New Zealand funding organisations: How do they make decisions on allocating funds to not‐for‐profit organisations?

Abstract

Purpose

The purpose of this paper is to investigate the funding criteria adopted by funding organisations (FOs) in New Zealand.

Design/methodology/approach

The naturalistic inquiry paradigm is applied and qualitative interview data were collected using semi‐structured interviews.

Findings

The most important finding is that there is a strong pattern emerging as to how the selected FOs determine the allocation of their funds. Outcomes and key people are important criteria for these FOs, while financial information is regarded as less relevant. On balance, the New Zealand funders involved in this study seem to adopt a creative approach to allocating their funds. To explain the lack of performance and financial measurements, it may be that, unlike their for‐profit counterparts, not‐for‐profit (NFP) organisations' managers are not constrained by returns to shareholders, earnings per share and the bottom line. Thus, many of the New Zealand funders' allocations rely on an instinctive feel for the projects proposed and the character of the applicants proposing them.

Research limitations/implications

A limitation of the research is that it was restricted to Auckland and Wellington and only to those FOs which were willing to participate. It is not possible to generalise the results and apply the findings derived based on seven FOs to all the funders in New Zealand. This research is an exploratory study; further research would be appropriate across Australasia to include larger centres such as Sydney and Melbourne where there are many more FOs.

Practical implications

Funders are in favour of a more creative and soft approach to their philanthropic giving. It is hoped that this research will raise an awareness of a strong tendency of FOs to adopt a creative approach to grant‐making rather than the more scientific approach involving financial analysis.

Social implications

The outcomes and key people are important to this grant‐making process, while much financial information is less relevant.

Originality/value

The paper recommends that FOs should pay more attention to financial analysis while preserving the flexibility of a creative approach. Moreover, grant seekers will have a much clearer idea about what sort of information most grant makers actually utilise in their grant decision‐making processes. The additional contribution of this research project is to enrich the existing literature on philanthropic funding in New Zealand.

Citation

Jiaying Huang, H. and Hooper, K. (2011), "New Zealand funding organisations: How do they make decisions on allocating funds to not‐for‐profit organisations?", Qualitative Research in Accounting & Management, Vol. 8 No. 4, pp. 425-449. https://doi.org/10.1108/11766091111189909