Nonprofit Organizations in Governance Arrangements: Adding Democratic Value to Community Reinvestment Act Agreements?

Abstract

This article examines the democratic contribution of nonprofit organizations to governance arrangements. Conceptualizations of governance focus on the multisector arrangements between public, for-profit, and nonprofit organizations that emerge to create public value. Nonprofit organizations have been found to contribute efficiency and effectiveness to these arrangements; however, less is understood about the democratic contribution nonprofits make. It is hypothesized that nonprofits contribute democratic value when they pursue the public interest in accordance with their civil society function. A binary logistic regression analysis is performed on negotiated Community Reinvestment Act agreements from 2000 to 2009 to predict the types of nonprofits that participate in agreements. The results show that nonprofits involved in agreements represent the public interest, as measured by their organizational purpose, representation in communities of need, and organizational capacity. The article suggests that the public interest consequences of governance arrangements vary based on the sources of accountability introduced by the participating organizations.

Keywords:

• democracy
• governance
• nonprofit organizations
• urban and community development policy

Notes

The two main mortgage credit markets are commonly referred to as prime and subprime. Prime markets, which offer credit at a lower interest rate, typically serve middle-income individuals with good credit. The prime market typically serves “A” borrowers, whose credit scores are above 650 (Renuart, 2004). The subprime market provides credit, offered at a higher price, to borrowers with an A– to D rating, based on credit scores.

The year 2000 was chosen because prior to 2000, lenders and nonprofits were not required to report agreement data.