International Journal of Management, Knowledge and Learning, 2(1), 45–64
Organizational Development:
A Tool for Nonprofit Organizations
to Become Professional
Katalin Dobrai
University of Pécs, Hungary
Ferenc Farkas
University of Pécs, Hungary
The paper is based on international research and on the ongoing research of
the authors in the field of professionalization of nonprofit organizations. Desk
research is supported by the analysis of the results of the pilot project of an
organizational development programme in Hungary. The findings of the empir-
ical research serve as a benchmark for the large sample research. Since the
paper gives insight over changes in the operational environment of nonprofit
organizations that are connected to their learning needs and chosen solu-
tions, and brings practical evidence, it contributes to the current research of
professionalization of nonprofit sector organizations internationally.
Keywords: nonprofit organizations; professionalization; learning; organiza-
tional development; knowledge
Introduction
In the last decades a shift can be observed in the nonprofit sector towards
using models and solutions of the business sector (Maier & Meyer, 2011;
Hwang & Powell, 2009). Nonprofits need to improve the existing organiza-
tional structures and processes, and become innovative organizations. It is
fact that changes in their environment affect nonprofit organizations: this
applies not only to the domestic but also to the international environment.
As a consequence of the changes, nonprofit organizations are forced to face
risks and also meet challenges and use their opportunities (Ridder, McCan-
dless, Piening, & Erk 2012). Due to these circumstances, they seem to
realize that they have to become more professional in their activities.
It also has to be mentioned that the increasing importance of nonprofit
organizations in the overall performance of national and global economy is
an intensively discussed topic in nonprofit research (Anheier, 2009). Their
role in the economy is a generally accepted fact. However, they are still rel-
atively neglected in research, when compared to other sectors. This is why
the aim of the paper is to contribute to a better understanding of this sector
of growing importance and to develop a more founded picture about it.
www.issbs.si/press/ISSN/2232-5697/2_45-64.pdf
46 Katalin Dobrai and Ferenc Farkas
According to the above presented objectives, the paper first describes
the applied research methods and tools, and formulates the research ques-
tions. After that, it continues with an insight over the present situation and
trends in the research field, such as the impact of improving cross-sectoral
cooperation; or the trends that can be considered as relevant drivers of the
changes in the nonprofit sector.
The central issue addressed in the article is how the application of man-
agement tools impacts the nonprofit organizations, how it contributes to
their present and future performance. As a background to the analysis of
learning and development needs of nonprofit organizations, it is also dis-
cussed how they react to the trends that are observable in their operational
environment and what they do to meet those requirements. A detailed anal-
ysis of the present situation within the sector is supported by empirical
evidence from the sector in Hungary, which is focusing on organizational
development as a tool of professionalization in the sector.
So, the study provides insight over issues in connection with commer-
cialization and managerialism and parallel to them, it also highlights certain
aspects of learning and development as influential factors of the profession-
alization of nonprofit organizations. The paper concludes with evaluation of
the research, its limits, its relevance for international research and practice,
and also with an outlook for future studies.
Research Questions and Methodology
In alignment with the aims of the paper, the authors draw dominantly upon
the international research of the last decade and they also analyze the on-
going research in the field of learning and development. Hence, through
literature and practice, the article provides evidence of the fact that non-
profit organizations are learning to find ways how to effectively use the tools
of business sector managers and leaders.
The authors used different research methods to answer the following
research questions:
1. Do theory and practice prove that nonprofit organizations learn from
business sector managers and leaders in order to become more pro-
fessional in their activities?
2. Is organization development a suitable tool to promote and enhance
management professionalization of nonprofit organizations?
Desk research was used to create the background of the empirical re-
search. It concerned mainly literature of the last decade and helped provide
an analysis of the factors that play a decisive role in the development of
nonprofit organizations. The desk research and literature was used to draw
International Journal of Management, Knowledge and Learning
Organizational Development 47
a picture of the general state of the research performed in the field of profes-
sionalization of the sector, and to give an insight over different approaches,
which help the authors link their own research to these streams, and also to
formulate their own definitions, used in the paper (the third and the fourth
section). By choosing this approach, the authors can also inspire possible
research ideas in readers or other researchers. The desk analysis not only
contained theoretical approaches but also information about the present
performance and impact of the sector, based on data from different coun-
tries.
The aim of the empirical research is to examine the responses of non-
profit organizations from the perspective of the trends that are studied in
the desk research. Empirical data are based on the results of the pilot
project of an ongoing research carried out by the authors of the article.
The pilot project represents the first phase of the research; namely, a test
of the large-sample research that is in progress at this moment. The find-
ings of the empirical research are based on document analysis, online sur-
vey among the participating organizations, and also semi-structured inter-
views completed with representatives of these organizations. The survey
took place in 2011 and 2012. The purpose of the empirical research is
to test and predict the results that can be expected from the research. As
opposed to future research, they can serve as benchmark.
In connection with the evaluation, the opportunity of expanding the re-
search towards international comparison is briefly outlined, including lim-
itations of the research at present stage (Henriksen, Smith, & Zimmer,
2012; Dobrai & Farkas, 2008, 2010; Billis, 2010; Millesen, Carman, &
Bies, 2010; Neville & Murray, 2008); furthermore, a table of enablers of
professionalization is put together under consideration of structures, pro-
cesses and people; and a conclusion is drawn.
Nonprofit Organizations Driven towards a Continuous Change
Non-profits vs. Organizations in Other Sectors
It is necessary to briefly explain what the authors understand under non-
profit organizations, because it is relevant for present study. The authors
share the view that an organization that belongs to the nonprofit sector has
to fulfil the criteria by Salamon and Anheier providing a principal definition
of the sector (1992, pp. 10–12):
•These organizations should be formal, institutionalized to some ex-
tent: they should have a meaningful structure and organizational per-
manence, and also regularity in their procedures, and operations.
•They should be private, separate from the government (non-govern-
mental), even if they are supported by the government.
Volume 2, Issue 1, 2013
48 Katalin Dobrai and Ferenc Farkas
•They are not allowed to distribute profits to their owners or directors
(hence, they should be non-profit-distributing). However, they are sup-
posed to use their surplus earnings for realization of the objectives of
the organization.
•They are not controlled from outside the organization, but they are
self-governing: they have their own internal procedures and mecha-
nisms of governance.
•They are based on voluntary membership, so participation in the ac-
tivities of the organizations is not compulsory.
This description allows us to state that a nonprofit organization is not pro-
hibited from earning a profit, but it shows how the profit earned or otherwise
received has to be used (Heyman, 2011). We also have to consider other
specific features of the nonprofits, such as their mission or the challenge
in connection with their dependence on volunteers: factors that clearly dif-
ferentiate them from business and government sector organizations. They
rely to a great degree on the contribution of volunteers for the fulfilment of
their objectives and for carrying out the operations and activities helping
with their management.
Sector Growth
One of the main indicators of the development of the nonprofit sector is
a general sector growth. We study this by using the example of Hungary
(the empirical research presented in this paper was carried out in Hungary),
the United States (a country with the strongest Third Sector traditions), and
also certain other international indices.
In Hungary, the number of nonprofit organizations has grown by 87 per-
cent in the last 20 years, and their revenue has also grown by more than
90 percent (Hungarian Statistical Office, 2012). Their contribution to GDP is
increasing steadily and in 2010 it accounted for 4.5 percent of the GDP (Ta-
ble 1). It is interesting to look at the revenues in the period of crisis. We can
see a growth of revenue even then, by 10 percent in 2010, as compared
with lower percentages of the earlier years (Table 1).
The changes in the field of employment in the sector are also very infor-
mative. As a result of the rapid growth of the sector, 65 thousand organiza-
tions (Table 1) employed three times as many people in 2010, as in 1993.
From 2009 to 2010, employment grew by 9.2 percent, so it is now 143
thousand. About 100 thousand people have a full time job in the sector.
Volunteers’ number is approximately 418 thousand.
However, we cannot say that these phenomena, which were emphasized
in the case of Hungary, are unique and that they could be explained through
the comparably short time of the development of the nonprofit sector in
International Journal of Management, Knowledge and Learning
Organizational Development 49
Table 1 Number of Nonprofit Organizations and Their Contribution to the Hungarian GDP
(2005–2010)
(1) (2) (3) (4) (5) (6)
2005 56694 100.0% 854755.1 100.0% 3.88%
2006 58242 102.7% 896244.1 104.9% 3.79%
2007 62407 110.1% 964309.0 112.8% 3.86%
2008 64925 114.5% 1093694.2 128.0% 4.12%
2009 66145 116.7% 1114404.2 130.4% 4.35%
2010 64987 114.6% 1202255.0 140.7% 4.52%
Notes Column headings are as follows: (1) year, (2) number of organizations, (3) change
in the number of organizations, (4) total revenue (mio HUF), (5) change in revenue/income,
(6) total revenue/GDP. 1 euro = approx. 290 HUF. Adapted from Központi Statisztikai Hivatal
(2012, pp. 251–252, 278–279).
Table 2 Change of Employment (%) in the For-Profit and in the Nonprofit Sector in the USA
(2000–2010)
Sector 2000
–2001
2001
–2002
2002
–2003
2003
–2004
2004
–2005
2005
–2006
2006
–2007
2007
–2008
2008
–2009
2009
–2010
Forprofit –1,0 –1,9 –0,3 1,3 2,0 1,9 1,0 –1,1 –6,2 –0,9
Nonprofit 3,3 2,8 1,6 1,8 1,9 2,2 2,5 2,6 1,2 0,8
Notes Adapted from Salamon (2012, pp. 5–6).
Hungary. If we look at the flagship of the third sector ‘movement,’ the USA,
there were 2.3 million nonprofit organisations in the USA in 2010, which
shows an increase of 24 percent in the period from 2000 to 2010 (Black-
wood, Roeger, & Pettijohn, 2012, p. 2). We also see that between 2000
and 2010, nonprofit employment rates grew in each field of activity, while
the for-profit sector showed decreasing employment rates (Table 2). These
estimations of Salamon, Sokolowski, and Geller (2012, p. 6) are based on
data from the US Bureau of Labour Statistics’ Quarterly Census of Employ-
ment and wages, and show that this trend also continued in the years of
the economic crisis (see data for 2007–2010). According to the Nonprofit
Employment Trends Survey (2012, p. 3), more than 40 percent of over 450
nonprofit organizations that responded to the survey increased the number
of employees in 2011, and 43% of the surveyed organizations want to in-
crease the number even in 2012. The nonprofit sector is the third largest
employer in the United States with about 11 million employees (Salamon
et al., 2012, p. 2). From the perspective of the USA, this has an enormous
effect on the economy as a whole.
If we look at the sector globally, similar statements can be made. Sala-
mon, Sokolowski, Haddock, and Tice (2013, p. 2) estimate that on the
average, 7.4 percent of all employees are working in the nonprofit sec-
tor (13-country-average, based on Israel, Australia, Belgium, New Zealand,
Volume 2, Issue 1, 2013
50 Katalin Dobrai and Ferenc Farkas
United States, Japan, France, Norway, Portugal, Brazil, Kyrgyzstan, Czech
Republic, Thailand). The sector’s contribution to GDP is on average 4.5 per-
cent (16-country average, the above mentioned countries + Canada, Mex-
ico, Mozambique).
Cross-sectoral Co-operation and Competition as Drivers for Learning
in Nonprofit Organizations
Nonprofit organizations are facing challenges and pressure to ensure the
efficient use of their resources, and to meet the demands of providing
more high quality services and better performance. Greater emphasis is
on demonstrating the effectiveness and efficiency in the sector, and all this
in times when obtaining funding is getting harder: a trend that can be ob-
served for nearly a decade now.
The competition from business and public sector organizations, and also
from other nonprofit sector organizations – as formulated by Ryan (1999)
– has been growing for a decade and a half. Carman (2009) and also Car-
roll and Stater (2009) stress that nonprofits also have to follow growing
accounting, auditing, and reporting requirements. We can argue that they
need to show accountability and meet performance requirements if they
want to receive financial support from public or private donors. We could
also argue, however, that not only competition challenges nonprofit organi-
zations but also collaboration, alliance, and partnership as articulated by
Chen and Graddy (2010) and also by Hesselbein (2004). The cooperation
between business and nonprofit sector can be beneficial for the participat-
ing organizations. Hickman (2004, pp. 153–154) presents the results of
the Business for Social Responsibility (2003) survey, according to which –
as an outcome of cooperation – the capacity in a nonprofit organization can
improve (employee skills and training), employee teamwork can improve,
employee leadership skills can further develop (followers become leaders),
more innovative work structures (organizational structures) are developed,
employee morale improves, retention, attendance, and performance get bet-
ter, new improved relationships develop between the organization and the
external community or society.
All these data prove that the economic weight of the sector is contin-
uously growing. Salamon (2012) also emphasizes that this is the result
of increased revenue from business operations (fees for services, invest-
ments, sales of products). The growing economic importance also proves
that the sector’s organizations can flexibly react to the challenges of the
environment, and that they are using the opportunity to sell their services
and products to customers that need their services and are also able to
pay for it.
The tendencies shown in this section of the paper explain why we look
International Journal of Management, Knowledge and Learning
Organizational Development 51
at the motions within the sector more carefully in the following sections of
the paper.
Disappearing Boundaries between the Sectors of National Economy
A New Mindset Penetrating the Nonprofit Sector
We should add another worldwide phenomenon to the above mentioned fac-
tors, precisely that organizations of different sectors show a growing num-
ber of similar features (Epstein & McFarlen, 2011; Dobrai & Farkas, 2010;
Anheier, 2009). Business sector organizations show more social respon-
sibility, while the organizations of the nonprofit sector are getting similar
to the organizations of the business sector. The numerous similarities be-
tween nonprofit and business sector organizations make experts coming
from the business sector very useful for the nonprofit sector organizations
(Epstein & McFarlen, 2011; Beck, Lengnick-Hall, & Lengnick-Hall, 2008);
they are the carriers and transferors of business knowledge.
It is characteristic of the nonprofit sector that it is implementing manage-
ment knowledge and practices, and developing specific nonprofit manage-
rial knowledge. From this perspective, managerialism, professionalization,
and hybridization are important processes.
For most people, the word management even nowadays means ‘busi-
ness management.’ However, Ridder et al. (2012) and also Meyer and Leit-
ner (2011) emphasize that nonprofit organizations also need to learn how to
use management as their tool for successful operation. Agard (2010), Cutler
and Waine (2000), Salipante and Aram (2003), and Maier and Meyer (2011)
draw attention to a new approach, which is observable in the nonprofit the-
ory and practice, the so called nonprofit managerialism. Managerialism is
a mindset and behaviour and has its origins in the business sector, but as
time passed it has found its way into the nonprofit sector.
The organizations of the sector increasingly participate in commercial
ventures. Hence, their income comes not from memberships, but from
sales for the commercial market. This develops the entrepreneurial mindset
in these organizations. In relation to this, Salamon (2012) addresses the is-
sue that these organizations provide work instead of service, and this leads
to the emergence of various types of social enterprises. However, the most
interesting is possibly the fact that the driver of the entrepreneurial activity
is not the goal of revenue generation, but the fulfilment of the organization’s
fundamental charity mission. Nonprofit organizations use their revenue for
a variety of goals, such as financing the programs of their mission or to
cover operational costs.
We agree with what Austin (1998) stated, namely that effective manage-
ment of nonprofit organizations requires special competencies, which can
be ensured by people coming from the business sector. The board partici-
Volume 2, Issue 1, 2013
52 Katalin Dobrai and Ferenc Farkas
pation of business people brings their expertise to the nonprofits and helps
develop their managerial and business mindset. The influence of manageri-
alism affects not only the management level, but also results in a growing
efficiency of organizational functions, namely in the changes of these func-
tions and in changing activities.
It is a well known fact that in their everyday operations, nonprofit or-
ganizations traditionally depend on the contribution of volunteers and also
on donations to a great extent, otherwise it would be hard for them to ful-
fil the organization’s mission and deliver higher level service to the target
group (Langer & Schröer, 2011). A phenomenon regarding this is that man-
agerialism negatively influences voluntary work, consequently, the role of
volunteers in the sector decreases.
Hannum et al. (2011) and Hesselbein (2004) draw attention to the
changes in the leadership models of nonprofit organizations, which have
occurred lately. These enormous challenges require learning and develop-
ment of the nonprofit organizations. Such factors, which make learning for
the nonprofits necessary (Hannum et al., 2011), are the commitment and
the need to operate under new types of leaders. Another difficulty is to
become increasingly diversified. Of course, organizational contingencies in-
fluence the decisions regarding the solutions (Brown & Guo, 2010; Epstein
& McFarlen, 2011), managerial or governance tools (Bradshaw, 2009; Rid-
der et al., 2012; Kreutzer, 2009) that should be adopted by the nonprofit
organizations.
The Emergence of Hybrid Organizations
Traditional methods are not sufficient to describe third sector organizations.
Markström and Karlsson (2012) see the causes in the blurring of the bound-
aries between organizations of public, private and nonprofit sector. One sign
of this trend is the emergence of hybrid organizations or organizations with
mixed-structure.
We have to consider hybrid organizations as the organizations possess-
ing the characteristics of organizations of more than one sector. They can be
hybrid organizations regarding their organizational structure, where different
structures co-exist in the same organization. Not only form but also solu-
tion combinations can be viewed as hybridization. Markström and Karlsson
(2012) stress the advantage of the hybrid forms in their feature that they al-
low the nonprofit organizations to access strong and powerful unions, social
networks, and structures, which are formalized and professionalized. It is
not simply a mixture of the characteristics of different sectors but, as seen
by Billis (2010), this also means using different governance and operational
methods and techniques. There is a variety of organizational and legal forms
existing parallel to each other such as community interest companies, so-
International Journal of Management, Knowledge and Learning
Organizational Development 53
cial enterprises, partnerships etc. Regarding this situation, Hasenfeld and
Gidron (2005) show that hybrid organizations combine the characteristics of
social movements, volunteer-run associations, and nonprofit service organi-
zations. They also argue that third sector organizations are dynamic entities,
so the individual organization can change during its whole existence. This
same feature is addressed by Salamon (2012) emphasizing the resilience
as a determining feature of nonprofit sector organizations; for which we can
find proof all over the world.
Professionalization of the Sector
In connection with an increasing degree of the usage of management tech-
niques and management tools, one of the current issues discussed in non-
profit research is professionalization (Maier & Meyer, 2011). This means
striving for more efficient structures, more efficient operation (Mannsky &
Siebart, 2010). According to various research findings, influencing factors
of professionalization can be found in the operations of the nonprofit orga-
nization (Mannsky & Siebart, 2010), in the increasing level and amount of
expertise within the organization (Hwang & Powell, 2009; Dobrai & Farkas,
2008), and in adopting managerial tools (Maier & Meyer, 2011). It is com-
monplace that professionalization goes along with hiring full time, paid staff,
which traditionally is not a common phenomenon in nonprofit organizations.
Professionalization brings expert knowledge not only in the functional fields
of the organization, but also in the leadership positions. Performance orien-
tation is consequently improving and leads to the development of organiza-
tional competences, building capacity, and facilitation of their realization. As
professionalization, we understand the process of becoming professional;
the fulfilment of both organisation-related tasks, and internal and external
services with expertise and excellence.
By looking at the trends that have been described in the previous chap-
ters – no matter if we talk about co-operation, managerialism, or hybridiza-
tion – we have to consider the fact that these are important forces, which
drive the nonprofit organizations in the direction of more professional op-
erations. They choose the ways that support them in their learning and
development processes, and in developing knowledge and skills facilitating
their professionalization process.
Organizational Development and Capacity Building
Cummings and Worley (2008, p. 752) consider organization development
(OD) to be ‘the system-wide application and transfer of behavioural science
knowledge to the planned development, improvement, and reinforcement
of the strategies, structures, and processes that lead to organization effec-
tiveness.’
Volume 2, Issue 1, 2013
54 Katalin Dobrai and Ferenc Farkas
Buchanan and Boddy (cited by Senior, 2002, p. 302), describe organiza-
tional development by using similar aspects; however, they also emphasize
that it is goal- and process-oriented – resulting in improved organizational
capacity:
•It deals with change over medium to long term, that is, change which
needs to be sustained over a significant period of time.
•It involves the organization as a whole, as well as its parts.
• It is participative, drawing on the theory and practices of the be-
havioural sciences.
•It has top management support and involvement.
• It involves a facilitator who takes on the role of a change agent.
It is a well known fact that organizational development is an important
tool of leading change in organizations. It includes everything concerning
the organization, such as organization culture, leadership and manage-
ment, strategy and structure, productivity and performance, systems and
processes, creation and reinforcement of change, innovation, problem solv-
ing, people (teams), workplace relationships, group dynamics, work design,
technology etc. OD views organization as a complex system.
According to our understanding, organization development is a top-down
approach involving the whole organization that aims to increase the effi-
ciency and the lifecycle of an organization though structured actions. We
define an organisational development program for the nonprofit sector as an
organized (national, regional, sector-specific) program that is carried out and
fulfilled within professional framework that ensures targeted organizational
development in the nonprofit sector and in its organisations.
One more characteristic of OD should be emphasized, namely that OD is
an ongoing process in a changing environment. Its aim is to develop skills
and knowledge of the organization members and to build organizational
capacity. McKinsey (2001) emphasises that each element of the capacity
building is important for the success of the organization (among others,
also organizational development). Also, the European Union has acknowl-
edged the importance of capacity building of nonprofit organizations. A re-
search conducted by the European Foundation Centre (EFC) (Carrington,
2008) looks for the factors that help improve the effectiveness and the
quality of the work of nonprofit foundations. Based on 100 interviews, the
study initiated by the EFC Capacity Building Committee, identifies the tasks,
roles, and priorities that help these foundations in the improvement of ca-
pacity building, which is: ‘Actions that improve effectiveness – the process
of strengthening an organization (and the people within) to enhance skills,
knowledge and confidence.’ (Carrington, 2008, p. 3.) This short definition
International Journal of Management, Knowledge and Learning
Organizational Development 55
sums up the most relevant aspects that we principally consider when talk-
ing about the professionalization of the nonprofit sector organizations, and
it also helps us fit the organization development approach in the research
trends focusing on the professionalization of the nonprofit sector.
Evidence from the Practice
Aim and Participants of the Empirical Research
The importance of meeting the demands of nonprofits for development
found response in the organization development program that was offered
to the nonprofit organizations in two counties of the Southern Transdanu-
bian region of Hungary (Table 3), namely in Baranya and Somogy. The aim
of the program was to enable the nonprofit organizations to consciously in-
fluence the factors that impact their situation and to consciously meet the
expectations towards them. Furthermore, the program helped these organi-
zations with choosing the right management tools necessary and appropri-
ate for their progress.
The research was conducted and coordinated by the House of Civic Com-
munities, an umbrella organization that focuses on providing all kinds of
professional services to help other nonprofit organizations. Documents of
and about the program’s details and the list of participating organizations
were provided by this organization. The pilot project with the aim to study the
professionalization and knowledge management features of the Hungarian
nonprofit organizations was based on this program.
Table 3 shows the number of nonprofit organizations in the surveyed re-
gions. From these organizations, a total of 58 organizations completed the
complex organizational development program. The participating organiza-
tions were the target of our online survey. The organizations included in our
analysis were mostly associations and foundations, the two main types of
nonprofit organizations in Hungary: 70 percent of them were associations,
one quarter were foundations. This structure corresponds fairly well with
the structure of the nonprofit sector of this region, where most nonprofit
organizations are operating in the form of associations (Table 3).
Research Process
The collection of the data used in our research took place in 2011–2012.
A questionnaire consisting of 18 questions, most of them with 5–8 sub-
questions, was developed. It consisted of questions with a 7 point ranking
scale and also several open-ended questions.
An e-mail containing the link to an online questionnaire was sent to 58
participants of the organizational development programme, 33 question-
naires were returned and analyzed. Later on 10 additional questionnaires
Volume 2, Issue 1, 2013
56 Katalin Dobrai and Ferenc Farkas
Table 3 Number of Nonprofit Organizations in the Surveyed Region
(Southern Transdanubia)
(1) (2) (3) (4) (5) (6) (7) (8) (9)
2005 1726 236 3357 77 81 238 146 17
2009 1863 226 4136 49 90 254 206 10
2010 1841 216 4119 44 79 226 209 11
Notes Column headings are as follows: (1) year, (2) private foundation, (3) public fundation,
(4) association, (5) chamber, (6) labor union, (7) professional organisation, (8) public benefit
organisation, (9) other. 1 euro = approx. 290 HUF. Adapted from Központi Statisztikai Hivatal
(2012, p. 205–210).
were filled out by the representatives of organizations that hadn’t partici-
pated in this particular OD programme. Since this was an online survey, the
results (statistical analysis) were generated by the online program. We anal-
ysed only those survey questions that provided general information about
the organizational development program, about its main objective and the
outcome of the research, general expectations and outcomes, indepen-
dently from activity field or size of the organization; namely the following
questions:
•Question 3. Name the most important areas of your interest where
you expected to gain new knowledge in the framework of organization
development program.
•Question 4. In your opinion, how well did the organizational develop-
ment program satisfy your expectations that after finishing the pro-
gram you will be able to meet the following challenges your organi-
zation is facing: to participate in national and regional cooperation,
learn principles of organizational and service management, learn the
methods of fund raising and financial management, be able to write
projects and execute them, and be able to deliver quality services.
In order to have a more complete picture about the organizations and
the sector, the authors of this paper took 37 interviews in the summer
and autumn of 2012. The aim of the semi-structured interviews was to get
the information that completes the data received from the questionnaire. It
involved the learning and development needs, and actions of the organiza-
tions during their whole existence. The information from the questionnaire
and the interviews was used to do the necessary alterations for the country-
wide research.
Findings and Evaluation of the Pilot Project
For such research it is always relevant to compare the expectations and
the outcomes from the perspective of the organizations involved, to learn
International Journal of Management, Knowledge and Learning
Organizational Development 57
Table 4 Expectations of the Participating Organizations
Development needs of the surveyed organizations Percentage
Improving fundraising techniques 76%
Communication development 67%
Cooperation development 64%
Financial management 55%
Public relations 48%
Volunteer development 45%
Project planning and management 23%
Conflict management 21%
Administrative activities, documentation, accounting 11%
Other (during the disagnosis arising, not foreseen development tasks) 9%
Nonprofit marketing 1%
why the participating organizations wanted to do this project. The authors
did the same in the framework of the examined pilot project. Based on the
document (application) analysis of the participating organizations, the two
questions (concerning the general expectations and the outcomes) and the
interviews in connection with the same issues, we summed up the results
of the pilot survey in order to answer the research questions.
Expectations of and Tailored Solutions for the Organizations
In accordance with the above articulated development needs of the non-
profit sector organizations, the complex organizational development pro-
gram was supposed to have long term impacts on the involved organiza-
tions. Such a program is able to prepare the participants for more stabile
operations, helps the strengthening and deepening of inter-organizational
cooperation, cooperation between the sectors, decreases the inequalities
between the city and the country, improves their information and communi-
cation infrastructure, improves experience in the field of activities (particu-
larly those in connection with writing applications and successful projects
accomplishment). Through all this, it is able to ensure long lasting existence
of the involved organizations.
According to the results of the survey that was conducted by the authors
of the present paper, it has been proven that the program, which contained
training and development facilitating teamwork and organization-specific
programs was very useful for the participating organizations. This can be
explained through the fact that they offered not only general programs that
fitted all of the participating organizations (foundation nonprofit knowledge,
financial issues in nonprofit organizations, human resource management
in nonprofit organizations, developing partnerships between organizations
and sectors, improvement of organizational activities of the services, op-
Volume 2, Issue 1, 2013
58 Katalin Dobrai and Ferenc Farkas
erational issues of nonprofit organizations etc.), but also programs which
were tailored to the special needs of different organizations.
By covering an extremely broad variety of development fields, they helped
the participants learn and improve their skills and knowledge, and to be-
come more professional in their service.
Lessons Learned from the Research
From the perspective of the demands generated by existing knowledge, the
organizations have a constant learning need they are experiencing in their
everyday routines. Most of them need different kinds of funding to be able
to participate in the formal development. Many organizations are lacking
financial knowledge and skills.
The participating organizations value both formal and informal learning.
They often use umbrella organizations to satisfy their need for expertise
in a special field. A lot of the nonprofits acquire skills and expertise by
carrying out tasks themselves. Projects seem to be very beneficial for them.
A very efficient way of learning is networking, which enables easy access of
information.
Organizational development has special values for the participating non-
profits, because the OD programs contained also programs that were tai-
lored to the specific needs of the individual organizations. Each organiza-
tion, no matter the level of its professionalization, could gain new knowl-
edge. These programs were very important because of an organizational
diagnosis, which helped them identify their strengths and weaknesses and
consequently develop and build capacity.
We can learn from both desk and our own empirical research that non-
profit organizations must turn to managerial tools if they want to find the
right responses to the challenges of their operational environment. There
is a need to become institutionalized and to adjust the existing organiza-
tional structures to the changing expectations. Among others, mixed forms,
networks, communities can be viewed as more efficient structures. The im-
plementation of these new forms goes along with a learning pressure for
the nonprofit organizations, or with pursuing the aim of knowledge sharing
for the sake of the nonprofits and the communities that they serve.
Implementing managerial techniques, finding better and newer solutions
to problems, and improving the organizational processes help nonprofits
with their capacity building. Focusing on the knowledge-related processes
in their operations, learning, personal and organizational development and
developing learning-friendly culture (where expertise and creativity, skills,
knowledge and competences are valued) is among the prerequisites of be-
coming a professional organization.
Findings of the desk and field research are compiled in the model in
International Journal of Management, Knowledge and Learning
Organizational Development 59
Table 5 Enablers of the NPO-professionalization
Structures Processes People
More efficient structures Implementing managerial
techniques
Professional knowledge
in functional areas
Organization design More efficient operations Expertise
Hybrid organizations Adapting new and better
solutions
Professional
management/leadership
Lean structure Standardization Improved competences
Blurry/fuzzy boundaries Learning Increased qualification level
of leaders
Networks Knowledge sharing Skills
Partnerships Co-operations Learning culture
Knowledge communities Capacity building Professional volunteers
Projects/teams Organization development Human capacity
Table 5, which shows the three main pillars of professionalization of the
sector’s organizations.
General Statements About the Research
We can learn from both desk and our own empirical research that nonprofit
organizations must turn to the managerial tools if they want to find the
right responses to the challenges of their operational environment. There
is a need to become institutionalized and to adjust the existing organiza-
tional structures to the changing expectations. Among others, mixed forms,
networks, communities can be viewed as more efficient structures. The im-
plementation of these new forms goes along with a learning pressure for
the nonprofit organizations, or with pursuing the aim of knowledge sharing
in interest of the nonprofits and the communities that they serve.
Implementing the managerial techniques, finding better and newer solu-
tions to problems, improving the organizational processes, help nonprof-
its with their capacity building. Focusing on knowledge-related processes
in their operations, learning, personal and organizational development and
developing learning-friendly culture (where expertise and creativity, skills,
knowledge and competences are valued) is among the prerequisites of be-
coming a professional organization.
The application documents, the survey and interview results showed that
there was a large scale of drivers for participating in the project. The differ-
ences in age, size, and the current development level of the organizations
influenced how they formulated their expectations; this proved a different
level of expertise and also a difference in the professional background of
the participants (the beneficiaries) of the project. However, we can agree
that they all recognized the importance of the learning and development
Volume 2, Issue 1, 2013
60 Katalin Dobrai and Ferenc Farkas
need in order to ensure the sustainable existence of their own organization.
Also, the contingency factors such as location, activity field, lack of opera-
tion resources, lack of info-communications technology, lack of application
experiences, dependence of revenues on governmental (central) sources,
and other characteristics of different organizations found their manifesta-
tion in the large variety of priorities (Table 4).
A common feature that could be observed was that they needed to ac-
quire and develop the managerial skills and knowledge; that they wanted
and had to develop their performance, and increase the quality of their ser-
vice; that they were lacking the financial knowledge they would need for
their everyday operations. They also needed to develop their cooperation
and partnership with other organizations; moreover, they had to improve
their skills in the field of team work and nonprofit specific activities such
as fund raising. These findings correspond completely with the results of
several earlier research projects (Henriksen et al., 2012; Dobrai & Farkas,
2008, 2010; Billis, 2010; Millesen et al, 2010; Neville & Murray, 2008).
Limitations and Future Perspectives of the Research
The sample of the studied organizations cannot be viewed as representa-
tive for the whole country due to the limited number of the surveyed or-
ganizations and limited geographic area. This is why it is not relevant for
the research to go into more detailed description of the participating orga-
nizations and give more detailed analysis of their characteristics (mission,
number of personnel, extent of activity) at this stage. However, the regularity
of the answers collected during the pilot project may become representative
for the sector.
The experiences are now being used in the large sample research that
includes each county of Hungary, with a large number of representatives of
organizations from different fields of activity. The proper differentiation of
organizations caring for old and disabled, those who are delivering services
in the field of health, sport and recreation, education, or advocacy and other
activities will be possible.
Conclusion
The paper gives a critical overview of a variety of issues in connection with
the professionalization in the nonprofit sector. Focus is on the use of soft
tools of change, such as organizational development.
The phenomena that have been described in the first part of the paper
are important forces, which drive the nonprofit organizations in the direction
of increasing efficiency and effectiveness of operations, more conscious op-
erations, improving service quality, and providing more professional opera-
tions. If we look at the nonprofit organizations from this perspective, we can
International Journal of Management, Knowledge and Learning
Organizational Development 61
state that, as a consequence of the changes in their external environments,
they have to learn constantly.
As a summary of the empirical research, it can be stated that organiza-
tion development programs for nonprofit organizations offer great opportuni-
ties for them to build capacity, acquire new knowledge, learn new methods,
develop capabilities; and by using those improve their organization and en-
sure their long-term existence. This was proven by the presented analysis
of the pilot project of a greater empirical research.
The lessons of the project can be useful not only for other nonprofits
in Hungary but also in other countries. If we consider that many aspects
addressed in the present paper are mainstream areas, we can say the per-
spective of organizational development fits well in these trends and adds
to the research in the field of professionalization of the nonprofit organiza-
tions.
The findings also suggest that, based on the lessons learned from the
pilot project, a modified questionnaire will help the researchers expand the
areas of research both geographically (to include all the regions of the coun-
try into the survey) and on as many fields of activity as possible, and would
consequently give a reliable picture of the country’s nonprofit sector. Be-
cause of the increased interest in the issue, and the model developed as
a result of the desk research and the pilot project, we can assume that a
deeper international comparison would also be possible. Furthermore, the
decreasing independency of nonprofit organizations, as a new element of
the professionalization, deserves deeper analysis.
Acknowledgements
Work on this paper was supported by the Hungarian Scientific Research Fund,
project No. 101886. This paper is an extended version of Dobrai and Farkas
(2012).
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Katalin Dobrai is an associate professor at the Faculty of Business and Eco-
nomics at the University of Pécs. Her main teaching areas include Leadership
and management, and Knowledge management. Her research focuses on
knowledge management and organizational learning in knowledge-intensive
businesses, and nonprofit organizations. She has participated in several re-
search projects funded by the Hungarian government and the European Union.
dobrai@ktk.pte.hu
Ferenc Farkas is a professor at the Faculty of Business and Economics at
the University of Pécs. His teaching areas include change management, or-
ganizational behaviour, and leadership. His research interest focuses on non-
profit management and leadership, and human resource management. He
has been the team leader of Hungarian and international projects, financed
by the European Union and the Hungarian government. He holds positions of
Board of Directors and Board of Trustees in for-profit and nonprofit organiza-
tions. farkas@ktk.pte.hu
This paper is published under the terms of the Creative Commons
Attribution-NonCommercial-NoDerivs 3.0 Unported (CC BY-NC-ND 3.0)
License (http://creativecommons.org/licenses/by-nc-nd/3.0/).
International Journal of Management, Knowledge and Learning