PNP 6003 Module 4 Leadership Dilemma Analysis Example

Double the Grant, Change the Line: A Funder's Offer and the Risk of Mission Drift at a Spokane Free Clinic

Student Name

American College of Education

PNP6003: Leading and Managing Public and Nonprofit Organizations

Module 4 Assignment

Instructor Name

November 2, 2026

Introduction

ACE's description of this course names the obstacles and dilemmas leaders meet in the public and nonprofit sectors. A dilemma is a choice in which every option costs something the organization values. This paper analyzes one now facing the Spokane free clinic. The hospital system that provides 12% of the clinic's revenue has offered to double its annual grant, from about $144,000 to $288,000, on two conditions: the clinic would reserve a fixed number of appointments each week for patients referred from the hospital's emergency department, and it would share patient-level visit data so the hospital can track emergency visits avoided.

Why This Is a Dilemma

The offer is attractive. The added money would nearly cover the community health worker after the foundation grant ends and would ease the capacity pressure documented in Module 3. Patients who visit emergency departments for conditions a clinic could manage are often exactly the people the clinic was founded to serve. Yet the conditions raise three problems. Reserved slots would come from the same limited supply that already turns away about 23 people a week, so priority for one group means longer waits for others. Patient-level data sharing raises privacy questions and could deter patients who distrust large institutions, including some immigrants. And the hospital's measure of success, emergency visits avoided, is not the clinic's chosen measure and could pull its attention away from chronic disease control. The question is not whether the hospital's goal is good, but whether the clinic can pursue it without becoming an arm of the hospital's strategy.

Resource Dependence

Resource dependence offers one lens. Organizations that rely on a few sources of revenue tend to adjust their behavior to the expectations of those sources, and different kinds of revenue bring different pressures. Froelich (1999) found that government funding tended to push nonprofits toward more formal, professionalized structures, while reliance on commercial income raised the risk of drifting from mission goals. A funder that sets conditions on whom the clinic serves first and what it measures exerts a similar pull. Accepting the offer as written would raise the hospital's share of revenue from 12% to roughly 21%, moving in the opposite direction from the strategic plan's goal of reducing funding concentration.

Mission Drift

Mission drift is the gradual shift of an organization's activities away from its purpose, often through many reasonable decisions rather than one dramatic one. Ebrahim et al. (2014) argued that organizations balancing social purpose with revenue pressures need governance that keeps the board accountable to the mission, not only to funders. The proposed revised mission commits the clinic to adults who cannot get care elsewhere and to helping them reach and keep better health. Emergency department referrals fit the first clause. Priority scheduling and a hospital-defined outcome measure fit the second less well, because they would rank patients by their cost to the hospital rather than by need.

The Options

Option 1: Accept as offered. The clinic gains $144,000 a year and a strong partner, and some high-need patients gain faster access. It loses control over a share of appointments, takes on privacy risk and becomes more dependent on one funder.

Option 2: Decline. The clinic keeps its independence and current grant, but forgoes money that would sustain the community health worker and may strain the relationship with a funder that provides 12% of revenue.

Option 3: Negotiate. The clinic proposes to accept emergency department referrals into its regular scheduling with a modest number of shared same-week slots rather than reserved ones, to report aggregate rather than patient-level data and to measure both emergency visits and chronic disease control. It might receive less than the full increase, but it would keep control of access and measurement.

Weighing the Options

Against the mission, Option 3 serves more patients without ranking them by cost. Against resource dependence, Options 2 and 3 limit concentration; Option 1 increases it. Against fairness to patients already waiting, Option 3 is better than Option 1 because shared slots can go to whoever is most urgent. Against privacy, aggregate reporting avoids the trust risk of patient-level sharing. Against the strategic plan, and against the balance of value, support and capacity in the strategic triangle (Moore, 2000), Option 3 aligns most closely, since a partially increased grant could fund the community health worker while keeping the hospital's share near 17%. The main risk of Option 3 is that the hospital refuses and withdraws its existing support, which would cost the clinic 12% of revenue. That risk is real but moderate: the hospital's community benefit obligations give it reasons to keep supporting free care, and its interest in emergency diversion is better served by a willing partner than by a reluctant one.

Recommendation

I recommend Option 3, presented to the board before any reply to the hospital. The clinic should open by agreeing with the hospital's goal and offering what it can deliver: a referral pathway for emergency patients without a regular source of care, a set of same-week slots shared among all urgent patients, aggregate quarterly reports on referred patients' follow-up and emergency returns and a joint review after one year. It should name its limits plainly: no reserved slots that bypass need and no patient-level data without each patient's consent. If the hospital accepts a smaller increase on these terms, the clinic gains resources and a partner without surrendering control. If it insists on the original conditions, the board should be prepared to decline, with a plan to replace the existing grant over two years.

The Leader's Role

Dilemmas like this are often settled by default, by staff eager for money or by a board reluctant to upset a donor. The leader's role is to make the trade-offs visible, bring them to the board with options rather than a fait accompli and keep the conversation anchored to the mission. In this case that means explaining to the board why a generous offer deserves a counterproposal rather than a quick yes, and explaining to the hospital why the clinic's conditions make it a more effective partner, not a more difficult one. It also means preparing staff for either outcome, since volunteers and employees will hear about the offer and may assume a larger grant is already secured. A short, honest update to staff, explaining that the clinic is negotiating terms that protect its patients, prevents rumors from shaping the decision.

Conclusion

A funder's offer to double its grant would help sustain the clinic's chosen strategy but on terms that would prioritize patients by their cost to the funder, share patient-level data and increase dependence on one source. Resource dependence and mission drift explain why those terms matter. A negotiated agreement, with shared rather than reserved slots, aggregate reporting and dual measures, serves the mission best, with a prepared fallback if the hospital refuses. Module 5 brings the course's work together in a leadership action plan.

References

Ebrahim, A., Battilana, J., & Mair, J. (2014). The governance of social enterprises: Mission drift and accountability challenges in hybrid organizations. Research in Organizational Behavior, 34, 81-100. https://doi.org/10.1016/j.riob.2014.09.001

Froelich, K. A. (1999). Diversification of revenue strategies: Evolving resource dependence in nonprofit organizations. Nonprofit and Voluntary Sector Quarterly, 28(3), 246-268. https://doi.org/10.1177/0899764099283002

Moore, M. H. (2000). Managing for value: Organizational strategy in for-profit, nonprofit, and governmental organizations. Nonprofit and Voluntary Sector Quarterly, 29(1 Suppl.), 183-204. https://doi.org/10.1177/0899764000291S009