This chapter describes the concept of social enterprise and explains the term ‘social entrepreneurship’. The term ‘social enterprise’ refers to a business activity intended to generate profit to finance a social, educational, cultural, religious, or charitable cause. A social enterprise is a for-profit business whose primary purpose is to reinvest its profits in not-for profit activities. There can be various types of social enterprises such as small-business entities, co-operative, social firm, credit union, trading arm to charity, and public sector spin-outs. The chapter explores the steps needed to develop a social enterprise and describes the key components of a business plan. The development of a social enterprise requires an investment, which implies some costs. The costs will be fixed and variable. The chapter emphasizes social entrepreneurship as a mission-driven enterprise and a strategy for financial sustainability in nonprofit organizations.
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This chapter defines the concept of program evaluation and also defines the term ‘logic model’. A program evaluation design is a document outlining principles and procedures to assess the achievement of a program’s goals. The logic model is one of the most common program design frameworks used in program evaluation. Program evaluation can be a needs assessment, a formative or process evaluation, a summative or outcomes evaluation, or an impact evaluation. The chapter identifies the items in a logic model and explains the benefits of a logic model for a nonprofit organization. It describes the process used to conduct a program evaluation and also explains the term ‘performance measurement in a nonprofit organization’. Program evaluation includes performance measurement to assess overall organizational effectiveness. The chapter examines the relationship between program evaluation and financial sustainability.
This chapter discusses the term “service delivery” and describes a service delivery system in the context of a nonprofit organization. Servitization is the process whereby an organization develops creative and innovative ways to create a product-service system that integrates value-based products and service offerings. The chapter discusses the roles of client-centeredness, decision making, scheduling, priority setting, effective and efficient flow of services or activities, quality assurance, and continuing quality improvement, and how these factors contribute in their own context to influence positively or negatively the financial sustainability of a nonprofit organization. A customer-centric service design is a service delivery system that focuses on providing the best quality service possible to customers or clients or the service target, based on a service concept, a service decision path, service sustainability, and service quality. The chapter explains the relationship between service delivery and financial sustainability.
This chapter defines the concept of social marketing and provides some of the common areas for the use of social marketing by nonprofit organizations. The term “social marketing” has been used for several decades to refer to a systematic process of using marketing strategy to influence current behaviors of a target population into a desired behavior in order to positively change a social or community issue. The chapter describes the contents of a social marketing plan. A social marketing plan is a document that justifies the needs for a social marketing campaign, as well as the process of implementation by outlining a SWOT (strength, weakness, opportunity, threat) analysis, a description of the target population, the goals and objectives, an impact statement, the marketing mix strategies, an implementation plan, an evaluation plan, and a budget. The chapter establishes the relationship between social marketing and financial sustainability.
This chapter provides an overview of the nonprofit organization in the United States, the main characteristics of nonprofit organizations, and the reality of the nonprofit sector today. It describes the differences between a nonprofit and a for-profit corporation. Nonprofit organizations have existed for many centuries, especially through religious groups or religious-based activities. The nongovernmental sector is growing throughout the world. Increasingly, these organizations are playing key roles in the economic and social contexts of their countries. Unlike private-sector organizations concerned primarily with making a profit, nonprofit organizations are focused on carrying out a specific public-service mission. Successful nonprofit organizations require substantial capability in key areas of management: developing strong boards of directors, recruiting and motivating talented staff and volunteers, creating plans to focus resources on relevant goals and innovative programs, winning the support of diverse stakeholders, raising funds, and wisely managing fiscal and human resources.
This chapter defines the term “human resource management”. Human resources management is the set of managerial activities involved in planning, recruiting, motivating, retaining, and developing a workforce that can contribute to the efficiency, effectiveness, overall performance, and sustainability of an organization. The chapter describes a human resource management system and human resource information system (HRIS). A generic HRIS includes components related to personnel management, time and attendance, payroll, and benefits. The chapter defines “job satisfaction” and discusses various job satisfaction approaches and theories, staff turnover, and staff retention. Theories in job satisfaction will be examined with respect to content, process, and situational theories. The chapter explains the key roles of human resources management and job satisfaction in the financial sustainability of a nonprofit organization and also explains relationship between human resources and financial sustainability.
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.
This chapter defines the concept of financial management and establishes the relationship between financial management and nonprofit financial managers. A nonprofit perspective on financial management includes financial planning, financial monitoring, financial decisions, and financial accountability in order to ensure that an organization can sustain its financial resources to fulfill its vision and mission through the achievement of organizational goals and objectives. The chapter discusses the various facets of nonprofit corporate finance and accounting and lists the most common funding sources of nonprofit organizations. It examines the financial and accounting principles and procedures related to the management of a nonprofit organization. The chapter addresses basic accounting principles that leaders of a nonprofit organization should be aware of, and the conditions surrounding the financial situation of a nonprofit organization. It describes a financial management system and explains the relationship between financial management and the financial sustainability of nonprofit organizations.
This chapter focuses on the asset-based approach to community development. It provides the different types of assets that create opportunities for a nonprofit organization, describes the asset-mapping process, and explains the relationship between asset mapping and financial sustainability. The chapter introduces the theories, concepts, and approaches of asset mapping as a strategy to help nonprofit organizations identify obvious and hidden assets within their communities, and mobilize them to connect issues and needs with assets, and foster the financial sustainability of a nonprofit organization. It examines the community context of nonprofit organizations in relation to community groups, neighborhoods, and larger social systems that influence quality of life. The chapter includes the concept and theory of community capacity, models of asset-based development for building community capacity, empowering individuals and groups, generating funding from new sources, and creating additional paths toward financial sustainability.
This chapter explains the concept of needs assessment and the relationship between the individual and the community. It identifies the different steps involved in conducting a needs assessment and shows how needs assessment can contribute to the financial sustainability of a nonprofit organization. The chapter emphasizes how financial sustainability is rooted in the investigation and analysis of the needs of a target community. It discusses the theories about the needs-assessment process, as well as action steps toward the development of a community needs-assessment report. The chapter explores facets of financial needs-assessment of a nonprofit that can help chart a course to further the vision and mission statements. It helps the readers to learn how to use primary and secondary data to conduct a targeted needs assessment that is linked to the financial sustainability of a nonprofit organization.