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.
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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 discusses both successes and failures in affiliation and collaboration techniques among nonprofits, including details on what the parties involved found to be the most valuable or most problematic aspects of the affiliations. It explores an overview of what has been and is versus what could be in the business models for both the nonprofit and the for-profit sectors, with the aim of shaking things up in the nonprofit world’s business-as-usual model. Clearly, a new business model is needed for the new paradigm, one that enables nonprofit organizations to adapt to the industry’s greater demands and the emerging market for corporate control without sacrificing core values. Capitalizing on the opportunities presented by the new human service paradigm will require nonprofit providers to adopt a new business model that is both capable of pursuing traditional consolidation strategies and supported by innovative organizational and financial designs.
- Go to chapter: Administrative Consolidations, Administrative Services Organizations, and Joint Programming
This chapter focuses on a series of case studies and best practices for partnerships that discuss in detail the provision of back-office support for nonprofit partners. Public Health Management Corporation (PHMC) is a nonprofit public health institute that creates and sustains healthier communities using best practices to improve community health through direct service, partnership, innovation, policy, research, technical assistance, and a prepared work force. Traditional back-office services are usually designed to address many of the challenges of today’s changing nonprofit environment. Services depend on the level of organizational need and affordability, but are usually identified through a comprehensive organizational assessment of the nonprofit client. The Urban Affairs Coalition (UAC) is a Philadelphia-based nonprofit that was founded in 1969 following a historic meeting between the city’s business and community leaders. Most nonprofits never rise to the scale of having a full internal administrative staff and purchased equipment.
For nonprofit agencies, there are generally two ways of growing: organically, which takes longer and is more detailed, or through strategic partnerships with other nonprofits. This chapter focuses on a wide range of strategic partnerships. Few nonprofits in the sector, other than hospitals and insurers, enter into strategic partnerships, and far fewer merge or affiliate with other nonprofits. The Public Health Management Corporation (PHMC), however, is one of the rare nonprofit health and human service organizations that has been engaged in mergers and affiliations in the past 20 years. Environmental factors such as increased organizational competition or decreased foundation or donor funding encourage nonprofits to contemplate mergers. Nonprofit mergers provide a variety of benefits including the opportunity for expanded social impact. Merged nonprofits can roll together annual audits, combine insurance programs, and consolidate staffs and boards. Mergers and affiliations are one way that organizations are attempting to temper competition.
This chapter lays the foundation for facilitative leadership from the unique social work perspective. Social work’s Code of Ethics and social work practice principles contribute to the value-based leadership that is part of the facilitative leader’s core. Among the important expectations of social work leadership are cultural sensitivity and competence. Five discussion areas have been selected as essential to facilitative leadership from a social work perspective: inclusion, strengths-based leadership, power and the difference between power over and power with, oppression and social justice, and the elusive but critically important concept of empowerment. There are different types of power and power relationships such as productive power and destructive power. Being conscious of privilege and oppression are precursors to understanding social injustice and working toward social justice. The social work program identifies social justice as a professional obligation of social workers to attempt to improve the quality of all people’s lives.
In recent decades, a number of large, complex human services and public health organizations have developed, which are becoming known as the Fourth Sector. This chapter defines the Fourth Sector, and its large, complex, nonprofit organizations, many of them members of the Alliance for Children and Families. It explores a case study that provides in-depth information about this organization and the work of the Alliance to support the complex organizations among their members. The Fourth Sector presents a unique partnership opportunity for government and must be viewed as a strategic management partner, and operations entity at the state, regional, and national levels. Hillside family of agencies (HFA) strives to improve every aspect of the organization, from business, financial, and human resources to service delivery to youth and families. Through the evolution, and implementation of the strategic intent and data-driven outcomes to inform practice, services are improved on a continual basis.
A funding model takes advantage of the natural matches that exist between funder motivations and a nonprofit’s mission and beneficiaries. For Building Educated Leaders for Life (BELL) model, the primary type of funding was government, specifically Title I funding through the No Child Left Behind Act (NCLBA). Many nonprofits are simply not ready to develop a funding model. This chapter provides some specific questions to help fund raisers assess whether their organizations are ready. Rare’s senior management team was ready to scale up the organization’s efforts and expand to new countries. Most organizations find it helpful to create a steering committee comprising senior staff from all parts of the organization and perhaps key board members. Diversification brings the desired risk-management benefits while still allowing nonprofits to build and leverage expertise in raising a particular type of funding.
Nonprofit, for-profit, and hybrid organizations with the greatest impact in areas such as education, health care, and social service delivery could also create new social industries and spur economic development. Angel investors are often the first professional lenders who provide financial support to a growing business. Launched in the United Kingdom, social impact bonds (SIBs) raise funds from nongovernment investors, that is, trusts and foundations, high-net-worth individuals, and so forth, to pay for preventive services. Greater levels of funding will be directed to organizations next-generation nonprofits (next-gens) that can prove impact and take operations to scale. This chapter discusses two very different innovations that are also sustainable business models, the retail-based convenient care clinics (CCCs) and the Apple iPad2. CCCs operate under different names, including Minute Clinic, Redi-Clinic, Take Care Health Systems, and Quick Quality Care. The Disrupter-o-Meter is an excellent, low-cost place to begin determining an innovative idea’s feasibility.
This chapter focuses on how nonprofit leaders can become nonprofit advocates. It provides an overview of the legal guidelines that govern nonprofit lobbying. The chapter details the process of developing a policy agenda, learning the legislative landscape, and executing the agenda. It reviews the tactics of effective lobbying, such as working in coalitions, meeting with lawmakers, and cultivating relationships with legislative allies. The chapter then presents case studies that describe the advocacy process that went into the expansion of the role of nurse practitioners as primary care providers and the expansion of the retail-based convenient care clinic model. It explores case study that discusses an assessment process on which advocacy for college access and success systems change can be built. The chapter examines how nonprofits can shape legislation by lobbying elected officials in ways that are in keeping with the Internal Revenue Service’s (IRS) definitions and requirements.
This chapter explores the need for nonprofits to have leadership, particularly board membership that will help them to weather the current economic times and come out on firm footing for the future. It considers how government, business, and foundations can play an important role in building nonprofit capacity. A 2010 study of the nonprofit sector by the Philadelphia Foundation (TPF) concluded that the financial fragility of nonprofits is often rooted in the business models under which they operate. The nonprofit sector comprises a large part of the economy in many U.S. cities, and it has grown tremendously. Communities across the United States need to recommit to effective nonprofit governance leadership. The chapter provides case study that illustrates leadership Philadelphia, mobilizing the private sector to serve the community; TPF’S capacity-building strategy two success stories; and the ins and outs: innovating through outsourcing.
Influential leaders from each of the sectors public, private, and nonprofit in every region of the world have issued a call for leadership within and across sector boundaries, boundaries that have inhibited economic and social wealth creation in times of great need. The United Nations has worked to identify critical areas of focus and investment: extreme poverty and hunger; primary education; gender equality and female empowerment; child mortality; maternal health; eradication of HIV/AIDs, malaria, and other diseases; environmental sustainability; and global partnerships for development. Like many large organizations public, private, and not-for-profit Wharton has developed a set of seven leadership competencies to which it devotes significant resources and programs. The seven competencies that constitute the Wharton dimensions of leadership are influence, emotional intelligence, teamwork, communication, decision making, diplomacy, and organizational awareness. This chapter provides case studies that illustrate successful succession planning through leadership development; Ashoka: innovators for the public; Eisenhower Fellowships (EF).
This chapter identifies a shift from the traditional strategic planning process to strategic action processes. It discusses the who, why, what, and how of a strategic action planning process. The chapter addresses a broader business planning process that focuses on identifying market-based, sustainable, and value-added solutions. It also addresses the use of consultants. The chapter suggests several tools, including the Core Capacity Assessment Tool (CCAT), used to determine an organization’s readiness to plan and capacity to execute. It provides a case study of an agency that transformed as a result of decisions made about its primary goal. Good planning helps organizations understand what is core to their missions and how to define success and allows them to recognize the conditions for which they will hold themselves accountable. Before planning, an organization needs to “plan to plan” and conduct an analysis of the environment in which it operates.
This chapter discusses the importance of integrating marketing with an organization’s mission and goals and describes the structural levels that can produce a cost-effective marketing strategy with messaging as its centerpiece. It examines cause marketing, which can serve as a link between corporate support and societal needs as well as a means to engage individual consumers in the support of an initiative. The chapter explores the global phenomenon of social media, which is quickly becoming a major form of communication. It then discusses three aspects of social media: the generation factor, the power of social marketing within niche networks, and the power of a connected organization. The chapter provides examples from Public Health Management Corporation (PHMC), A Drink for Tomorrow (ADFT), and the niche social networking provider Skipta. PHMC uses a structure that contains six levels: background/context; audiences/stakeholders; key messages/messaging architecture; objectives; strategies; and tactics.
Many social service leaders with only a focus on promoting social justice had become increasingly aware that to grow, they needed to incorporate more financial and business management practices into their nonprofit organizations. Leaders in the for-profit world are becoming more concerned about the need for social responsibility and promoting programs that not only made a profit but also reflected a social justice perspective. This book explicitly integrates social justice principles into the management of a nonprofit organization. The book discusses the history of the development of nonprofit management up to the present day. It addresses legal and ethical considerations, organizational planning and staff management, finance, public relations, fundraising, public advocacy and volunteerism, program design and grant development, governance and board development, developing an international nonprofit, information technology, career development, and creating a nonprofit/social entrepreneurship organization. Additional chapters address quality improvement, mentoring, and proposal writing. The text is ideal for students and faculty in social service administration, human service leadership, social work management, public and community health, public administration, and health care administration and management.
This chapter proposes a clarification of what social entrepreneurship is and how it differs from other socially oriented and entrepreneurially oriented activities. It also proposes that one of the more productive uses of the term implies a certain mind-set. The chapter highlights some versions of social entrepreneurship as case examples and argues that social entrepreneurship can be studied at a university. Social entrepreneurs are similar to business entrepreneurs in the methods they use, but different as they are motivated by social goals rather than material profits. The social entrepreneur, in contrast to the traditional entrepreneur, public servant, or nongovernmental organization (NGO) executive, is purpose driven and impact oriented. Market orientation is a key feature that differentiates social entrepreneurship ventures from other social organizations, such as nonprofit social service delivery or advocacy.
Cortes explains that two major university-generated forces can potentially prompt changes in nearby neighborhoods: university-community partnerships and campus economic activities. Rural campuses have different campus-community considerations surrounding infrastructure projects than urban campus, which are housed within a more multifaceted economic ecosystem. University spending, employment, earnings, and student spending have implications for the communities and regions where they are based; these activities often have multiplier effects making quantification challenging. In college towns, student housing tends to be highly concentrated and segregated from the rest of the community. Facing different economic challenges, rural communities are alternative models for campus-led community development. Grounded in the land-grant mission, the Extension model seeks to formalize networks between universities and communities. Historically, many Extension initiatives have focused on agricultural practices and sharing best practices and research with farming communities.
Medieval universities were structured as urban centers providing technical training in medicine, law, and, most importantly, theology. Colleges and universities are uniquely situated within communities, often influencing many facets of a community’s life, including costs and structure of housing, types of amenities and businesses, and the presence of law enforcement. During the rapid industrialization of Victorian London, urban poverty in the East End became a growing concern. In partnership with Vicar Barnett, Arnold Toynbee conceptualized a model of community engagement whereby students from universities such as Cambridge and Oxford would take up residence in London’s East End to collaborate with residents and address social problems. Understanding the historical rationale for campus-community partnership is critical for determining the future of community engagement. The engaged campus plays an important role in both maintaining and promoting civil society and fostering civic engagement among emerging adults.
- Go to chapter: Hosting International Service-Learning Students: Assessing Expectations and Experiences of Supervisors
Hosting International Service-Learning Students: Assessing Expectations and Experiences of Supervisors
Historically, service-learning practice and literature have focused more heavily on student experiences rather than those of the community partner. Although research focused on community partners’ experiences has increased, it has generally not taken into account shifting demographics of students in the U.S. higher education system, specifically the rapid internationalization of colleges and universities. Beginning in 1938 with Dewey’s introduction to experiential learning and democratic education, service learning has gained momentum as a pedagogical technique and as a high-impact practice. The number of nonprofit organizations in the U.S. hosting international service-learning students is unknown, but given trends in international exchange programs and the demographic nature of clients served by nonprofit organizations in the U.S., the mutually beneficial possibilities of international service learners in U.S. organizations are vast. Through an analysis of the qualitative data, researchers have identified cultural and linguistic barriers as a consistent theme.
A number of years ago, a professor from the University of California, Los Angeles (UCLA), named Albert Mehrabian conducted extensive research on the communications process. A number of his most famous findings had to do with how a speaker impacts his listeners. The most common failure of speakers when they begin an address to an audience is that the volume is too low or too soft. The audience silently groans to itself because they get the sense that they are in for another boring talk. In the nonprofit world, a good many of our talks will most likely have one of the following purposes: to exchange information; suggest action to be taken on the information; or to get approval. Being effective in front of an audience is not just the intellectual process we always assumed it was.
Historically, community-based nonprofit organizations have drawn board members from their local communities. Board members are being asked to deepen their understanding of the mission of the agency and develop an understanding of social change and social justice. As the agency matures, the roles of the board shift and they become more responsible for governance and fundraising. A well-balanced board is composed of people of various professional backgrounds and social skills, with cultural and ethnic diversity that reflects the composition of the people being served by the agency, and with the financial means, or access to it, to provide support for the agency. Irrespective of any professional credentials that board members may hold, it is critical that all board members have strong leadership skills. Board members are frequently concerned about how agencies handle their ‘legal issues’.
In order to be an effective manager, the key ingredient is to understand that the world, as it is perceived, is the world that is behaviorally important. As a manager, it is important to be able to differentiate between fact and inference. Managers should identify staff with high-power needs and understand that when those people feel powerless or not in control of a situation, they are more likely to be frustrated. As many managers view the appraisal process as intruding into their “regular” responsibilities, they tend to not want to go out of their way to concentrate on gathering, thoroughly evaluating, and digesting all the information needed to accurately assess a staff member’s performance. An ongoing and open dialogue between staff and management is critical to ensure that the manager is conducting him- or herself in a manner that fits into the parameters of social justice.
This chapter explores four ways, goals, sources of funds, determinants of scale, and boundaries, in which nonprofits differ financially from their for-profit cousins. It looks at financial data systems and financial decision making in the nonprofit environment. Within the current finance paradigm, the goal of the for-profit organization is to maximize its financial value to its owners. As the largest for-profits are organized as corporations whose shareholders are considered their “owners”, this goal is often stated as “Shareholder Wealth Maximization (SWM)”. The accounting system is how an organization keeps track of its financial activities. The role of the external auditor is only to review the financial statements in the context of its accounting processes and procedures to determine if the statements are ‘free from material misstatement’. The chapter considers how the financial differences between nonprofits and for-profits create an emerging and very exciting opportunity for nonprofit organizations.
This chapter refers to the most important federal tax laws relating to nonprofit governance. It addresses the relationship between tax-exempt status and advocacy for “social justice” that is an important public policy issue. The chapter describes the type of nonprofit organization, the primary responsibilities of directors, trustees, and officers, how to address conflicts of interest and related party transactions, important governance rules related to fundraising and what legal rules affect nonprofit organizations engaging in advocacy for social justice. A nonprofit status is generally a state law concept that may make an organization eligible for benefits such as state income, sales, and property tax exemption. The ultimate legal authority and responsibility for a nonprofit organization lie with the governing board, which is composed of directors or trustees. The chapter concludes by extracting some general principles and best practices for good governance of nonprofits.
Universities are often both the providers of education and the hubs for the study of education as a profession and the role of schools as institutions within society. This chapter documents the history and development of campus-community partnerships aimed at improving educational opportunities in under-resourced communities. Today’s universities often wrestle with the tensions of contemporary neoliberalization and commodification of education and the democratic missions on which they were originally founded. This is not to say that the successful development of universities as service providers specifically and community partners broadly has occurred (or could do so) evenly across all institutions of higher education. Several scholars have identified challenges or barriers to the successful implementation of universities as service providers. These barriers are directly linked to universities’ abilities to resist market forces and maintain their democratic or civic-engagement missions.
- Go to chapter: Nonprofit 2.0: Hardware, Software, and Shareware: Opportunities and Challenges in the Digital Age
Information and communication technologies (ICT) have been held up as a means for nonprofit organizations to be innovative, to address challenges of accountability and transparency, and increasingly to answer calls for efficiency. Constituent relationship management (CRM) systems allow nonprofits to track a 360° view of all its interactions with constituents of all types. This chapter explores some of the newer ICT tools and applications to enhance organizational practice across the continuum of holistic functioning. For organizations interested in using an empowerment approach that also combines a technology focus or uses self-management, m-Health strategies may be worth considering. Using an organizational management theory called the competing values framework (CVF), the chapter also explores both inward- and outward-facing technology tools, offering a description of each as well as some specific brand names.
- Go to chapter: International Nonprofit Organizations: Global Standards, Local Practices, Challenges, and the Meaning of Sustainability
International Nonprofit Organizations: Global Standards, Local Practices, Challenges, and the Meaning of Sustainability
As a resource for potential leaders of international nonprofit organizations (INFP), this chapter introduces some of the core concepts pertaining to the world of international nonprofits and theoretical frameworks defining structures of leadership, with relevance to understanding the universe of INFPs, the factors contributing to high effectiveness in INFP leadership, and the current challenges facing INFPs in the context of globalization/global governance. It provides a brief overview of the categorization of international institutions (IIs), focusing on international nongovernmental organization (INGOs), and the cultural factors affecting their practice, as well as the main challenges and ethical dilemmas they face. Two main types of IIs were established at Bretton Woods: the international financial institutions (IFIs) and the UN sector. IFIs aim to provide access to funding, while setting normative standards that contribute to the creation of sustainable economic growth and, implicitly, sustainable development.
There are several components that should be considered when developing a quality improvement plan for an organization. A nonprofit leader needs to work closely with the administrative staff to identify the needs and limitations that the organization may have in order to develop the goals and objectives. In order to develop these goals and objectives, an assessment of needs must be completed on all areas of the organization. A quality improvement manager needs to audit a percentage of patient charts to identify deficiencies within multiple disciplines and then develop a report that identifies those areas that need to be improved. In conclusion, quality improvement is essential for the organization to identify deficiencies and create corrective actions to provide change for the greater system. Reviewing the performance indicator reports annually will allow the organization to monitor realistic goals and objectives.
A growing body of research demonstrates that community-engaged learning opportunities involving authentic grant making can deepen students’ understanding of philanthropy’s role in our society and extend its benefits to the community. Authentic grant making has been incorporated into programs targeted at primary and secondary school children as well as undergraduate and graduate students. Colleges and universities have been offering experiential philanthropy (EP) courses since the late 1990s. The Students4Giving program provides a framework for philanthropic education emphasizing community-based knowledge with both grantmaking and fund-raising dimensions. Just as philanthropy permeates many aspects of U.S. society, EP lends itself to a wide range of disciplines. Instructors use experiential philanthropy to accomplish multiple goals. The analysis noted that just over half of all courses included civic engagement goals. A growing body of research on the impact of EP courses has identified a variety of positive student learning outcomes.
Assessment and evaluation provide an opportunity for nonprofits and funders to discuss outcomes and program improvement concretely rather than abstractly. The current funding climate requires nonprofits to embrace evaluation, as a required means for achieving sustainability. This chapter provides an overview of key steps to support assessment and evaluation in addition to building the capacity and competency required to do so successfully. When we consider the scope and the depth of contributions from the nonprofit sector to society, at its core, we find the collective persistence to prioritize the preservation and well-being of human capital. Nonprofit leadership must prioritize assessment and evaluation, as they would any key human resource, budgeting, or fundraising matter. An often overlooked, yet critical step in assessment and evaluation involves the development of a theory of change (ToC) as a precursor to evaluation.
Social justice is the foundation for a democratic society and means that all people should have an equal chance to achieve economic, personal, and public success. Social change means that nonprofit organizations do not accept the status quo in the health, education, poverty, and other areas of public concern where they work. The problem in today’s financially uncertain world is that nonprofits have moved away from doing social change advocacy and concentrate more on their own staff, fundraising, and other management issues. This chapter traces the development and evaluation of a training program for present and future nonprofit leaders that combine management and social change skills and knowledge, which allow a nonprofit executive to take on social change challenges. The training considers social change as a part of the daily workload of a nonprofit and so it is integrated into each management course in the curriculum.
This conclusion presents some closing thoughts of key concepts discussed in the preceding chapters of this book. The book illustrates the emerging importance of social justice when developing the nonprofit leader of the future. It describes the importance of financial management skills for the nonprofit leader. The book explores the changing role of a nonprofit board that includes more accountability and a higher level of demands. It analyzes many diverse functions within the nonprofit ecosystem and discusses how social justice is now an absolutely essential skill set when developing leaders in this field. The book examines the evolution of nonprofit boards from its humble beginnings as a neighborhood organization to its current state of a more formal entity. It indicates the definition of ‘social justice’ as creating an egalitarian society that is based on equality and solidarity where human rights and the dignity of each individual is of utmost importance.
Mentors are used at all educational levels, with the broad intent of the mentor supporting students’ school work, personal issues, and, at later ages, being a guide in the area of careers. Informal mentoring has long been seen as common and beneficial in social service organizations. For students, some of the barriers to participating in mentorship included timing, compatibility, and knowing how to appropriately interact with one’s mentor. Mentorship is a form of relationship building that involves a certain level of commitment from both the mentor and the mentee. Generally, mentorship as a component in the Master of Science in the Nonprofit Leadership degree program has been a successful experience from both the mentor and mentee viewpoint. Despite the challenges, which for the most part are found across many different relationship types, mentees and mentors are able to come together to contribute to the formation of this successful relationship.
Community engagement is a dynamic multi-facilitated, multi-stakeholder endeavor that makes impact measurements allusive. This chapter discusses the role of critical service learning as a backdrop for ethical engagement; and aims to graft existing professional frameworks and theory as tools for guiding and reflecting practice in community engagement with the aim of minimizing ethics violations in the community. Community-engaged learning models, such as service learning, have been shown to impact students in several areas, including self-efficacy, deeper learning of course material, reducing stereotypes, and fostering critical thinking. Students entering resource-poor communities have preconceived notions about why residents currently occupy their socioeconomic status. Ethical community engagement must emphasize the inherent capacity of individuals and communities to understand and respond to social issues. Community engagement presents a difficult duality; many students will participate in it to develop professional skills particularly within education, social work, and health professions.
This chapter discusses the state of the nonprofit social sector in the 21st century, provides a historical perspective of the sector’s development in the United States, and considers its size and the legal framework in which it operates. It explores overview of the health, status, and contributions of nonprofits in the United States and discusses how the sector going forward must be more open to and adept at strategic partnerships if it hopes to maintain and expand its impact on social services in America. The nonprofit world is changing, and the future success of the more than 1.6 million nonprofits will be defined and dominated by strategic alignments and partnerships. The online journal edition and launch event were a huge success, with more than 300 nonprofit leaders in the room who all wanted to understand the spectrum of partnerships, how to do partnerships themselves, and what lessons others had learned.
This chapter defines the term “grant” and examines potential funding sources for nonprofit organizations. A grant is a monetary fund disbursed by an institutional or organizational donor to a recipient, which does not have to be paid back. The chapter discusses the overall grant-seeking process and describes the items of a generic grant proposal or application. A grant proposal is a written document or application submitted in response to a call for proposals issued by a grant-maker agency or as a result of opportunities for funding or an invitation received by an applicant. A generic grant proposal includes: cover letter, cover page, table of content, abstract, problem or needs statement, goals and objectives, project description, timeline, organizational capability, evaluation, references, budget, and appendices. The chapter focuses on how grant seeking can serve as a strategy to generate revenues that may ultimately contribute to financial sustainability of a nonprofit organization (NPO).
This chapter defines the term “budget” and explains the importance of the budget for a nonprofit organization. It describes the different types of budgets and provides the most common budget approaches. The most common types of budgets are an operating budget, a cash budget, and a capital budget. The chapter also describes the process of developing a budget in a nonprofit organization and presents the relationship between the budget and financial sustainability in nonprofit organizations. Budget techniques are central to the successful operation of all organizations. A budget enables organizations to allocate scarce resources, control operations, and manage performance. A budget is the translation of an organization’s plans and priorities. The chapter helps the readers to learn the basic concepts and practices of budgeting in nonprofit organizations. It also explains the essential role played by budget approaches and techniques in the successful and sustainable operations of a nonprofit organization.
This chapter explains the purpose and benefits of information systems for nonprofit organizations. Information technology refers to the means of access to information and related services that combine various support and devices, such as telephone, computer, software, and the Internet. Information technology includes all computer-based information systems and related technology used by organizations in the operation of their programs, activities, or services. The chapter discusses the dimensions of information systems and also discusses the most common types of information systems in organizations. Some organizations develop and maintain: executive information systems, management information systems (MIS), and transaction processing systems. Effective information system must meet at least five criteria such as accuracy, completeness, consistency, relevance, and timeliness. The chapter presents the relationship between information technology and the financial sustainability of nonprofit organizations.
This chapter discusses the life cycles of organizations and focuses on the life cycle of nonprofit organizations. Daft. R. L. argues that life cycle of an organization includes four stages: entrepreneurial, collectivity, formalization, and elaboration. Stevens. S. K. argues that nonprofit organizations evolve from vitality to regeneration, through seven stages, encompassing idea, start-up, growth, maturity, decline, turnaround, and terminal. The chapter identifies factors affecting organizational transformation process of nonprofit organizations and discusses the elements of an organizational transformation initiative. The organizational transformation of a nonprofit organization includes factors that are antecedent to the process and other elements that are part of the process. Organizational transformation is the consequence of other factors or elements, which must be taken into consideration in future plans of action. These factors include, but are not limited to, life cycles, internal environment, and external environment. The chapter explains the relationship between organizational transformation and financial sustainability.
This chapter focuses on how some successful nonprofit agencies began building a new culture of partnership within the nonprofit sector through successful collaborations, less formal arrangements under which all involved parties maintain their independent governance but work together for a common cause. By taking a collaborative, community-based approach, the partnership has seen success in connecting residents to resources that allow them to improve their quality of life as well as in fostering capacity building and best-practice sharing in local nonprofit organizations. Recent trends underlying the accelerated collaboration in the nonprofit sector include: tremendous growth, squeezed balance sheets, greater demand for services, contracting budgets and sector contraction. Collaboration among nonprofits can take many forms, from coordinated programming to full-fledged mergers. The entrance of new intermediaries such as the Lodestar Foundation’s Collaboration Prize and Boston’s Catalyst Fund is likely to help step up the pace of nonprofit collaboration.
This chapter defines the concept of leadership and describes the most common leadership theories. Most scholars agree that leadership is a key component of organizational effectiveness. The very range of definitions of leadership and the absence of consensual agreement between the definitions make the concept of leadership an issue in itself. The chapter examines leadership from various perspectives with an emphasis on the influence of particular leadership styles on the financial sustainability of a nonprofit organization. It integrates theory-based and practice-based approaches, and thus provides tools to better understand and influence the leader-follower dynamic in the nonprofit setting. Early leadership theories include: Great man theory, traits theories, behavioral theories, contingency theories, and attribution and charismatic theories. The chapter explains the relationship between leadership and community relations and discusses the role of leadership in strategic planning. It also explains the relationship between leadership and financial sustainability of nonprofit organizations.
This chapter defines the terms community relations, outreach, and partnership in relationship to nonprofit organizations. Community relations combine an organization policy and process used to develop and implement community outreach and awareness about programs and activities in order to promote the organizational vision and mission in a community-oriented manner. As a policy, community-relations programs and activities are intentional. The chapter also defines the terms advocacy and public relations. Public relations involve the communication of intentional messages to the public in order to influence the opinion or perception of an organization by the public at large. Public relations are a key communication practice for organizations, including nonprofit organizations. The chapter describes the different facets of community relations and discusses community outreach, partnership, advocacy, and public relations as facets of community relations. It explains the relationship between community relations and financial sustainability.
As the interest in nonprofit mergers grows, so do the myths surrounding them. In the nonprofit sector, mergers carry the stigma of forprofit experiences. The most persistent myth about nonprofit mergers is that they will save administrative costs; maybe, but maybe not. The second most pervasive myth about nonprofit mergers is that they lead to massive job losses. This fear is largely a carryover from mergers in the for-profit sector and the simplistic media coverage they usually get. Chief executive officers (CEOs) need to produce a quick offset to the additional cost of the merger, and the fastest way to do that is to lay off staff. Although it is logical to associate the increase in merger activity with the economic downturn, the fact is that many nonprofit resources are currently locked into outdated corporate structures and aging program models. Mergers are simply another leadership tool.
This chapter describes a financial sustainability plan and explains the importance of a financial sustainability plan for nonprofit organizations. It discusses the elements of a financial sustainability plan. A financial sustainability plan should include an executive summary, financial sustainability analysis, financial ratios analysis, strategic goals and objectives, action plan, benchmark and outcomes, continuing quality improvement strategies, and budget. Many nonprofit organizations are faced with a constant challenge to match financial sustainability with their vision and mission statements. Some of the challenge may have to do with how much money they can successfully raise. This aspect can be manipulated by greater fund-raising efficiency and effectiveness. The chapter suggests approaches and best practices in developing a financial sustainability plan for a nonprofit organization. It includes a step-by-step process to use to develop a financial sustainability plan.
The term “fund-raising” can be used for any activity whose primary purpose is to raise money to support the activity of a nonprofit organization. The meaning of the term “fund-raising” can change based on approaches used by a particular nonprofit organization. This chapter discusses why people donate to nonprofit organizations. The literature suggests that people donate to nonprofit organizations based on compassion, altruism, values, tax deductibility, corporate social responsibility, stewardship, and solicitation. The chapter identifies some common effective fund-raising strategies used by nonprofit organizations in the United States and describes the items in a fund-raising proposal. An effective fund-raising proposal requires effective planning. The planning of fund-raising activities should start with a fund-raising proposal that sets clear justification, goals, objectives, and overall approaches and strategies. Finally, the chapter provides conceptual frameworks and approaches to organize fund-raising activities that can generate alternative funding for financial sustainability.
This chapter introduces the concept of financial sustainability in relation to the use of financial statements. It also introduces selected financial ratios to assess the profitability, liquidity, solvency, efficiency, and effectiveness of a nonprofit organization. Profitability is the surplus of revenue over expenses. Profitability used to be a forbidden word in the nonprofit world. Many nonprofit organizations are faced with the challenge of undercapitalization and do not have enough cash or liquidity to pay their regular bills. The liquidity of an organization can be measured by the current ratio, the net working capital, and the acid test or quick ratio or liquidity ratio. Solvency is different from liquidity because it deals with the long-term ability of an organization to continue to exist and expand. The debt ratio and the debt-to-equity ratio are two common measures of organizational solvency.
The YMCA of the USA’s partnership with United Health Group (UHG) was particularly innovative, and it was based on sound principles that can effectively guide even the most informal partnership efforts. Leaders from the participating nonprofits were eager to understand how they could position their organizations to establish formal partnerships with health care entities. By sharing facilities and resources, the partners intend to collaborate on programs, provide better access to services, and use financial and volunteer resources most effectively. The North Penn Community Health Foundation (NPCHF), an independent, private foundation, has supported the collaboration through strategic funding for visioning and organizational, legal, and fundraising planning and support as well as collaborative program development. Partnerships and collaborations are fostered and encouraged to promote learning and creative problem solving and to leverage the core competencies and resources of collaborators who seek to address unmet community needs.
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.
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.