This chapter describes the key phases of the strategic-planning process and ‘strengths, weaknesses, opportunities, threats’ (SWOT) analysis. A generic strategic-planning process includes three key phases of assessing, visioning, and strategizing in order to further the mission and vision of an organization. The vision, mission, and values statements constitute the core identity of a nonprofit organization. In other words, a nonprofit organization justifies its social or community relevance through its vision, mission, and values, and the extent to which they are reflected in governance and program implementation. The chapter discusses the relationship of strategic management and program effectiveness, and the interrelationships between strategic planning and financial sustainability. It introduces various approaches to effective strategic planning geared to the financial sustainability of a nonprofit organization.
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This chapter discusses the legal and organizational roles of the board of directors and special committees in the governance and financial sustainability of a nonprofit organization. It describes the differences between governance and government, and identifies some common governance theories. Corporate governance is often analyzed around major theoretical frameworks. The most common are agency theories, stewardship theories, resource-dependence theories, and stakeholder theories. The chapter highlights the key governance structures and perspectives in nonprofit organizations and lists some key principles of nonprofit governance. Governance models or approaches are considered in an eclectic perspective that combines empirical observations and literature related to nonprofit and for-profit organizations as micro societies. Eclectic perspective considers nonprofit board governance through functionalism, structuralism, structuro-functionalism, and symbolic perspectives. The chapter explores conceptual and theoretical frameworks that explain governance in nonprofit organizations in the context of financial sustainability.
This chapter explores the dimensions of financial sustainability as well as the principles needed to manage a nonprofit organization that can generate continuous funding through diverse sources in order to support its vision and mission in a way that is socially and environmentally sustainable. Sustainability is the ability of a business, an organization, or a project to fulfill its vision and mission, meet its goals, and serve its stakeholders over time. The chapter discusses the inherent, collateral, and environmental factors of financial sustainability in nonprofit organizations. Inherent factors of financial sustainability include: Financial management, budget, financial statement analysis, financial sustainability plan, social enterprise, fund-raising, grant seeking, investment, and risk management. Collateral factors of financial sustainability include: Governance, leadership, and strategic planning. The chapter describes key indicators that can reveal whether an organization is financially sustainable or is on the path for financial sustainability.
This book provides leaders and managers of nonprofit organizations with theoretical and conceptual frameworks, approaches, and strategies that will enable them to manage organizations that are financially sustainable. The book aims to equip students and nonprofit leaders with the information and conceptual frameworks needed to do financial analyses, manage budgets, and conduct various operations for organizational and financial sustainability. People have a tendency to think of financial sustainability almost exclusively in financial terms. The book argues that financial sustainability involves both financial and nonfinancial facets. To that end it provides a systemic conceptual framework. The chapters are articulated around four sections. The first part introduces the concepts of nonprofit organizations and financial sustainability. The second part is about key aspects of organization and planning for sustainability in a nonprofit organization. The third part discusses issues that are vital to the financial sustainability of a nonprofit organization. The last part emphasizes the contributions of management and leadership practices to the financial sustainability of nonprofit organizations. The book may serve as an introductory textbook for future leaders of nonprofit organizations, as well as students in schools or programs of nonprofit leadership, human service leadership, social work, public and community health, organization management, public administration, education, and other similar fields.
This chapter describes the concept of investment and the items in an investment policy statement. Investment is the purchase of a financial or real asset by an individual, an organization, or an institution, in order to generate a return over time, which is proportional to the risk assumed during the investment period. The chapter identifies the different types of investments available for nonprofit organizations. The most common types of investments are short-term investment vehicles and fixed-income securities. Contrary to short-term investments, long-term investments are made with funds that are not needed for use in a period of less than a year. Examples of long-term investments are pension funds, self-insurance funds, and endowment funds. The chapter explains the extent to which investments can contribute to financial sustainability of nonprofit organizations. It summarizes the key principles for investment management and examines the management structures involved in investment for nonprofit organizations.