 1.3 - Organizational Context
• 1.4 - Rationale for the Study
• 1.5 - Purpose of the Project
• 1.6 - Research Question
• 1.7 - Definition of Key Concepts
  

1.1: INTRODUCTION (back to top)

The most important component of democracy is civil participation, which requires awareness and a means of involvement.  Nonprofit or nongovernmental organizations (NPO or NGO), also known as the third sector, are vital to the development of civil society as they enable individuals to take active roles in their communities and become vigorous participants of democratic life. Fortunately, the twentieth century has witnessed a substantial growth in this sector.   As Saloman & Anheier (1997) state:

Nonprofit and nongovernmental organizations have emerged in recent decades in virtually every corner of the world to provide vehicles through which citizens can exercise individual initiative in the pursuit of public purpose (p. 60).

According to the Urban Institute’s statistical profile of the nonprofit sector, in the U.S. alone, there are more than 1.4 million registered nonprofit organizations (1.1 million in 1994) and they account for more than $1 trillion in the nation’s revenue. The vast majority of these organizations are classified with the Internal Revenue Service (IRS) as 501(c)(3) “public charities,” a category that includes most arts, education, health care and human services organizations (The Nonprofit Sector in Brief, 2007, pg 1).

Human services organizations are the most common type of public charity (35 percent) in the United States, with nearly twice as many organizations as the next largest category, education (18 percent).  Although representing more than one-third of all public charities, human services organizations account for less than 14 percent of the sector’s revenues and less than 12 percent of assets (The Nonprofit Sector in Brief, 2007, pg 1).

Even though the number of nonprofits in the United States is growing linearly, the size and scope of these organizations are still relatively narrow.  According to the data, more than 84 percent of 501(c)(3) public charities that gained IRS ruling status between January 2000 and January 2008 have not broken past the $100,000 revenue mark.  Only 0.6 percent of these organizations have annual revenue larger than $5 million ("Registered Nonprofit Organizations," n.d.).

The disadvantage of staying small is that the organizations cannot achieve a far-reaching or nationwide level of impact.  That being said, some nonprofit organizations purposefully choose to stay small in their size and scope.  For instance, a neighborhood watch does not necessarily need staff or a budget above $1,000, and yet it might still be highly successful in what it is doing.

Being small becomes an issue particularly for organizations that have large aspirations or goals and do not have a sufficient infrastructure to help them transition out of the start-up phase.  They may never accomplish their mission or reach their full potential because of a variety of factors that are faced in their early stages, including high burnout rates, founder’s syndrome, lack of structures to manage change, etc.  They may even dissolve without reaching their desired level of impact.

Considering that nonprofit organizations can have very diverse structures, from small neighborhood associations to well-run and complex hospitals, and that they address a broad range of issues, from teaching kids mathematics to educating nations on AIDS epidemics, it is important to study factors that contribute to their success, as well as reasons that cause them to fail.  A better understanding of such factors and reasons may aid nonprofits in delivering greater social change at both the local and global levels.

Crutchfield and Grant says that “we don’t have time for incremental change; we need dramatic change if we are to solve complex global problems that plague us today” (Crutchfield & Grant, 2008, p. 7).  Organizational effectiveness and capacity building are becoming more widely researched as the demand for high-impact and well-functioning nonprofits increases.


1.2: ORGANIZATION DESCRIPTION (back to top)

The study was conducted for Community Volunteers Foundation, an exemplary human services nonprofit organization in Turkey, whose aim is to build social awareness among youth aged 17-25 by channeling their energy into social responsibility projects.  In a few years, the organization demonstrated a successful transition from the inception of an informal grassroots movement to the development of a sustainable formal organization.

Community Volunteers Foundation started as an idea in April 2002 and became one of the most powerful grassroots movements in Turkey within a few years.  Its operating budget grew from $0 to over $7 million, with a bold fundraising principle that did not allow any one person to donate more than 7 percent of the budget.

In its first year, the organization had only a handful of staff members; it now employs over 30 professionals, empowering and mobilizing more than 20,500 youth each year in 88 universities to make a difference in their local communities.

The vision of Community Volunteers Foundation is to realize social peace, solidarity and change through the participation and leadership of youth.  In 2008, these young volunteers, with the assistance of adult volunteers, served approximately 278,000 people through more than 688 different social responsibility projects.

Community Volunteers Foundation has received widespread public recognition and awards, such as “the Best Nonprofit of Turkey in 2006” and “UNDP Best Youth Projects 2007”, and in fewer than five years, held a fundraiser where it raised more than $1 million in one night.  The organization’s programs expanded from nationwide to international and are also being replicated by other nonprofit organizations in other countries such as Bangladesh.  Furthermore, the organization has received interest from universities in Azerbaijan and Germany.


1.3: ORGANIZATIONAL CONTEXT (back to top)

The success of Community Volunteers Foundation is well above not only its Turkish peers, but also its peers in the United States given that only 0.5 percent of 501(c)(3) public charities that gained IRS ruling status since January 2000 have reached annual revenue larger than $5 million ("Registered Nonprofit Organizations," n.d.).

Growth is a continuous process that can be observed on many different levels.  Even though financial and numeric data is not the only way of measuring growth, it is one of the most widely used and accepted norms of measurement.  In this regard, Community Volunteers Foundation shows a linear and progressive growth in its budget and revenue, as well as the number of projects, volunteers, donors, and staff.

By examining these numbers, one can recognize that the leaders of Community Volunteers Foundation realized a dream of establishing a high-impact nonprofit organization that creates large-scale social change.  No other grassroots organization in Turkey, with similar human services goals, has realized comparable success in such a short period of time.

There are fundamental differences worth mentioning that are unique to Turkey’s nonprofit sector and that highlight the magnitude of Community Volunteers Foundation’s successful growth.

Foundations and associations are the two main legal forms of nonprofit, nongovernmental voluntary entities in Turkey.  Together, they are referred to as civil society organizations.  In 2007, there were 71,240 associations and 4,367 foundations active in the country.  Unlike the United States, Turkish foundations typically raise funds to allocate for executing their own programs (operating), rather than providing funds to other organizations (grant-making) (Bikmen, 2006, p. 14).

Another significant difference is the process for obtaining tax exemption status.  This status (known as public benefit status) is available upon application to regulatory officials and after a lengthy process of approval by the Council of Ministers.  Of the active civil society organizations in Turkey, only 229 (5 percent) foundations, and 481 (less than 1 percent) associations have tax exemption status.  Also, universities and hospitals are not classified as nonprofit organizations in Turkey; they are mostly government and/or private business entities (Bikmen, 2006, p. 30).

Besides, donations made directly to most government entities are allowed a 100 percent deduction whereas donations made to private foundations and associations with tax-exempt status are only allowed a tax deduction of 5 percent of annual taxable income.  This not only adds a significant bias in raising donations between government and private organizations, but also creates a climate of competition between these sectors (CIVICUS & Third Sector Foundation of Turkey, 2005, p. 30).  Unlike nonprofits in the U.S., it is not customary for Turkish nonprofits to contract with government to carry out services or receive grants from it.  However, this started to change with the influence of international governmental funds, like European Union grants.

In 2004, roughly $1.91 billion was contributed by individuals representing 80 percent of the population.  Of this, 37 percent are donations to civil society organizations, 35 percent is direct individual-to-individual giving, and the remaining 28 percent is for religious giving, street beggars and compulsory donations mainly to government organizations (Bikmen, 2006, p. 18).

Most of these differences stem from Turkey’s state as a developing nation.  The structure of civil society and nonprofit organizations face significant constraints.  These include, but are not limited to, the narrow depth of civil participation, inadequate skills and resources, underdeveloped linkages among nonprofits, and a challenging legal framework (Bikmen & Meydanoglu, 2005, p. 13).  In this context, the accomplishments of Community Volunteers Foundation become even more prominent as a successful example of early-stage growth and a high-impact nonprofit organization.


1.4: RATIONALE FOR THE STUDY (back to top)

The stakeholders of Community Volunteers Foundation are committed to continue and sustain exemplary growth in order to expand its programs to areas that are currently out of reach.  Furthermore, in two years, the organization will undergo its first leadership transition when the present chairman, and the founding father of the organization, completes his term.  As the organization went from a concept to a mature and stable condition rather rapidly, its leaders have not had opportunity to reflect on how this growth was accomplished.

Community Volunteers Foundation, therefore, has requested evaluation research in order to develop a greater understanding of its success criteria and use this knowledge as a tool to make more informed decisions in order to achieve further stability.


1.5: PURPOSE OF THE PROJECT (back to top)

The purpose of this study is to identify and describe the elements that enabled Community Volunteers Foundation to achieve a remarkable transition from start-up to maturity stage.  It also aims to shed light on challenges that the organization faced during this transitionary period in order to avoid them in the future.

This study intends to empower the leaders of the organization to develop strategies for further growth and expansion while continuing to sustain its accomplishments as a high-impact organization.  By examining the success of Community Volunteers Foundation, this research may also bring forth its “golden recipe.”  If there seem to be replicable factors that facilitate early-stage growth, then the readers can take and apply them to make a difference in any organization that they are involved with.


1.6: RESEARCH QUESTION (back to top)

The main research question that guided this study is, “How did Community Volunteers Foundation achieve early-stage growth?”  The researcher focused on investigating the key elements that enabled the organization’s exemplary growth.

;As the study proceeded, the following questions were also taken into consideration: What were the main difficulties faced during its growth?  What are the perceived challenges in sustaining performance?


1.7: DEFINITION OF KEY CONCEPTS (back to top)

Nonprofit organizations are explicitly established for the purpose of serving a public or mutual benefit other than the pursuit or accumulation of profits for owners or investors.  Nonprofits are usually funded by cash and in-kind donations; sales of goods and services; governmental contracts; and grants from other institutions.  Although their types as well as classifications may vary, all nonprofit organizations are governed by a Board of Directors.

Stakeholders are similar to shareholders of a corporate organization, and are simply different groups of people who can affect, or be affected by, the organization’s actions.  They primarily consist of founders, board members, staff and supporters (donors, volunteers, partners, etc.) as well as other influential community members.

Start-up stage is defined as the stage in which the organization is first founded and is mostly dependent on entrepreneurial enthusiasm.  The organization is closely identified with one person or a small group of like-minded people.  It is focused on investigating funding sources, developing organizational identity, and designing and launching its programs.  In this stage, it is uncertain whether the organization will be able to continue its existence.

Early-stage growth is obtained between the start-up and maturity stages of the lifecycle. It covers the transitional stage where the organization is continuously expanding its programs and capacities as per demand from the community it serves.

Maturity stage is when the organization achieves considerable development in certain areas such as program delivery, fund development, financial management, infrastructure and public outreach, and it has sufficient resources to maintain the status quo.  In this stage, policies, procedures and rules become more formalized and businesslike.