MGT 133s Exam 1

third sector

"third" after business and government. But it also seems to imply a rank order of importance, which would not agree with the values of many people, who may consider religion, education, the arts, medical research, and other purposes served by the nonprofit sector to be among the most important of human endeavors.

Three Test to be recognized as a 501 (c)(3)

1.First, it must be organized and operated for one or more of eight purposes: charitable, religious, educational, scientific, literary, testing for public safety, fostering national or international amateur sports competitions, and prevention of cruelty to children and animals. 2.In addition to demonstrating that its primary purposes include one or more of those, a 501(c)(3) nonprofit must meet two other requirements. It must meet the non-distribution test, ensuring that its assets are not being used to benefit individual owners and that its managers are not being personally enriched through excessive compensation. 3.It must limit its political activities. A nonprofit that qualifies under Section 501(c)(3) cannot support or oppose candidates for public office, and again, it must limit its expenditures on lobbying.

Social enterprise

1.It encompasses nonprofits that have a social objective but employ commercial principles in their generation of revenue. 2.It could be argued that the term captures the positive essence of all private organizations having a social purpose, perhaps better than nonprofit. 3.Like companies, nonprofits bring together people, resources, and purposeful effort in pursuit of a mission, and they increasingly operate with plans, goals, and established criteria for success. 4. But their missions relate to social purposes rather than to the enrichment of private individuals.

Fourth sector:

1.It encompasses organizations that blend the features and methods of both forms. 2. Some new types of organizations have developed in alignment with this concept of the fourth sector

Tax Exempt Sector

1.It is commonly used by accountants, attorneys, and other tax specialists, is similar to nonprofit. 2.It identifies organizations entirely in terms of their status under U.S. tax law. 3.With a few exceptions, nonprofits are exempt from paying federal income tax and generally from state and local income taxes as well. 4.Tax-exempt speaks to the legal status of such organizations and says nothing about what they actually do. 5.The sector encompasses a variety of organizations with few apparent similarities aside from their tax-exempt status.

charitable sector

1.It is contrary to the reality that charitable gifts, while important, are not the largest source of nonprofit revenues. 2.Nor is the term synonymous with nonprofit sector, since there are organizations that qualify as nonprofit under the U.S. tax code but that neither seek nor receive any form of charitable support. 3.Nor does the term seem appropriate to encompass major institutions, such as Harvard University, that are nonprofit but hardly consistent with most people's understanding of a charity.

Advocacy Differ from Charitable nonprofits

1.One big difference between 501(c)(3) and 501(c)(4) organizations is that the latter do not face the same limitations on lobbying and political activity that are imposed on the former. 2.They can spend money on lobbying without limitation. 3.Because of the different advantages enjoyed and disadvantages experienced by 501(c)(3) and 501(c)(4) organizations, in terms of the tax treatment of gifts and the limitations on lobbying and political activity, some organizations have two arms, actually, two separately incorporated but related organizations. 4.One organization is qualified under Section 501(c)(4) and is free to engage in lobbying without restriction. 5.It cannot receive deductible gifts, but it can raise funds through member dues and others types of revenue, which are not tax deductible. 6.The other related organization is qualified under Section 501(c)(3) and is thus eligible to receive tax-deductible gifts. 7.It pursues education, research, and other activities consistent with that classification.

North American Industry Classification System (NAICS)

1.Similar ways of classifying nonprofits include the North American Industry Classification System (NAICS), which uses the same breakout as for the for-profit sector. 2.The Bureau of Economic Analysis of the U.S. Department of Commerce, and some other agencies, use a definition of "nonprofit institutions serving households" (NPISHs), which excludes nonprofits that serve businesses. 3.The fact that different classification systems are used by various agencies that collect data on the nonprofit sector accounts in part for the fact that estimates of the sector's size and impact are often not consistent. Existing classification systems may provide a somewhat inaccurate picture

How many tax exempt organizations are there in the US?

1.There are more than 1.5 million tax-exempt organizations in the United States that are registered with the Internal Revenue Service. 2.That does not include all religious congregations or smaller organizations that are not registered; if they were included, the total number would be larger.

A nonprofit curriculum requires students to choose from public policy, business, and economics courses as well as from nonprofit courses. According to your textbook author, the curriculum studies discussed in the first sentence would be considered a ______ curriculum.

Hybrid

Identify the term Gregory and Howard use to describe a situation in which the minimization of overhead costs reduces an ability to produce desired results.

Starvation Cycle

True or False: External sources of funding can affect organizational relationships.

TRUE

True or False: Non profit organizations compete with for profit organizations for government contracts

TRUE

True or False: Salamon argues that nonprofit organizations are self-governing.

TRUE

Which Act requires nonprofit organizations paying their employees $1 million or more to pay an excise tax?

Tax Cuts and Jobs Act (2017)

Professionals can earn fundraising certification status from the

CFRE International

The board of a community-based nonprofit wrote a policy requiring the organization's annual report be published in its local newspaper. According to BoardSource, the board is applying which best practice?

ethos of transparency

Which nonprofit board action listed below is a functional responsibility?

establish a clear institutional mission and purpose

An individual is interested in creating a nonprofit organization to provide services to help former prisoners reenter society. This scenario describes an application of ______ theory.

Sociological

advocacy organizations

1.There are two types of organizations in that category: public charities and private foundations. Other organizations are exempt under Section 501(c)(4). 2.They are referred to by the IRS as "social welfare organizations," encompassing what many would call advocacy organizations, as well as others. 3.There are a variety of other tax-exempt organizations, classified under various sections of the tax code, such as labor unions, chambers of commerce, social and recreational clubs, trade associations, and others. While this latter group is tax-exempt, the organizations are not ones we commonly think about when the term "nonprofit" is used. 4.Despite the wide array of organizations that are tax-exempt, which emphasizes the charitable [501(c) 3] and advocacy [501 (c ) 4] organizations that most closely align with the conception of the nonprofit sector that most people hold.

tax exempt

1.They are generally not required to pay federal taxes on their income, although some may be subject to other taxes. 2.Important at this point to distinguish between two concepts: the tax exemption of organizations themselves and the tax deductibility of gifts made to them. 3.Organizations exempt from federal income tax are usually also granted exemption from state and local income taxes, which increases the benefits attached to this status. 4.Only those classified under Section 501(c)(3)— the charitable nonprofits—are tax-exempt themselves and also eligible to receive gifts that are tax deductible for the donors.

The birth of the modern nonprofit sector in the United States occurred in

1900s

The Internal Revenue Service classifies advocacy organizations as ______ nonprofit organizations.

501 (c)(4)

Which famous philanthropist said, "The man who dies thus rich dies disgraced."?

Andrew Carnegie

TRUE OR FALSE: "Advisory council" is another term for "governing board."

FALSE

TRUE OR FALSE: The Sarbanes-Oxley act applies only to nonprofit organizations.

FALSE

True or False: A nonprofit demonstrates its success by earning a financial profit

FALSE

True or False: A primary focus of nonprofits and for profit organizations is social advancement

FALSE

True or False: Nonprofit advisory councils have legal responsibility within the organization.

FALSE

True or False: The Internal Revenue Service does not classify religious organizations as nonprofit organizations.

False

Triple bottom Line

First line is People (Mission.) success must measured in terms of it's ability to achieve that mission Second Line is Profits (Finance). Nonprofits must pay close attention to this to survive and succeed Third line is Planet (Environment). Impact on the world either positive or negative.

In the book, The Cathedral Within, Bill Shore argues traditional funding practices often result in

Inability to expand capacity

Social Sector

It is used by some people, but it has not gained universal acceptance and the more common designations of nonprofit organization.

A board of directors is looking for ways to invest their foundation's assets so the directors can use interest revenues to increase philanthropic opportunities. The directors could consider registering with the Internal Revenue Service as a ______.

Limited Liability Company LLC

"The American Red Cross prevents and alleviates human suffering in the face of emergencies by mobilizing the power of volunteers and the generosity of donors." The previous statement is an example of a nonprofit organization's ______.

Mission Statement

Example of an organization that is not tax deductible for donors

NRA National Rifle Association

Identify what the initials "NACC" indicates

Nonprofit Academic Centers Council

Charitable organizations evolving in colonial America were often founded by ______.

Religious Conglomerates

voluntary sector

That term is part of the title of one of the leading academic journals in the field, Nonprofit and Voluntary Sector Quarterly. 1.Voluntarism is one of the foundations of the sector, and many organizations do indeed rely on volunteers, both as members of their governing boards and for at least part of their workforce. 2.The term does not reflect the reality that, in many nonprofits, paid staff members far outnumber volunteers. 3.It also may perpetuate an inaccurate image of nonprofits as universally small and amateurish in their operations, when in fact many nonprofits are substantial enterprises, and professional management of nonprofits has been a growing trend.

Hybrid organizations

The organizations that operate under both nonprofit and for-profit legal forms,

"social entrepreneurship."

The term is used in different ways by various authors, and it is important to understand the distinctions. Some authors use the term to mean the application of business principles and the generation of earned income by nonprofits. Others use the term to mean social innovation

Civil Society Sector

There are many different definitions of civil society, and while "the nonprofit sector provides the organizational infrastructure of civil society," the concept itself is more abstract, including "the sum of institutions, organizations, and individuals located between the family, the state, and the market, in which people associate voluntarily to advance common interests

instrumental purposes of nonprofits,

They emphasize what Frumkin (2002) calls the instrumental purposes of nonprofits, that is, the services that they provide and the needs they meet, rather than their role as vehicles for individuals' expression.

Network of Schools of Public Policy, Affairs, and Administration (NASPAA)

This coincided with a period of growth in the federal government and the development of master of public administration (MPA) degree programs in universities, which for the first time emphasized management skills in government and differentiated the study of public management from the discipline of political science. Thus was founded in 1970 and began to accredit such programs.

National Taxonomy of Exempt Entities (NTEE)

This divides the universe of nonprofit organizations into 26 major groups under 10 broad categories. These categories are based on organizations' purposes, activities, and programs and are similar to the industry classification codes used to group for-profit companies.

True or False: The National Geographic Society is a nonprofit organization.

True

Nonprofit Academic Centers Council (NACC)

a membership association of academic centers and programs that focus on nonprofit organizations, issued its first "Curricular Guidelines for Graduate Study in Philanthropy, the Nonprofit Sector, and Nonprofit Leadership" in 2004.

Herman and Heimovic recommend nonprofit chief executive officers do NOT adopt a(n) ______ leadership style.

autocratic

Rogers recommends that nonprofits executives______

build diverse boards

voluntarism

calling philanthropy "voluntary action for the public good." But most people would make a distinction. Philanthropy could involve giving money from afar while having little or no involvement with the organization or its beneficiaries, but volunteering implies a more hands-on role.

Lohmann calls goods that provide an indirect benefit to society ______ goods.

common

Berman describes the nonprofit sector as the ______ sector.

community

A nonprofit board asked for an independent audit of its financial records. According to BoardSource, the board is applying which best practice?

compliance with integrity

A research physician believed that the free market place and governments were not meeting consumer demand for new medications to treat certain diseases. The physician received government approval for a new treatment and opened a nonprofit medical clinic to provide that treatment. The previous scenario describes an application of theory about nonprofits from the discipline of ______

economic

independent sector

has some prominence since it is also the name of the principal organization representing the interests of nonprofits in Washington, DC—Independent Sector (www.independentsector.org). But the term itself raises the question of "independent from what?" Nonprofits are financially dependent on resources derived from both government and private donors and are subject to an increasing array of state and federal law, so independence would not seem to capture their essence.

An individual who is willing to accept a lower financial return in exchange for larger social benefits. This individual is a(n) ______ investor.

impact

Philanthropy

is a more rational form of long-term investment in the infrastructure of society, seen, for example, in gifts made to construct new hospitals, endow universities, or create new charitable foundations intended to exist in perpetuity

Charity

is appropriately defined as giving intended to meet current individual human needs or to alleviate current human suffering—for example, to feed the homeless or aid the victims of a natural disaster. It is emotionally driven and often impulsive, as evidenced by the outpouring of gifts made through the mail, by phone, and online within days of any natural disaster, such as Hurricanes Michael and Florence in 2018, as well as the deadly Camp Fire in California that same year

nondistribution constraint

law stating that nonprofit organizations cannot distribute surplus earnings to individuals without regard to the charitable purpose for which the organization was formed

A disadvantage of a hybrid governing board is ______.

members may have differing interests and loyalties

Theories exploring the inner workings of nonprofit organizations are referred to as ______ theories.

micro

List three management issues Robert Herman explains non profit managers must explain

mission, resource acquisitions, and strategy

International nonprofit organizations are called ______ organizations.

nongovernmental

nongovernmental organizations (NGOs)

nonprofit groups that provide charitable services or promote social and environmental causes. The term nongovernmental is one that originated with the United Nations and reflects in part the reality that many such organizations are performing government-like functions in the countries they serve and that most receive a substantial portion of their revenue from government sources.

The Great Society program resulted in increased ______ sector spending on social programs.

public

According to Chait, Ryan, and Taylor, a nonprofit board that develops long-term goals is applying which type of mode?

strategic

expressive purposes of nonprofits

they provide an outlet for individuals to express their values and passions through their involvement with such organizations.

At Save Our Orphans, volunteer board members perform all of the nonprofit's management activities. Save Our Orphans has what type of board?

working