Funding sources and performance management systems : an empirical study

Purpose: The purpose of this paper is to explore how performance management systems in nonprofit organizations are influenced by their funding sources. It explains how resources motivate organizations to diversify their strategies with attended performance management systems. Design/methodology/approach: It adopts a qualitative case study approach involving semi-structured interviews with key informants in a nonprofit organization to understand the evolving nature of performance management systems associated with different funding sources. Findings: The findings suggest that the case study organization changed its revenue base along with its performance management systems to satisfy the reporting and accountability requirements of different funding sources. Despite external funding sources detailing different restrictions and requirements, the overall performance management system was able to manage these different expectations. Research limitations/implications: This study is based on a single case study, and its findings need to be interpreted with care, as there are differences between nonprofit organizations because they differ in their environments, services and funding. Originality/value: This paper contributes to extant knowledge on how organizational performance management is influenced by funding sources, providing insights at the operational and governance levels.