The status of the Romanian nonprofit sector and its readiness for social entrepreneurship Claudia Petrescu, Marton Balogh, Natalia Monica Balogh, Paula Beudean Claudia Petrescu cpetrescu@oakland.edu

Historical background Prior to WWII: charities December 1989: Number nonprofit organizations: zero 2010: Over 62,000 registered nonprofits. 21,000 active. 2015: 90,000 registered nonprofits with one-third active (Romanian National Nonprofit Organizations Register, October 10, 2015).

The Environment After the fall of Communism (1989): No nonprofit knowledge, No community engagement or volunteering culture; No funding mechanism Starting with 1990 Import of nonprofit knowledge International Nonprofits and Foundations (Re)creation of organizations that existed prior to WWII Creation and Development of the sector with external funding 10-15 years later: withdrawal of external funding Present Funding Sources: Romanian state and local governments, EU institutions, Foundations established in Romania or external Foundations

Research Objectives Assess the organizational capacity of Romanian nonprofit organizations for growth and development To understand Romanian nonprofit organizations’ potential for social innovation, respectively if they have the organizational capacity to : understand social needs find new and effective ways to address them To understand the strengths and weaknesses of nonprofits’ capacity from the perspective of social enterprise, respectively if and how they use and apply business practices

Methodology Capacity building assessment instrument created and tested as part of a Capacity Building grant (Petrescu and Clifford, 2009-2011) Interview with nonprofit executives in Cluj-Napoca, Romania to adapt the instrument (Summer 2014) Develop and pre-test the survey. Administer the survey via Survey Monkey Administer the survey to 55 top level managers in selected organizations (June-October 2015) (Main criteria: active) Responses: 33. Return rate: 66%

Characteristics of respondents Age: 8 (25%) were established right after the revolution (1990-1999), 17 (53%) between 2000-2009, and 6 (19%) since 2010. One: 1924 Staff size: 5 (17%) with no staff, 12 (41%) with less than 10 staff members, 6 (21%) with 11-20 staff members, 5 (17%) with 21-50 staff members, one with over 50 staff members Board: 12 organizations (41%): Less than 5 members; 16 organizations (55%): 5-8 members, One organization has more than 8 members N=29

Characteristics of respondents (2) Volunteers: (n=27): 17 organizations (63%) have less than 25 volunteers; 2 (7%) between 26-49; 2 (7%) between 5-100; 6 (22%) over 100 Budget: 10 organizations with budgets of approximately under 1 million lei ($242,000), 12 organizations with budgets between 1 million and 10 million let ($2.4 million); 2 organizations with budgets over $2.4 million Location: From all parts of Romania, but the Nord-Western and Central Regions are better represented, as in these regions (beside Bucharest, the capital) have a higher density of nonprofit organizations

Organizational capacity of Romanian nonprofits for growth and development Budget trends (N=29) in the past five years 24 organizations (89%): increasing. Three (10%): decreased budgets Two organizations: did not know Funding sources (N=29) 19 organizations (66%) have a diversity of sources. These sources can be: external to the country, private sector, state and local government, a combination of private and public, donations. 10 organizations (25%) rely on one source

Nonprofit Sector’s Potential for Social Innovation

Nonprofit Sector’s Capacity for Social Enterprise

Performance level (% respondents) Strategic decisions: Organizational Practices and the level of performance N Performance level (% respondents)   We do this very well We should do this better We don't do it but we should Take into consideration the org mission 26 69 23 Take into consideration past performances 54 39 8 Take into consideration outcomes of program evaluation 19 50 27 Based on information provided by board, volunteers and employees Take into consideration socio,econ,techical and legal factors 62 12 Take into consideration financial trends and situation 58 Include long and short term objectives 35 ED evaluates on a regular basis the achievement of the SP goals 25 72 Job Descriptions are updated on a regular basis 32 44 20 Staff seeks public and private funding sources 40 48 Org has an efficient system for monitoring grants administration 56 36 Org creates partnerships with private sector for resource diversification 24 38 Org partners with other organizations on projects 67

Summary of the exploratory study Complements present studies of the Romanian sector We found elements of strategic management: organizations are seeking to understand community needs, collect information from their stakeholders to understand the type of services they need to provide or develop analyze the external environments strategic decisions are being made by seeking funding through partnerships This study contradicts previous studies (Bibu&Lisetchi, 2011; FDSC & USAID2014 ) The finding that a large majority of our respondents use strategic planning Good budgeting practices

Summary of the exploratory study (2) Difference between our study and previous studies: previous studies did not look at all to how the organizations prepare for entrepreneurial activities. They only measured the value of the income-generating activities of the sector, and surveyed the interest of NGOs in social entrepreneurship. The young Romanian nonprofit sector is developing its management practices, is learning and on its way to adopt best practices developed by mature organizations.

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