The Iron Triangle of Affordable Homeownership: Habitat for Humanity Affiliate Strategies for Balancing Efficiency,Effectiveness,and Equity

Abstract

While the public values of efficiency, effectiveness, and equity have been extensively studied in the public sector, very little research exists in the nonprofit context. In particular, we lack an understanding of what public values nonprofit leaders prioritize, why they prioritize certain public values over others, and how they balance or make tradeoffs between public values. Thirty-six Habitat for Humanity affiliate leaders from the United States were interviewed for this research. Interestingly, while the nonprofit leaders in the sample represent the same mission, they all prioritize different public values—though a plurality focuses on equity. We also found that the three primary challenges they perceive in achieving these public values relate to access, quality, and capacity. While Habitat leaders already apply strategies to deal with these challenges, we offer some additional suggestions for Habitat affiliates and similar affordable homeownership nonprofits to consider.

Keywords

public values efficiency effectiveness equity Habitat for Humanity affordable homeownership

Introduction

An emerging view of public administration, building on the perspectives offered by New Public Management, posits that public service organizations must balance traditional measures of success (Moynihan et al., 2011; Talbot, 2010) with mission-based values (Radin, 2006), or make tradeoffs to resolve conflicts (Oldenhof et al., 2014). Much of the literature on public-value prioritization has focused on differences between sectors (de Graaf & van der Wal, 2008; Miller-Stevens et al., 2015; Van der Wal et al., 2008) or on why individuals in similar sectors prioritize public values differently (DeForest Molina & McKeown, 2012; Fernández-Gutiérrez & Van de Walle, 2019; Van der Wal & Hubert, 2008; Stazyk & Davis, 2020; Stazyk et al., 2017). Yet very few have examined the prioritization of public values in the nonprofit sector (Miller-Stevens et al., 2015).

Understanding how public values are assessed when considering public management performance for decision-making is essential. Public service organization managers are often faced with balancing or compromising objectives that may not be compatible with improving the organization (Andrews & Entwistle, 2010; Andrews & Van de Walle, 2013; de Graaf & van der Wal, 2008). However, the prioritization of these values for guiding decision-making takes on added importance given the significant role that nonprofit organizations play in meeting the needs of society. Thus, this research study asks the following questions: What public values are nonprofit leaders prioritizing? Why do nonprofit managers prioritize certain values over others? And how do nonprofit leaders balance or make tradeoffs among public values?

This research is important for several reasons. First, nonprofits play a unique and significant role in meeting public needs. Therefore, understanding the nonprofit sector's approach to prioritizing certain public values will inform the emerging literature on public-value governance. Second, this study takes an empirical approach to understanding nonprofit prioritization and explores the challenges nonprofit leaders may face in balancing or making tradeoffs among the public values. Thus it adds an essential but missing element to the conflicting public values literature (Bozeman, 2008; Charles et al., 2008; Moore, 1995).

Literature Review

Public Values: Definition and Relevance

We use Miller-Stevens et al.'s (2015, p. 2426) definition of public values as “those values that guide decision making in the public interest.” It is important to note that public values differ from public value, which the value is created by public managers (Moore, 1995). Many public values can guide public managers. For instance, in a review of the literature, Jørgensen and Bozeman (2007) identified 72 public values that had been examined. Some of the identified values were accountability, balancing interests, citizen involvement, democracy, effectiveness, efficiency, equity, fairness, good working environment, and honesty. Many different studies explore a variety of public values, but effectiveness, efficiency, and equity are often studied together (e.g., see Andrews & Entwistle, 2010; Andrews et al., 2019; Brinkerhoff, 2002; Brown et al., 2006; Davis et al., 2013; Lien et al., 2014; Sengul Orgut et al., 2016) as they have been regarded as “the most important dimensions of public service performance” (Brewer, 2006, as cited in Andrews & Entwistle, 2010, p. 680).

We also focus on the public values of efficiency, effectiveness, and equity in response to Bryson et al.'s (2014) acknowledgment that there is an emerging view of public administration in which efficiency, effectiveness, and the full range of democratic and constitutional values are now more prominent. Furthermore, in the context of public management, Baehler et al. (2014) categorize public values as either integral, meaning they produce improved outcomes, such as efficiency and effectiveness, that are related to an organization's mission; or extrinsic, meaning they do not contribute directly to achieving the core mission (Baehler et al., 2014). Bryson et al. (2014) argue that pursuing extrinsic public values is critical to moving beyond traditional public management and New Public Management approaches.

Efficiency, Effectiveness, and Equity as Guiding Principles in Public Administration

Many different public values guide organizations, but effectiveness, efficiency, and equity are foundational to public administration (Dahl, 1947), and are also key performance measures for organizations (e.g., see Andrews & Entwistle, 2010; Andrews et al., 2019; Andrews et al. 2017; Davis et al., 2013; Sengul Orgut et al., 2016).

Traditional public administration focused on efficiency as a guiding principle. In his seminal article, Wilson (1887) stated that “it is the object of administrative study to discover, first, what government can properly and successfully do, and secondly, how it can do these proper things with the utmost possible efficiency” (p. 197). This was further supported by classical organizational theories like Weber's bureaucratic design Weber (1952), Taylor's Scientific Management (1911), and Gulick's Theory of Organization (1937), all of which examined optimal working arrangements to maximize efficiency. New Public Administration emerged after the Minnowbrook Conference in 1968 (O’Leary et al., 2011). As a result of the social and political unrest of the time, social equity emerged as a value requiring greater emphasis in public administration study and practice (Gooden & Portillo, 2011; Hart, 1974). Shortly after, Rawls (1971) developed a theory of justice to promote a more equitable and just society. However, according to Norman-Major (2011), “social equity still struggles to find its place as an equal among the traditional public values of economy, efficiency, and effectiveness” (p. 233). Throughout the 1980s and 1990s, New Public Management emerged, emphasizing a more business-like approach and the values of efficiency and effectiveness (Bryson et al., 2014). However, equity still did not gain the necessary traction. More recently, Bryson et al. (2014) argue that an emerging approach to public administration embraces the key values of efficiency and effectiveness and the full range of democratic and constitutional values such as equity. The following describes the values of efficiency, effectiveness, and equity in greater detail.

Frederickson (2010) explained that efficiency refers to “achieving the most, the best, or the most preferable public services for available resources” (p. xv). According to Manzoor (2014), efficiency has evolved to hold dual meanings in public administration. One definition corresponds with bureaucratic organizational forms as the most efficient type of organization (Manzoor, 2014; Rutgers & van der Meer, 2010); another refers to how organizations respond to the multiple, conflicting goals of democratic organizations (Manzoor, 2014; Rutgers & van der Meer, 2010). Rutgers and van der Meer (2010) trace the evolution of the concept of efficiency, differentiating between the technical definition of efficiency as a ratio of resources to results, and a substantive description specific to goals (Rutgers & van der Meer, 2010). Inherent in their definitions is recognizing goal ambiguity in the public sector, contributing to the ultimate measure of inputs and outputs.

Manzoor (2014) describes effectiveness as a partner to efficiency and notes that the terms are often used interchangeably. Hoyle & Wallace (2005) contribute to the definition by describing effectiveness in terms of accomplishing “valued outcomes” (p. 35). Rutgers and van der Meer (2010) clarify that effectiveness is the accomplished work and the results, and state that effectiveness is used as a qualifier for technical efficiency.

There have been conflicting definitions of social equity in the public sector. Frederickson (2010) defined equity at the organizational level as impartiality within an organization and its products. The National Academy of Public Administration extends this definition to the sector and includes the advocacy of fairness and justice in public policy. Johnson & Svara (2015) define social equity at both the individual and organizational levels as an “active commitment to fairness, justice, and equality” (p. 282). While these definitions overlap, equity still lacks a consistent, universal interpretation (Gooden & Portillo, 2011; Norman-Major, 2011; Svara & Brunet, 2004). As Svara and Brunet (2004) exemplified, one administrator may seek consistency as equity, whereas another may seek to provide programs that target disenfranchised communities. Without conceptual and operational clarity, social equity is not as actionable or achievable for public administrators as efficiency or effectiveness (Norman-Major, 2011). As noted by Berry-James et al. (2021), equity is not well enmeshed in the “practice of public administration” (p. 10). This challenge can be further complicated when laws bind public administrators, including laws that contradict a commitment to social equity (Durant & Rosenbloom, 2017; Svara & Brunet, 2020).

Conflicts between Efficiency, Effectiveness, and Equity

Efficiency, effectiveness, and equity are common objectives among organizations that provide public services (Savas, 1978). However, “managers experience these values as pressures from internal and external stakeholders that they must balance or optimize as they deliver services … The services themselves and the character and composition of their markets influence the ability of public managers to optimize or balance competing values through service delivery” (Brown et al., 2006, p. 324). However, it can be challenging to balance these public values as they can work against one another, and as a result, tradeoffs must be made (Brown et al., 2006; de Graaf & van der Wal (2008). This tension ties into Baehler et al.'s (2014) notion that public values can be either integral or extrinsic to the mission since if balance cannot be achieved amongst public values, careful prioritization of one public value over another is important to satisfy stakeholders and ensure the survival of the organization. For instance, internal stakeholders may be more attuned to efficiency and effectiveness, whereas external stakeholders may be more attuned to equity.

Prioritization of Public Values

Researchers have studied public-value prioritization by comparing value sets between different sectors (de Graaf & van der Wal, 2008; Miller-Stevens et al., 2015; Van der Wal et al., 2008). For example, de Graaf & van der Wal (2008) find that private managers prioritize profitability, competition, and customer orientation, whereas public managers prioritize legitimacy, lawfulness, accountability, and impartiality. Van der Wal et al. (2008) find that private managers prioritize profitability, accountability, reliability, effectiveness, expertise, and efficiency, whereas public managers prioritize accountability, lawfulness, expertise, reliability, effectiveness, and impartiality. While there is some overlap between public and private sector values, such as accountability, reliability, and effectiveness, there are also some key distinctions. Extending this research to the nonprofit sector, Miller-Stevens et al. (2015) compare the value sets of public and nonprofit managers, finding a high degree of congruence between the two sectors.

At the same time, other studies focus on why individuals in similar sectors or contexts prioritize public values differently (DeForest Molina & McKeown, 2012; Fernández-Gutiérrez & Van de Walle, 2019; Van der Wal & Huberts, 2008). Some studies support that personal characteristics, such as professional and educational background, age, role, and gender, strongly influence an individual's prioritization of specific public values. For instance, Fernández-Gutiérrez and Van de Walle (2019) find that public officials with education in business or economics prioritize efficiency rather than equity. Similarly, DeForest Molina and McKeown (2012) find that professional education shapes leaders’ values. Regarding professional background, Fernández-Gutiérrez and Van der Walle (2019) and Van der Wal and Huberts (2008) find that work experience does not significantly affect public-value preferences of public and business managers. Van der Wal & Huberts (2008) also found that age is a strong predictor of the public values of sustainability and social justice. Furthermore, Fernández-Gutiérrez and Van de Walle (2019) find that those with fewer than five years of seniority in the public sector orient themselves more toward efficiency than those with 20 years. They also find that public officials at the top of the hierarchy lean toward efficiency. At the same time, those closer to the recipients of policies and services lean toward equity (Fernández-Gutiérrez & Van de Walle, 2019). DeForest Molina and McKeown (2012) explored how different administrative roles influence public-value preferences. For example, they find that stewards gravitate toward professional public values such as dedication, effectiveness, and efficiency, whereas mediators gravitate toward ethical values such as honesty, integrity, and social justice. Stazyk et al. (2017) explored how race influences public employees’ value preferences finding that “minority and white managers express similar preferences for traditional public administration values; however, minority managers report a stronger preference for both traditional public administration (e.g., efficiency and effectiveness) and social equity-oriented (equity, representation) values” (p. 605).

In addition to finding that personal characteristics can influence value prioritization, these studies have also found that organizational factors can also be an indicator. Fernández-Gutiérrez and Van de Walle (2019) also assess how organizational size affects public-value prioritization. For example, they find no significant differences in equity-efficiency positions of public officials working in organizations with fewer than 50 employees; however, those with 50–500 employees are oriented toward equity (Fernández-Gutiérrez & Van de Walle, 2019). As a result of DeForest Molina and McKeown's (2012) work, they developed a theoretical framework that proposed that the public administration context, such as organizational culture, affects public service values. In another study, Stazyk and Davis (2020) find that clear goals of public agencies increase how public managers emphasize traditional public values of efficiency, economy, and effectiveness when making organizational decisions.

This body of literature helps us understand why the various sectors prioritize different public values and why individuals in similar sectors prioritize public values differently. However, it is very much focused on the for-profit and public sectors, with very few studies focusing on how the nonprofit sector prioritizes public values. Furthermore, there is limited empirical evidence that shows how nonprofit leaders balance or optimize those value sets, and how they prioritize one value over another when tradeoffs need to be made. This study seeks to help fill that gap.

Methodology

This research design utilizes a case study approach to better understand how nonprofit leaders prioritize the public values of efficiency, effectiveness, and equity and how they make tradeoffs or balance them (Stake, 1995). Within this approach, this article focuses on data retrieved from 36 in-depth, qualitative interviews with Habitat for Humanity leaders across the United States. Habitat for Humanity “brings people together to build homes, communities, and hope” (Habitat for Humanity, 2021). The sample is used because of similarities in operations and outputs across affiliates, allowing each affiliate's efficiency to be measured.

Data Collection

This qualitative study utilizes a stratified purposeful sampling strategy that creates subgroups to facilitate comparisons (Creswell & Creswell Báez, 2021). Data from several sources are used with the stratified purposeful sampling strategy. The housing production data was provided by Habitat for Humanity, while the financial data comes from the IRS Form 990 provided by GuideStar by Candid. Habitat for Humanity provided the 2016 production report for all its affiliates in the United States, which included 1,385 Habitat for Humanity organizations. Only those that completed the IRS Form 990, produced houses and reported program and management expenses are included in the study as this information is necessary to calculate the efficiency of each affiliate. This resulted in a sample of 840 Habitat organizations.

The subgroups used in the stratified purposeful sampling technique are based on efficiency level and organizational size. Data envelopment analysis (DEA) measures the organizations’ efficiency level. DEA is a nonparametric, mathematical programming model that maximizes the sum of an affiliate's output-to-input ratio (Charnes et al., 1978) and is a common nonprofit efficiency measure amongst scholars (e.g., see Ayayi & Wijesiri, 2018; Coupet & Berrett, 2019; González-Torre et al., 2017; Miragaia et al., 2016). DEA produces an efficiency score between 0 and 100. An organization scoring 0 is considered least efficient, whereas an organization scoring 100 is considered most efficient. Groups were created by classifying organizations with low-, moderate-, or high-efficiency scores. To ensure that a diverse sample was collected, the three groups were divided into small, medium, or large organizations based on total revenue. The interviewer randomly selected and invited leaders from these groups to participate in the interviews. Interviews were conducted until saturation was reached for each group.

Interviews were conducted with 31 executive directors and five board chairs from 18 states. Of those interviewed, two were black (5.56%) and 34 were white (94.44%), while 16 were female (44.44%) and 20 were male (55.56%). Before working with Habitat, five of those nonprofit leaders came from the public sector (13.89%), nine from the nonprofit sector (25.00%), eight from the for-profit sector (22.22%), and 14 brought experience from a combination of the sectors (38.89%). Of the organizations that the nonprofit leaders represent, 15 were highly efficient (41.67%), nine were moderately efficient (25.00%), and 12 had low efficiency (33.33%). In addition, six of those organizations were small (16.67%), 11 were medium sized (30.56%), and 19 were large (52.78%).

Interview protocols were developed and piloted amongst Habitat leaders and approved by the Institutional Review Board. The interviews took place between November 2019 and January 2020. While interviewees were asked a series of 15 questions as part of a larger study, the key questions that pertain to this study include: (1) Three public values commonly related to nonprofit organizations are efficiency, effectiveness, and equity. I define these as efficiency is producing the most at the lowest cost; effectiveness is the extent to which an organization is making an impact or creating change; equity is giving people what they need to be successful and leveling the playing field, rather than giving everyone the same thing or equal amounts. How would you rank these in order of priority for your affiliate? (2) What contributes to this priority ranking? (3) How does your organization make tradeoffs between the three values? Or how do you balance the three? While the interviews averaged 30–60 minutes, the questions pertaining to this study took approximately 10−15 minutes.

Data Analysis

The qualitative data analysis was conducted in Dedoose and Excel and included qualitative content analysis. The qualitative data were analyzed by the following process: (1) preparing, organizing, and reading through the data, (2) exploring the data through coding text segments and assigning a code label based on the main idea being conveyed, (3) grouping codes to eliminate redundancy and overlap, (4) using codes to develop overall themes, (5) creating a conceptual map of the different themes, and (6) developing a narrative story that ties together all of the themes (Creswell & Creswell Báez, 2021).

This study uses multiple validity strategies to assess the accuracy of our interpretations. The strategies are best implemented “through the eyes of the researchers, the views of the participants and readers and reviewers of studies” (Crewsell & Miller, 2000, as cited in Creswell & Creswell Báez, 2021, p. 199). Through the lens of the researchers, the research team engaged in the process of reflexivity. Each research team member has experience working directly with nonprofit organizations, so it was important to acknowledge and have ongoing discussions about how our values, attitudes, and biases may influence the research (Creswell & Creswell Báez, 2021). As part of this process, we monitored our subjective ideas to remain close to the participants’ understandings. This awareness serves to bring greater objectivity to the research process. As researchers, we also looked for disconfirming evidence, identifying any exceptions to the main themes identified (Creswell & Creswell Báez, 2021). Through the lens of the participants, the researchers collaborated with the participants and conducted pilot interviews with seven Habitat leaders. Lastly, through the lens of readers and reviewers of studies, thick, rich descriptions were used. These descriptions can be observed through the themes, subthemes, and codes used in Table 1, along with the direct quotes used throughout.

Table 1.

Themes Related to the Challenges in Balancing Efficiency, Effectiveness, and Equity.

Themes	Subthemes	Codes
Access	Equity versus equality	Subsidize what they need, or everyone gets the same subsidy Equity versus equality
	Policy restrictions	Board votes Habitat policies
	Families/homeowners	Need to invest in families Finding the right family Ability to pay a mortgage Family qualification Sweat equity Need to go through financial training Families do not want to live in certain areas
	Demand	So much need Great demand
	Outreach	Reaching broader demographics Nondefined market area
Quality	Quality versus quantity	Building cheap, cookie-cutter homes Lack of quality Have hit a ceiling of growth versus quality Can't serve a lot of people when making significant investment
Capacity	Financial capacity	Grant restrictions Lack of financial resources Overall cost Cost of materials Cost of labor Cost of land
Capacity	Human resource capacity	Volunteers Time Not enough people Organizational size Building relationships is not efficient

For interrater reliability, the questions related to how interviewees prioritize the three specified public values and what contributes to this priority ranking were initially coded by the primary interviewer, followed by a graduate research assistant. Both coders coded all 36 of the transcripts. If there were discrepancies in the coding, discussions were had until 100% agreement was reached. The question related to how organizations make tradeoffs or balance the specified public values was coded by the primary interviewer and second author following the same process to ensure interrater reliability. The themes that emerged were then discussed and analyzed by the authors of this paper, one of whom was the primary interviewer. This process supported a high level of intercoder agreement.

Lastly, the generalizability of studies can be applied internally or externally. According to Maxwell (2021), “internal generalization is generalization within the setting, group, or population that is subject to the study. External generalization is generalization to other settings, groups, or populations” (p. 111). The primary aim of this study is to apply internal generalizability to the population sampled (Habitat for Humanity affiliates). Through the stratified purposeful sampling strategy, we aim to have a sample representative of the broader population of Habitat for Humanity affiliates in terms of organizational efficiency level, organizational size, and geographic representativeness. We also apply the qualitative concept of transferability, in which the reader or potential user of the results is responsible “for the transfer of the original study's findings, to a different setting, group, or population” (Maxwell, 2021, p. 112). In this paper, we are not claiming that the results generalize to all nonprofits; rather, we believe that organizations with similar goals and contexts, such as affordable homeownership nonprofits, may find our results helpful.

Results

Habitat Leaders’ Prioritization of Public Values

Based on their perspectives, Habitat leaders discussed how they rank the public values of equity, effectiveness, and efficiency in decision-making for their organization. We found that a plurality of respondents prioritize equity at 36.11% (13/36), 22.22% prioritize effectiveness (8/36), and 19.40% prioritize efficiency (7/36). Of the remaining respondents, 22.22% did not prioritize a single public value but indicated that they balance all three (8/36). See Figure 1.

Figure 1.

Public-value prioritization.

Equity

Following up with the question, “What contributes to this priority ranking?” we found that Habitat leaders who prioritize equity indicated that equity is directly aligned with their mission. Habitat focuses on families and the quality of being fair and impartial to those who cannot afford a home. As one respondent said, “We want to give people what they need, which is safe, decent, and affordable housing” (Habitat leader, personal communication, December 12, 2019). Others who prioritize equity describe Habitat's impact on generations of families. Another respondent commented, “What happens in our program is not just life-changing; it's generation-changing” (Habitat leader, personal communication, December 17, 2019). Although equity is directly connected to Habitat's mission, many discuss intentionally prioritizing equity above costs (efficiency).

Efficiency

Many Habitat leaders who prioritize efficiency had difficulties explaining why often conflated efficiency and effectiveness or saw them as equally important. They also did not see equity as a distinct consideration because it was “baked in” to the process. Respondents emphasized the interconnectedness between efficiency and effectiveness, suggesting that an organization cannot be effective if it is inefficient. However, one respondent commented, “My efficiency in construction is to see that our costs are accurate and that we are raising the appraised value of our houses to increase the value of the overall neighborhood” (Habitat leader, personal communication, December 12, 2019). Others primarily focus on financials, and some communicated that efficiency is a primary objective because the need, or demand, is so high.

Effectiveness

Habitat leaders who prioritize effectiveness primarily focused on the family, similar to those who prioritized equity. Numerous respondents emphasized that if Habitat affiliates are not effective, they neglect their mission. For instance, one respondent stated, “If we’re not accomplishing what we are proposing that we should be accomplishing, then the other two (efficiency and equity) are not going to be relevant” (Habitat leader, personal communication, January 8, 2020). Interviewees indicated, however, that Habitat affiliates cannot be effective if they are not equitable.

Balance

Respondents who did not prioritize any of the specified public values, but instead stated that they aim to balance all three, emphasized the interconnectedness of efficiency, effectiveness, and equity. As one respondent said, “Efficiency can lead to more effectiveness. Equity—do you subsidize what they need, or does everyone get the same subsidy? That ties into effectiveness. If you subsidize too much, you don't have enough for the next family. I don't think it's a tradeoff, but they are linked. One can boost another” (Habitat leader, personal communication, November 18, 2019). The focus on families arose numerous times when interviewees indicated that they balance all three public values. Respondents emphasized that Habitat strives to give families what they need; investing in families is a high priority.

Challenges and Strategies for Balancing and Making Tradeoffs between Efficiency, Effectiveness, and Equity

When interviewees were asked, “What contributes to this priority ranking?” and “How do you make tradeoffs between the three values? Or how do you balance the three?” they described both challenges and strategies. The emerging view of public administration indicates that public managers should incorporate integral and extrinsic mission-based public values into strategic decision-making (Rosenbloom, 2007). However, the prescribed approach is somewhat ambiguous, and not firmly grounded in theory (Bryson et al., 2014). An inductive examination of the data revealed challenges and strategies that illustrate how and why leaders contend with achieving key performance measures while incorporating extrinsic public values. The following sections describe the three key themes that characterize the challenges leaders face and their strategies in relation to efficiency, effectiveness, and equity. Those three themes are access, quality, and capacity. Please see Table 1 for a list of the themes, subthemes, and codes.

Challenges

Access

In the context of Habitat for Humanity, access is about providing affordable and safe homeownership to all who seek it. When speaking about access, interviewees talked about the tension between equity and equality, policy restrictions, working with and helping families, the high demand for affordable homeownership, and the challenges with outreach.

Habitat's mission is all about creating equitable access to affordable homeownership and leveling the playing field for individuals who might need extra support in purchasing a home. At the same time, once homeowners are selected, the homebuilding process focuses on equality. For example, one respondent commented, “Each of our families is given the same housing opportunities in terms of what goes into each house” (Habitat leader, personal communication, November 25, 2019). Similarly, another respondent said, “Habitat for Humanity through its history has had the one-size-fits-all approach” (Habitat leader, personal communication, November 18, 2019). This is mainly due to Habitat for Humanity International's policies. Of course, if individuals need accessibility features in their homes, they will get those. But for the most part, Habitat builds cookie-cutter houses, which are identical homes designed to save money (Christensen, 2022). However, this creates tension between promoting equity and equality. As one respondent commented, “Do you subsidize what they need, or does everyone get the same subsidy?” (Habitat leader, personal communication, November 18, 2019).

Habitat leaders also spoke about working with homeowners and their families to help them prepare for homeownership. Prospective homeowners must put in sweat equity and participate in financial training. As one respondent said, “Our families have difficulty understanding balancing a checkbook. So, we help them develop financial prowess” (Habitat leader, personal communication, November 12, 2019). While Habitat aims to be equitable, their families still need to qualify for homeownership, which takes a significant investment by Habitat and its volunteers. This means they must find suitable families; not every family will qualify. For example, families can say “I don't want to work. I don't want to live in that neighborhood” (Habitat leader, personal communication, November 29, 2019), which would disqualify a family.

Regarding demand, in many communities, there is a great need for affordable homeownership. One Habitat leader said a recent study indicated “a deficit of 6,000 affordable housing units here in our community. We are only building six to ten a year” (Habitat leader, personal communication, December 17, 2019). Similarly, another leader said, “There's probably 100,000 people in our city that would easily qualify for affordable homeownership” (Habitat leader, personal communication, December 17, 2019). Most Habitat affiliates cannot meet those demands, making it hard to increase access.

Lastly, there are challenges with outreach. Respondents spoke about the challenge of reaching broader demographics and not having a well-defined market area.

Quality

As mentioned previously regarding access, Habitat affiliates tend to build cookie-cutter homes on the cheaper side, creating a quality versus quantity issue. This leads to several problems. As one leader commented,

I would rather spend more money on something better quality rather than the cheapest house that is substandard. Habitat has cookie-cutter houses. The majority of the houses look exactly the same in our area. Like no front or back porch and no garage. You know it's a Habitat house when you drive by. We need to put in the budget to have porches and garages. Spend a little more money … A garage and a porch may increase their monetary payment by $50 a month, so we need to find a family that can afford that” (Habitat leader, personal communication, November 14, 2019).

Another Habitat leader said the challenge is that “when you have to make such a substantial investment, you serve fewer numbers of people” (Habitat leader, personal communication, December 3, 2019). Some affiliates are trying to serve more families; this often results in trying to save on costs to squeeze in that one extra house. But those saved expenses may result in poorer quality. One affiliate mentioned that they had hit a growth ceiling with compromising quality. This creates further complications. If Habitat is building houses, not of excellent quality, it will cost the homeowner more down the road in repair bills or increased utility bills.

Capacity

During the interviews, Habitat leaders discussed financial and human capacity. Financially, the high cost of materials, labor, and land is a significant concern, which leads to a lack of financial resources to cover those increased costs. High costs equate to less efficiency, but furthermore, as one leader put it, “There's a very high cost to produce that equity. When you think of raising $170,000 to help one family, there are many shoes you can buy with that” (Habitat leader, personal communication, December 17, 2019).

In addition, they described experiencing a challenge in human capacity. Habitat relies heavily on volunteers, which has both pros and cons. On the one hand, volunteers donate their time and can provide a bigger workforce. On the other hand, utilizing volunteers can take longer. Most are not experts in home construction, so mistakes are sometimes made, and there is a cost to volunteer recruitment and management. Habitat leaders also talk about being small and not having enough people to get everything done. There are also tensions in how time is spent. For example, building relationships and fundraising is an integral part of nonprofit work, but it takes away crucial time from the homebuilding, making organizations inefficient when it comes to time.

Strategies

While the Habitat leaders spoke about many of the challenges they face, they also described different strategies they apply to help them make decisions. Below, we organize the strategies related to access, quality, and capacity.

Access

Four key strategies emerged for increasing access. First, it was clear that the leaders see equity as the primary focus of the organization, and feel that when it comes to equity, they must not compromise or make tradeoffs. One organization discussed focusing on equity, orienting it in the middle of efficiency and effectiveness: “So, if I were to think about them, like if you could visualize a scale. I would put equity right in the center, and then put efficiency and effectiveness on either end of the scale. It's a balancing act any given day” (Habitat leader, personal communication, January 6, 2020). Second, Habitat leaders said that “if equity is a priority, it will lead to efficiency and effectiveness” (Habitat leader, personal communication, November 18, 2019). In contrast, another asserted that having equity and efficiency will lead to effectiveness: “You can't be effective if you don't have any equity and efficiency” (Habitat leader, personal communication, November 8, 2019). Third, leaders saw investment into families, such as helping them with financial training, as crucial. Fourth, organizations can create more equitable subsidies for homeowners and their families.

Quality

To improve quality, several leaders provided some insight. One Habitat leader said, “Focus more on spending than saving” (Habitat leader, personal communication, December 12, 2019), while another respondent said, “Spend more to create quality” (Habitat leader, personal communication, November 14, 2019). While these strategies may be counterintuitive to nonprofit practices and efficiency, they are vital to increasing quality.

Capacity

Habitat leaders spoke about the financial and human resources needed to increase capacity. Regarding financial resources, one respondent talked about how “efficiency leads to effectiveness” (Habitat leader, personal communication, November 18, 2019). Others spoke about being more efficient by negotiating free labor and working on receiving breaks from contractors and on real estate. Habitat relies heavily on volunteers for labor, but still needs to hire professionals such as electricians and plumbers. Regarding human resources, leaders talked about the importance of partnerships and triage: “The more you embrace true partnerships, one must consider the partner's issue as their own. That being said, helping others’ issues usually helps you as well. Being able to triage on a regular basis is critical. Tradeoffs really don't happen as much as adjusting timelines for completion happens” (Habitat leader, personal communication, December 12, 2019).

Discussion

While efficiency, effectiveness, and equity are important public values and performance measures, it can be difficult for nonprofits to prioritize or achieve all three. Therefore, this study set out to understand what public values Habitat leaders prioritize, why they prioritize certain values over others, and how they balance or make tradeoffs among public values, given the challenges involved. While we found that the plurality of nonprofit leaders prioritize equity, we also identified three primary challenges to achieving these public values and strategies associated with overcoming those challenges. The key challenges were access, quality, and capacity. These themes illustrate how these managers approach strategic decision-making while incorporating integral and extrinsic mission-based public values prescribed by the emerging literature (Bryson et al., 2014; Rosenbloom, 2007). While the leaders already apply strategies to deal with these challenges, we offer some additional recommendations for Habitat affiliates to consider. In addition, we believe that affordable homeownership nonprofits with goals and contexts similar to Habitat's may find our results and suggestions helpful.

The plurality of nonprofit leaders prioritizing equity provides evidence that we are starting to see a shift; equity is gaining greater traction as a critical public value. Nonprofit leaders may prioritize equity as a natural result of the nonprofit sector's overall mission and unique context. As many nonprofit leaders must deal with the tension of staying true to the mission while balancing the values of efficiency, effectiveness, and equity, these findings provide theoretical insight for research and practice. The shift could also indicate a broader sociopolitical movement toward a focus on equity, particularly considering the institutional fallout that occurred during the Trump administration (Goodsell, 2019; Moynihan & Roberts, 2021).

Although this study only focused on Habitat for Humanity, a chapter organization with a shared mission, it was interesting to see how the various chapters prioritized values differently. While there are many possible explanations, such as individual and organizational characteristics (DeForest Molina & McKeown, 2012; Fernández-Gutiérrez & Van de Walle, 2019; Van der Wal & Hubert, 2008; Stazyk & Davis, 2020; Stazyk et al., 2017), additional research tells us that chapter organizations must meet accountability demands that match their local context, even if they share the same mission (Siddiki & Lupton, 2016). Therefore, differences in local context may contribute to Habitat leaders having different priorities. We believe this directly illustrates how nonprofit managers must balance mission-centric values related to performance measures with extrinsic public values important to society.

Regarding making tradeoffs versus balancing values: efficiency, effectiveness, and equity are common objectives amongst organizations that provide public services (Savas, 1978) but our findings indicate that, as noted by Sengul Orgut et al. (2016), “these objectives may be in conflict with another resulting in tradeoffs for decision-making” (p. 240) and organizations must perform a balancing act to deal with the conflicting public values. Our findings are very similar to those of Sengul Orgut et al. (2016) and Kissick (1994), who proposed the “iron triangle of hunger relief” and the “iron triangle of healthcare,” respectively. In their study of hunger relief organizations, Sengul Orgut et al. (2016) find that the challenges of achieving efficiency, effectiveness, and equity are supply, distribution, and capacity. In healthcare, Kissick (1994) finds that the challenge is balancing cost, access, and quality. Therefore, we propose the Iron Triangle of Affordable Homeownership as an illustration for understanding how the three primary challenges of access, quality, and capacity impact nonprofit leaders’ ability to balance efficiency, effectiveness, and equity in Habitat for Humanity and similar affordable homeownership organizations (see Figure 2). This concept highlights the inherent tradeoffs in affordable homeownership nonprofits. Essentially, an organization can focus on one or two of these public values, but it will come at the expense of the third.

Figure 2.

The iron triangle of affordable homeownership.

For example, in the context of affordable housing, an organization working towards being more equitable may incur more costs by creating subsidies that would make them less efficient. Alternatively, an organization trying to be most efficient with its resources may save construction costs by utilizing more volunteers or buying less expensive materials, but may not build a quality house. This decision will result in more repair costs for the homeowner, rendering the organization less effective.

As for implications, we offer suggestions for Habitat for Humanity and similar affordable homeownership nonprofits to consider in working through the challenges of access, quality, and capacity. One of the most impactful strategies for improving access is to focus on advocacy and policy that targets the causes of the lack of affordable housing. Galster and Lee (2021) identify construction costs, regulation, household growth, income inequality, agglomeration, and induced migration as causes of the housing affordability crisis. While tackling the root causes is not easy, it is critical to increasing access and promoting equity.

When thinking about improving the quality of a home, ensuring quality structure and construction is critical, but often comes with a cost, which ties into building financial capacity. Quality may cost more in the short term but will likely result in savings in the long run, not just for the organization but for the homeowners. This calls for a change in mindset amongst nonprofit managers, who often have a scarcity mentality and need to shift to an abundance mindset (Putnam-Walkerly, 2020). Furthermore, when thinking about the quality of the home, we encourage nonprofit managers to also consider things such as access to public transportation, parks, schools, shops, and hospitals, as well as environmental conditions like air quality, noise, and traffic congestion—aspects identified by Chohan et al. (2015) in their model of housing quality determinants, since this approach also contributes to increasing overall access and equity. While Chohan et al. (2015) created their model for developing countries, we encourage Habitat for Humanity affiliates and similar affordable homeownership nonprofits in both developing and developed countries to review it, since it includes an extensive list of design quality determinants.

Regarding building capacity, Light (2004) found that small nonprofits reported experiencing benefits from capacity building in relation to increased resources, and considered efficiency and capacity building as synonymous. Previous research also demonstrates that nonprofit managers perceive the use of networks as creating a direct and positive impact on effectiveness (Chandler & Kennedy, 2015; Johansen & LeRoux, 2013). Broadening and leveraging networks allow nonprofit managers to broker relationships to address public values whose complexity creates difficulty in achieving balance. This is especially important for smaller nonprofit organizations, which may lack the organizational infrastructure and human capital to build capacity (Paynter & Berner, 2014).

In addition, while volunteers may help build the capacity of organizations, and are often viewed as free, they come with the added costs of recruitment, retention, and supervision (Bishop & Brand, 2003; Brudney & Gazley, 2002). Public managers must ensure that volunteer recruitment, roles, and management align with the strategies and goals of the organization (Connolly & Lukas, 2002; Millar & Doherty, 2016; Minzner et al., 2014). Given that volunteers present such management challenges, and that Habitat for Humanity and other nonprofits use a model that utilizes volunteer labor to such a large degree, it may be time for leaders to consider alternative strategic approaches (i.e., minimize reliance on volunteers, recruit skilled volunteers, develop more robust volunteer training programs, secure long-term volunteers) that do not add yet another challenge for affiliate leaders to contend with. Our suggestions may be idealistic but they provide a foundation to guide future research and implementation. This is especially important due to the high demand for affordable homeownership, which requires a move to embrace new ideas and change how we think and operate within the public sector.

While qualitative research allows for in-depth inquiry and the development of new constructs, frameworks, and typologies, it does have limitations related to validity and reliability. First, this study focused on a small sample of Habitat for Humanity leaders, so caution must be used when generalizing to broader populations. However, we do believe that our findings hold promise for other Habitat affiliates because our representative sample allows us to generalize to that population (Maxwell, 2021). Furthermore, while caution should again be used, we believe that other nonprofit organizations working to provide affordable housing can also benefit from these findings. Second, qualitative research is intrinsically subjective. In qualitative research, confirmability addresses both reliability and validity concerns. Therefore, the researchers engaged in reflexive exercises in the form of ongoing discussions about how our values, attitudes, biases, and professional experiences may influence the research. These reflexive discussions help to bring objectivity to the research process and ensure the confirmability of the findings (Ravitch & Carl, 2015). It is still important to consider that, even if the same Habitat leaders were asked the same questions, their responses might differ due to new experiences since the initial interviews. Additionally, a new set of researchers might interpret the findings differently. While we aim to minimize researcher bias and subjectivity through interrater reliability, this is still important to note.

Moving forward, we suggest two directions for future research. First, focusing on prioritizing public values, we suggest a survey design that could reach a broader set of nonprofit leaders across nonprofit subsectors to determine whether the results are generalizable to the broader nonprofit sector. A larger sample of nonprofit leaders would also reveal whether there are correlations between priorities and individual characteristics such as education, work experience, and race, which have all been found to influence the prioritization of public values in the public sector (e.g., see DeForest Molina & McKeown, 2012; Fernández-Gutiérrez & Van de Walle, 2019; Stazyk et al., 2017). In addition, collecting socioeconomic data on the nonprofits could assess how location and community demographics may affect a nonprofit's prioritization of public values. It would also be interesting to collect data over time to see if public value priorities have shifted and if nonprofit leaders feel that the current political and social environment has influenced them. Second, as we discovered that asking Habitat leaders about how they make tradeoffs or balance public values led to them talking about the challenges and strategies of balancing the specified public values, this could lend itself to future studies that ask specific questions about the challenges and strategies across a broader range of affordable homeownership nonprofits, enabling us to go deeper and confirm the results, and perhaps develop a stronger set of strategies and recommendations for affordable homeownership nonprofits.

Conclusion

Prioritizing public values in the nonprofit sector is complex. This article explores these complexities by asking how nonprofit leaders prioritize public values, why they prioritize certain public values over others, and how they balance or make tradeoffs among public values. A case study approach was utilized to examine responses from interviews with 36 Habitat for Humanity affiliate leaders across the United States. Interestingly, while the nonprofit leaders in the sample represent the same mission, they all prioritize different public values—though a plurality focus on equity. We also found that their three primary challenges in achieving these public values relate to access, quality, and capacity. This configuration of values and challenges can be understood as an “iron triangle,” the innate lesson of which is that there are inherent tradeoffs when it comes to public values, so that stakeholders, leaders, and their organizations must decide what they prioritize most and what they are willing to sacrifice to meet their goals.

Footnotes

Declaration of Conflicting Interests

The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

Funding

The author(s) received no financial support for the research, authorship, and/or publication of this article

ORCID iD

Jessica Berrett

Author Biographies

Jessica Berrett is an assistant professor in the College of Public Service at the University of Colorado Colorado Springs. She specializes in nonprofit management with a research focus on financial and performance management.

Teshanee Williams is an assistant professor of Public Administration and Government in the School of Government at the University of North Carolina, Chapel Hill. Her research focuses on nonprofit management and partnerships between nonprofits and local governments.

Honey Minkowitz is a PhD student at North Carolina State University in the Department of Public Administration. Her research focuses on public policy and public and nonprofit management.

Alexandra Lahoud received her Master's of Public Administration from the University of Colorado Colorado Springs in December 2021. She is currently a member of the business process management team at Enterprise Community Partners, an organization focusing on affordable housing issues in the U.S.

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