POLS361: Nonprofit Management Lecture Notes PDF

Friday, November 8, 2024 POLS361 : Nonpro t Management Lecture Notes Introducing non-pro ts - nonpro t's are di erent and have a distinctive character - serve as intermediaries betwe...

Friday, November 8, 2024 POLS361 : Nonpro t Management Lecture Notes Introducing non-pro ts - nonpro t's are di erent and have a distinctive character - serve as intermediaries between donors with resources and clients with needs - the sector is varied in scope, scale, function, revenue sources, and modules of governance - Institutional Sectors: 1. Corporations/business 2. government 3. voluntary/nonpro t organizations (3rd independent or citizen sector) 4. households and community organizations Why is nonpro t management uniquely di erent? - 1. The boundaries of a nonpro t organization are porous - external focus (externally justi ed/legitimized): - politics: anticipating change, responding, and lobbying - 2. Public accountability: history, public good nature of services, funding sources Nonpro ts can be broken down into two broad categories - 1. PUBLIC SERVICE (501c3) - social service/human service agencies - educational and research institutions - civic organizations - health organizations - 2. MUTUAL BENEFIT ORGS - service, fraternal, professional organizations Tax Treatment of Nonpro t Organization - the government supports nonpro ts di erent ways through tax laws "nontaxable advantages" - Tax expenditures and direct expenditures provide billions of dollars to nonpro ts - Tax expenditure categories charitable contributions that incentivize deductions tax exemptions Funding - governmnet contracting, grants, fundraising - fee for fee service 1  ff fi fi fi fi ff fi fi fi fi fi fi ff fi  survival is in the hands of funders innovative and new: fundraising is easier if programs are commonplace, the task is more di cult trend toward generating earned income - revenue diversity Introducing non-pro ts: Tax Deductions - Charitable Contributions allows individuals and corportaitons to deduct the worth on contributions agisnt income and estate taxes - these tax incentives encourage private contributions - if charitable contributions were not tax deductible, giving would decrease more of the income can be used to support missions Introducing non-pro ts: Tax Deductions Tax Exemptions - most nonpro ts are exempt from state income tax - nonpro ts are also exempt from some property tax - state property and sales tax exemptions for nonpro ts can vary from state to state - ability to issue tax-exempt bonds tax treatment of nonpro t organizations - tax exemptions are important: can be seen from two di erent perspectives 1. government condoning 2. it opens up the door for more resources - criticism: it is sometimes di cult to make a distinction between exempt and commercial activity of nonpro ts - exempt activity vs exempt organization By giving the nonpro t organizations exemptions, the government also has a right to regulate the nonpro t sector - certain guidelines to keep their exemption status - restrictions on lobbying and electioneering - some may say there are not enough restrictions on lobbying for nonpro ts Introducing non-pro ts - how do 501 organizations generate reevune? - 54% fees charged - 36% government contracts and grants - 10% private and charitable giving - De nitions: Social Enterprise - social enterprise have been de ned as having the following interdependent attritubes (double bottom line) 1. Having social missiona nd purpose 2. Trading in goods/services in a market through earned income stategies social enterprises are placed within the market driven economy and the social economy - Some have also stressed: 2  fi fi fi fi fi fi fi fi fi ffi fi fi ffi fi ff fi  ethical values social ownership, control and governance - bene t goes to community or public More likely to be self- nance with a variety of income streams= economic risk - Produce social capital - critical for democratic and economic growth the US it is very common for 3rd sector organizations to get revenue from fees in charged for services overlap with NPOs some NPOs are social enterprises some are not - Within social enterprise realm, a large variation related to legal structure actives, revenue sources, and mission - signi cant cross-national di erences as well in Europe social economy is growing faster than the private sector in job creation di erences in social and economic development, legal networks, and welfare systems Why has social enterprise grown? - Globalization has led to increased communication and literacy as well as increased global trade. but increased trade has led to many issues that are concern to civil society human rights abuses demographic changes such as aging populations environmental degradation income inequality: wider gap between rich and poor - concerns about traditional approaches to social intervention - governments focusing more on outcome measurement, and pushing business practices in 3rd sector incentivizing the organizational structure - networks and support structures needed to facilitate growth encourage movement away from grant decency toward self nancing - Other "social sector" trends: corporate to experimentation corporate involvement in social and community issues creative nancing development - What is needed to continue growth? supportive government and legislative structure focus on measuring social impact to demonstrate performance Veneture Philanthropy and Ashoka - Venture philathropy applying venture capital nance and high tech business management to philathropy - Characterized by: experimentation/entrepreneurial appraoches measuable results shifting prioities based on results high involvment by donors with their grantees - giving nancial, intellectual, and human capital 3  ff fi fi fi fi fi fi ff fi  Focus on capacity building HIGH IMPACT NONPROFITS 1. Balance advocacy and saervice 2. make markets work 3. inspire evangelists 4. nurture nonpro t networks 5. master the art of adaptation 6. share leadership - De nitions: Social Enterprise An entrepreneur: - create value through innovation - opportunity orientation - resourceful;mobilizing resources of others focuses more on the individual creation of innovation solutions to create and sustain social value - vs social enterprises: may be created through collective action and may not run by entrepreneurs could set up social enterprises but may also set up other organizational forms, or networks or may operate as a policy entrepreneur the term more common in US contexts Social entrepreneurs act as change agents by - adopting a social mission to create social value - pursue new opportunities to serve mission - engage in innovation, adaption, and learning - explore all resource options not limited to those on hand - heightened sense of accountability to constituents challenges for social entrepreneurs inc reacting social enterpriser - new managerial capacities can be hard to build - new funding modes crease culture clashes original funders may reduce funding - stakeholders may nd move objectionable - outside political opposition can arise - the "tail can start waging the dog" Strategic Management and Planning De nition "A disciplined e ort to produce fundamental decisions an actions that shape and guide what an organizational is, what is does, and why it does it." What is it? - management tool, focuses priories, guides decision making - any planning processes worthwhile, but not end in itself - ongoing process o re nement with feedback loops - exible not rigid doctrine 4  fl fi fi fi ff fi ff fi  Contains - mission statement and principles - goals and strategic objectives - strategic issues - internal and external assessments, attention to stakeholders, issue identi cation, stragedy development, action steps, and evaluation It all starts with Mission - Entrepreneurs most useful tool: mission as a lever to move hearts and minds through mission development, leadership and responsibility shared mission as a discipline, guide and tool for accountability mission as a exible tool, to be revisited at least every three years - Focused yet uid mission rigidity mission drift or creep mission focused - used as a daily guide - leaders understand that it can be changed and revisit it often - customers can understand the mission by observing the organizations actions - Live your mission share it use it: make it visible and make it a criterion explore it: keep its validity an open topic celebrate it: keep everyone focused through reminders and application - strategic management and planning - conduct preparatory research needs and an environmental assessment history and pro le of organization - preplanning: who to involve? consultant? - choose partipcants involve leaders, sta and other constituents stakeholders and constituent building- internal and external decision makers and leaders obtain support of leaders and stakeholders. why? mission driven decisions ae powered by many mind 2. mission and values - examine mission related to environment - prior to mission clari cation, should complete a stakeholder analysis - then develop mission statement: who are we as an organization what are the basic social or political needs and problems we exist to address how do we recongonze or antipcate and respond to these needs and problems how should we respond to our key stakeholders 5  fl fl fi ff fi fi  what it our philosophy and core values what makes us distinctive or unique 3. Assessment of internal and external enviornemtns a ect on mission - external trends? demographic, economic, technological, political, professional - opportunities and threats. monitor political, economic, social, and technological forces and trends (PESTS) - mandates placed on organization may be formal (external legislation, regulation) o informal - develop a collective vision for organization - forward looking Internal environmental assessment: - capabilities, constituent satisfaction, governance structures, culture, nancial and human resources - strengths and weaknesses - resources (inputs), present strategy (process) and high performance (outputs) - absence of performance data causes con ict 3. Strategic issue identi cation - fundamental policy questions a ecting the mandates, mission, service, clients, users or payers, cost, nancing, management or organizational designs - what is best t between organization and its enviornmetn? - issues involve various con icts 4. Targeted goals and objectives are established: - how the general policy directions will be carried out - goals broad and limited in number - next come up with strategic objectives, evolving from mission,goals, etc - develop 3-5 year plan: strategic plan guides program actives, allocates resources, and assesses successe 5. Implementation plan and operational plan - generally prepared by sta - sometimes called action plan - tactics, timelines, employee duties, resource requirements, anticipated results, evaluation measure 6. Monitoring and evaluation Why plans fail - unclear focus, too many ideas - wish lists dont re ect reality - plan not tested against resources - lack of commitment from leaders or sta - no operational plan - no mechanism for leadership transition - Strategic Planning Overall 6  fi fl fi fi ff fl ff ff fl ff fi  an e ective strategy: technically workable, politically acceptable, in accord with mission and core values, ethical and legal implementation dosent and shouldn't wait until all steps are completed required a champion and a dominant coalition willing to sponsor - Is strategic planning just another mamgment fad? no because the planning process build on the nature of political decision making, while most fads try to impose a formal rationality on systems that are not rational there is the recognition that the model is con ictual and that the policies and programs are treaties, among stakeholders Executive Leadership - Overall - executives have a central role in non-pro ts - pressure for the organization to be successful; executives blamed and praised positive board relations, internal and external management - balancing resource acquisition and mission challenging - successful exec provide more board leadership - avoid "founders syndrome" Di erent management frames for e ective executives: - political frame: con ict linked to resources, interests, coalitions, bargaining - structural frame: rules, processes, procedures linked to rational hierarchy - human resource frame: people most valuable resource - open communication team building and collaboration Executive Leadership Related to Board Board centered leadership - facilitate board relationships - act with consideration with the board - provide information to the board relevant and timey - no surprises - promote board accomplishments - use board to monitor external environment Governance - A set of relationships between management, its board and other stakeholders - also principal/agent issues between board and executive - external stakeholders and board - involves leadership of the board and management of di erent interests - complex responsibilities require diverse qualities in the individuals selected to serve on the board Boards terminology depends on speci c organzations - board of directors - board of trustees - board of governors 7  ff ff fl fi ff fi fl ff  boards that lack legal responsibility for governing their organizations are not governing boards - elected boards - self perpetuating boards - appointed and hybrid boards Boards guided by - articles of incorporation - by laws - fed tax laws - civil rights related law there is a greater scrutiny of boards by external environmental which enhance accountability Board Responsibilities - vary accordingly to the size, scope, stage and structure or organization - duciary: legal responsibility held in trust - steward for public interest 1. determine organizations mission and manage conformance to it 2. Select and support chief executive and review performance 3. Planning: strategic planning 4. Approve/ monitor programs and services 5. Financial management Income managed, assets guarded, resources secures 6. strengthen own e ectiveness 7. self assessment and selection Role of Board: Governing role vs Sta 's managing role e ective leadership vs board members with too much power - policy and administration are interconnected - situational variables can impact role: age/size or organization and CEO leadership style Boundaries - who leads the nonpro t organization? - extreme scenario 1 - CEO manipulates the board, orchestrates board meetings, and relegates the board to the role of a rubber stamp for his or her initiatives lower morale and productivity less time for strategy - partnership between the board and the CEO is ideal, but di erent vies on exactly how this partnership should be constructed and how it should operate Challenges speci c to boards of social enterpriser - reconciling di erent types of accountability - developing culture of transparency - managing for democracy: how inclusive are governance processes for stakeholders groups - managing delivery and measurnmnet of social bene ts Board 8 fi  ff ff fi ff fi ff fi ff  - most boards don't prepare members or allow them to maximize their e ectiveness through training development - continuing process - leadership commitment - willing to invest in own development Why is development neglected? - pace of business, time commitment - lack of expertise - fear of change and power sharing - shoestring budgets - board exists for the wrong reasons Development Activites - orientation and job description - retreats, workshops, conferences - develop a selection process for new members - self assessment - provide linkages to organizational programming and services: observe and participate Marketing marketing literature has most neglected activities of organizations that sell services, including nonpro ts thus there has been a alg in marketing practice by social organizations. Those most dedicated to marketing are social enterprises, which are most like corporations has been misperceived by nonpro t managers, as aggressive or manipulative - Marketing is about meeting needs - a management process directed at satisfying customer needs and wants through an exchange process - actually better viewed as the facilitation of exchange, linking an organization with key environmental elements: donors. governments,. media, service collaborators, allies in advocacy and clients - an expanded de nition considers delivering value and managing relationships Bene ts - greater customer satisfaction: measuring and satisfying needs - increased stakeholder participation in organization - better attraction of market resources - greater e ciency: maximize cost e ciencies - greater pro t for social cause Implications - is a crucial management function - is not optional in ant organization - is much more than promotion and communication with parties Research 9  fi ffi fi fi fi fi ffi ff  - implies a thorough understandings of the organizations clients including demographics, motivations, attitudes, needs, wants, and behavior - formal market investigations are rare in social organizations. assumption that they are already close of their customers and that the process in an expensive tool of big business - may be closer to their customers but many are su ciently isolated and unresponsive to clients - even simple probes can produce highly pro table insights - may even focus on secondary data or engage in a joint undertaking if funds are limited Examining the environment - organizations environment + internal capabilities and goals = market mix - the four Ps of the market mix are 1. product or program,: produced in response to a need 2. price: to your organization for the services you provide 3. place: area to be covered by service, service delivers 4. promotion: methods to let market segment know about service bene ts - international enivonrmnet can sometimes be changed size and wealth organizations, sta ng, equipment, board commitment, current programs, mission, plans by law is organization well positioned or in danger? should goals be expansion or retrenchment? new strategies? how much risk? - External environment: anything outside organization that can a ect market or ability otto enter or deliver a service or product barriers to market entry - level of consensus in community - regulations, competing organizations, start up costs - Choosing targets markets very purpose of organization is to determine needs and wants of its markets , and to create/deliver programs - Targeting the market: break down large potential market, called market segmentation focus resources on the clienteles that best t mission, capabiiltes, and aspirations Marketing vs cause marketing aligning a company with high pro le cause of nonpro t in which the public sympathizes signs that consumers more suspicious of sincerely and motivation risk of capture and co-optation if you are cause then you are a social enterprise, and not merely cause marketing Marketing vs social marketing social enterprises may attempt to accomplish components of mission related to enchasing social capital (improving personal and societal welfare) through behavior changes Shaping products and Services begin shaping marketing mix by focusing on product - is it available? may be more of a service or social behavior 10  fi ffi fi fi ffi fi ff fi  - presents problems: cant be created in advance of consumption, mass produced, packages, stored, evaluated after the purchase, or returned after the purchase quality control, routine productions, and satisfaction assessment di cult Advice - you have to be good - good on quality, good on service, good on value - mission advantage: bring you mission to bear on your marketing. your brand has an ethical dimension - don't make unsustained market claims, anymore than you would in ate your mission - stay true to your mission and don't exploit Funraising and Revenues - The most obvious importance of fundraising is that it generates income for the organization - a less obvious reason: a rmation of organizations purpose, and link to community needs - relationships with individuals are key to fundraising Success in fundraising depends on response to evinorment, adapting to changing conditions and building support - long term success in fundraising strong cause for support clarify value of organization to the community clear mission di culty? organization is little known? marketing? poor mission? The cost of raising money is a critical issue for NPO - e ciency vs e ectiveness donors should have the right to know investments are going to credible organizations well established organizations will generally have lower fundraising cost than new organizations the more ine cient fund raising methods consistent of getting smaller amounts of money from alot of donors - Steps an organzation usually follows in developing a fundrasing program (form Henry A Rosso) 1. The Formative Stage: new activity 11  ff ffi ffi ffi ffi ffi fl  - at this stage fundraising is done because it has to be done primarily motivated by the organizations need fore more money - this technique requires the selling of the organizations to the donors - 2. The Normative Stage - this stage is understood as a family stage - donors are generally people who have already made a connection to the organization through some other means - fundraising is sta centered, with perhaps the CEO and a handful of volunteers seeking interested donors - 3. The Integrative Stage - philanthropy at center of who are and what we do - donors are seen as thoughtful participants of the organizations life - donors ll a role that is essential to the organization - donor involvement gives the organization important link to environment - everyone involved in the organization makes a e ort to have a healthy relationship with supporters - a high level of communication is kept between the organization and those making donations - fund raising is a program which links to planning and evaluation Fund-Raising Process: Individual Donors Individual donors - giving in the US motivations are often complex - helpers high - altruistic and egotistic motivations for giving motivated desire to obtain some bene t giving by wealthy individuals - controversy over tax incentives Identifying priorities and developing the case - priorities as a product of strategic planning - case statements why should i give to this organization? why is this cause more important than others that also ask for my support? - Identifying and qualifying prospects 12  fi ff fi ff  prospects o er a better than average chance of giving prospect research Cultivating Prospects - developing a relationship before moving to solicit a gift scale of potential giving as a key factor in the amount of time and attention soliciting the gift Fund-Raising Process: Individual Donors Stewarding the gift and the relationship - pas donors are the best prospects for future gifts - two meaning of stewardship the activities that the organization undertakes to keep the donor informed and engaged the organizations responsibility to manage the gift according to the doors intention Acknowledging and recognizing donors - promptness - individual tailoring Campaigns Campaign method developed by fund-raisers for the YMCA in the early 20th century later adopted by higher education institutions and subsequently by most other nonpro t organizations characteristics of campaigns - high priority in the organization - de ned purposes - gift solicitation in speci c amounts Ethical Concerns Fund-raiser behavior - misleading or dishonest representations donor behavior - funds that were illegally obtained - company that makes harmful products - unsavory reputations Restricted Giftds - gifts that require new programs 13  fi ff fi fi  - requests for inappropriate in uence Protecting the privacy of donors and prospects - growing sophistication of prospect research - creation and distribution of donor pro les Earned Income: Introduction earned income - income form payment for goods and services that the nonpro t has provided most revue in the nonpro t sector is earned income, especially in the education and health care subsections most government funds received by nonpro t organizations are earned income Fundraising and Revenues Issues for NPOs - NPOs can earn income, cant pass equity to owners - is business related to mission or will unrelated income tax be incurred - may invite scrutiny if over 20% of revenue is from unrelated activities - is business part of NPO or a spin o - are sta and board prepared to redirect attitudes? Reasons for Adopting Earned Income Strategies Decline in government funding for social programs shift toward a voucher approach in government funding use of competitive contracts in government outsourcing diversifying sources of revue advance speci c missions increasing visibility via partnership and promotions 14  ff fi fi fi fl ff fi fi  Building Successful Partnerships Successful partnerships have a logic to them - home depot and KaBOOM strategies for nonpro t organizations - begin with self understanding - seek out partners with comparable values - engage in discussion and conduct due diligence - use small scale tests before expanding the partnership Nonpro t Business Ventures Three principal activities - services - manufacturing - distribution or retail Example - retail stores operated by goodwill or the Salvation Army Caveats - earning income from commercial ventures if often no easier than earning income form donations - extremely high failure for small businesses Thinking critically about earned income strategies Two opposing perspectives - nonpro ts should consider only venture that are aligned with their missions - nonpro ts should look almost exclusively at whether a business venture is nancially pro table Beyond National Borders: NGOs NGOs - any non state nonpro t voluntary organization expanding globalization - more ngos alot of time, e ort and resources confronting major obstacles international activities may be inegral to mission international and foreign a airs - NPOs more than doubled since early 1990s 15 fi  fi fi fi ff fi fi fi ff  - There are di ernt ways of categorizing NGOs in broad terms: one categorization mutual bene t NGO: concerned with improving the situation of its membership, versus a public bene t NGO: improvement of conditions of society as a whole or of a segment of a society - The world bank di erentiates two main categories of NGOs: design and implementation of development-related projects operational NGOs: design and implementation of development-related projects advocacy NGOs: defend or promote a speci c cause, and in uence the policies and practices of international organizations Getting started - thinking small and realistic goals - study foreign markets and think about replication and cultural t - trends, opportunities, costs - consider contacts, customs, counterpart organizations, economic and political factors - strategic relationships with non US partner can enhance success Common Intl Management Issues: - social, cultural and political di erences: understand and have local contacts - language communications and delivery of product: can become logistical nightmare nance: currency di erences; cost living di erences; di ering legal requirements; lack of diversi cation technology: allows enhanced communications and service delivery: privacy laws and cultural taboos advertising and marketing: local agents lack of planning: dealing with challenges on ad-hoc basis fundraising di culty: increasing compeition - human resources: nding experienced people willing to work overseas at reduced weages professionalization 16 fi  fi ff fi ffi ff fi ff fi ff ff fi ff fl fi  - coordination and relations between central o ce and eld o ces - lack of evaluations and outcome measures - administrative di culties related to government procedures, rules, and regulations Managing People in a Social Enterprise recruiting and selecting employees: very important function social enterprise is more labor driven organization only as good as employees necessitates human resource planning: a basic management function - people to resource organization (paid and volunteer) - create a performance culture to meet mission A more ethical approach to HRM than traditional businesses - views employees as assets who give a competitive advantage - Issues sector speci c recuirtment in SE risks creating a workforce lacking in diversity Diversity - important to avoid inbreeding and strive for diverse perspectives and may be di cult to strive for equality and diversity at the same time natural for people to gravitate toward those most like selves: elective homogeneity - Strategic mix: balancing managers need for chemistry and the organizations need for broad diversity workers should be representative of the diverse groups they serve - Hiring vs training for skills internally focused approach may allow organization to train for the sector training time, costs and risks lack of diversity oftentimes in social sector, hiring for soft skills more important - Finding and keeping the right employees who will be involved in developing? functions of jobs in description interviews - Nondiscrimination (EEO) commonsense recruitment and employment practices organizations should re ect the society they are in 17  ffi fi ffi fl ffi fi ffi  a set of federal regulations that require certain employment practices - federal regulations: the activite, process, and materials involved in hiring employees are subject to a number of federal statutes. related to age, disabilities, civil rights - in general: laws forbid all employers from making hiring decisions based on critter that are either irrelevant to the job or inappropriately subjective Recruiting for di erent position: - where to recruit? where is prospective employee likely to be found? ads, notice, job posting, professional publications, networking, internet employment agencies: nd and screen people for you recruiting regionally: will you pay relocation costs? recruiting nationally: networks important, as are professional journals and newsletters search rms: recruiters go nd match Wages and Compensation internal equity - equity between similar and dissimilar jobs in the organization - methods by which jobs are valued in the organization - comparable worth external competivness - ask what are the salary markets for the jobs in this organization - where does the organization recruit for each type of job? - benchmark jobs should be unde ned based on job content not job titles - published sources of salary data: published survey's widespread - reconcile internal equity with external competitiveness Volunteers integrating volunteers into an organization requires a structure and program program - planning reasons for volunteers, what will they do, job descriptions, integration with paid sta - recruitment and screening - orientation and training 18  fi ff ff fi fi fi  - supervised, managed and motivated - rewarded and recognized - evaluated Planning - what is the rationle? - volunteer programs are not free - they are an investment - investments an have a high return which is e ectiveness - pros: enhance connection to stakeholders and community rather than free labor that will do their work: chain of command issues - volunteers administration involves matching the di ering needs of organization with di ering recruitment strategies - each of the following structural arrangements requires leadership, which may include a director of volunteer services: spontaneous, ad hoc, short term strategy: good for large numbers in short time line leaning on established organization to assist with recruitment: certain element decentralize recruitment to departments: gives exibility but gives up consistency and economics of scales centralized program for entire organization - Job Descriptions a given position may be classi ed as volunteer or paid depending on organization - should be part of planning process current employees suryved in attempt to determine aspects of their jobs or services which they lack time or expertise bit many volunteers endeavors may be outside existing employee realms description will look very similar to paid sta - title, any bene ts, quali cations, time, requirement and reporting relationships understanding motivations and meeting needs of volunteers motivations are complex but understanding them can enhance satisfaction and performance 19  fi ff fi ff ff fl ff fi