Handbook of Research on Nonprofit Economics and Management
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Handbook of Research on Nonprofit Economics and Management

Edited by Bruce A. Seaman and Dennis R. Young

Nonprofit organizations are arguably the fastest growing and most dynamic part of modern market economies in democratic countries. This Handbook explores the frontiers of knowledge at the intersection of economics and the management of these entities. The authors review the role, structure and behavior of private, nonprofit organizations as economic units and their participation in markets and systems of public service delivery, assess the implications of this knowledge for the efficient management of nonprofit organizations and the formulation of effective public policy, and identify cutting edge questions for future research.
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Chapter 15: Franchises and Federations: The Economics of Multi-site Nonprofit Organizations

Dennis R. Young and Lewis Faulk


Dennis R. Young and Lewis Faulk Introduction The purpose of this chapter is to consider the various economic factors that may explain the formation and structure of multi-part, multi-site nonprofit organizations that operate on a regional, national or global scale. We are particularly interested in how federations are related to nonprofits’ capacities to achieve efficient scale in promulgating their missions and services. Following Selsky (1998), we define federations simply as ‘associations in which the affiliates [members] are organizations rather than individuals’ (p. 286). This is a more inclusive definition than others. For example, O’Flanagan and Taliente (2004) define a federation as ‘a network of local affiliates that share a mission, a brand, and a program model but are legally independent of one another and of the national office’. This is one type of widely recognized nonprofit federation, akin, as we shall discuss below, to a franchise system. Here, however, we shall take a wider view that includes several other variants. Indeed, nonprofit federations exist in a wide variety of forms and can be described by various terms including federations, franchises, membership associations, systems, leagues, councils and decentralized corporations. Some are aggregations of organizational units of very similar function and structure, all of which consider themselves to be part of the same overall system or umbrella, such as YMCAs or chapters of the March of Dimes. Others are aggregations of more distinct and varied organizations in the same industry or field of service, such as the Child Welfare League of America...

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