PA 501 Intro to NPA

Statistics on Nonprofit Organizations

- The National Center for Charitable Statistics groups tax exempt entities into ten areas: 1. Arts, culture and humanities 2. Education 3. Environment and Animals 4. Health 5. Human Services 6. International/ Foreign Affairs 7. Public/Societal Benefit 8. Religion Related 9. Mutual/ Membership Benefit 10. Unknown/ Unclassified

Blurring the Distinction - Non and for Profit Organizations

-Some organizations exist as contractors implementing government funded programs - Almost one third of the revenue of charitable nonprofit organizations ( 29.4% in 2010 come from government grants and payments for service ( such as Medicare and Medicaid programs ) - Many nonprofit organizations receive some government funding but also ( often increasingly so ) rely on a fee for service structure ( museums and parks )

Charity versus Philanthropy

1. Andrew Carnegie helped distinguish the difference but both assume the gift of money and time through volunteerism. 2. Charity: Giving the allieve current human suffering. - Emotionally driven and impulsive - Usually in response to current conditions. 3. Philanthropy: - Long-term investment in the infrastructure of society for hospitals,universities, foundation etc. - Theoretically if enough philanthropy happened the need for charity would disappear

Domestic and International nonprofit organizations

1. Outside the U.S.A: Called nongovernmental organizations or NGO's -Many are performing governmental like functions in the countries they serve - Most receive a substantial part of their budget from government sources. 2. Inside the U.S.A There were more than 1.9 million nonprofit organizations in 2009 - Classified under 501 (c) (3) of the Internal Revenue Service tax code, this largest group of charitable nonprofit organizations totaled 1.5 million in 2009 .

Classifying Nonprofit Organizations

1. Salamon's classification based on who receives the benefit : - Public Serving -Member Serving 2. By source of support: - Foundation- limited individual large scale donation( Bill and Melinda Gates Foundation) - Public charities - multiple small scale donation with the proceeds then given in block funding to targeted charities ( United Way ) 3. By category: -By purpose -By activities -By programs.

The Rise of Nonprofit Organization

1. The growth of Nonprofit organizations since the 1990's is due to: - Devolution of federal programs to states who when contracted out to nonprofit organizations -Booming economy of the 1990's - Big events ( Hurricane Katrina, 9/11, Haitian earthquakes, triggered media focus on human suffering. -Concentration of great wealth in individuals who created foundations as tax shelters. - Requirements of community service for graduation from high school -Federal focus such as additional funding ( 5.7 Billion ) in 2009 for community volunteer service programs.

Brief Tour of Nonprofits

1.Charitable: Religious organizations ( not known for hiring professional (paid)managers but with the larger facilities- this is changing_ 2.Non-religious : Provide direct services in areas such as education, health care, arts and cultural programs. 3. Non-charitable( broad definition often supports charitable organizations) - Foundations - Advocacy groups ( political and social welfare )

Domestic Nonprofit Organizations

1.Classified under 501 (c) (4) of the IRS tax code, about 140,000 are designed as advocacy groups ( Sierra Club, National Rifle Association etc.) 2. Nonprofit organizations influence on economy - Employ 12.9 million people or almost 10% of the workforce - In 2009 Nonprofit expenditures totaled almost 1.1 trillion or about 5% of Gross Domestic Product ( GDP )

Nonprofit management is different

1.It must integrate mission and acquisition of resources and strategy : -Most nonprofit organizations obtain resources from multiple sources which causes huge fluctuations in funds which in turn affects the type and scope of activities they can do to fulfill their missions. 2. Management of nonprofit organizations must be adept at negotiation and compromise : - Different donors have different requirements or intentions for their funding. -The interrelated relationships between multiple stakeholders dilutes the autonomy of the CEO of a nonprofit organization. For example the volunteer base pursue their own values that ( hopefully) reflect the mission in some way. Board members may have their own agendas of values Funding sources may give their support because they believe their own values are in concert with continued activities 3. Non profit organizations have a double bottom line: - How well does the organization fulfill its social purpose? -How well does the organization manage its fiscal resources? 4. Nonprofits often try to accomplish their goals in hostile environments - Averse cultural or religious norms. -Dangerous or remote locations -Adverse political pressures -Program or concept illiteracy.

Nonprofit Literature

1.Literature has focused on three areas : -Practitioner "how to" advice. -Organizational behavior and management theory - Nonprofit organizations as social and economic institutions. 2. Some specific topics include: Role and relationships between nonprofit CEO's and their boards: -mission versus longevity practices -Measurement standards for nonprofit organization's effectiveness. -Preparing leaders for nonprofit organizations. -To develop entrepreneurial business skills -To promote ethical decision making abilities. -To link an understanding of nonprofit values with strategic planning, management and marketing skills.

New challenges for nonprofit organizations

1.Since the 1980's competition for resources has increased : - Between the nonprofits themselves (=smaller pool of available public and private grants or contracts) -Between nonprofits and for profit organizations for contracts or services in revenue style funding schemes. 2. Devolution of funding to state governments from federal government: -Shift from block grants provided by states to programs to individual voucher systems that split funds into micro units at the individual level. 3. Shift from large in state programs to outsourcing or contracting out resulting in a myriad of smaller programs . Example: increase in student Pell ( Federal ) grants leading to an increase in payments directly to individuals instead of money granted directly to universities or government payments to individuals within the Medicare system instead payments directly to and for general hospital support.

The Role of Tax Status

1.The tax code status determines the rules under which the nonprofit organization is manged. The IRS delineates nonprofit status within two major categories, 501 (c) (3) and 501 (c) (4) 2.All nonprofit organizations under 501 (c) are tax exempt from income but only 501(c) (3)'s also are able to allow their donors to receive tax deductions for their gifts 3.501 (c) (4) Advocacy organizations ( some HMO's are in this category) : - Gifts made to 501 (c) (4)'s are not tax deductible for their donors -These nonprofit organizations are understood to have higher purposes such as furthering the common good of a community ( like 501 (c) (3)s) but they are not restricted to how much money they can spend on political activity ( unlike 501 (c) (3)'s) - Some nonprofit organizations have 2 arms , each classified differently in order to get around this political activism distinction.

New challenges for nonprofit organizations (cont)

4. Positives of this trend include diversity of choice: Perception of quality, location and ease of access have increased in importance as nonprofit organizations have splintered from large programs to small 5. Negatives include diversity of quality: The more programs = the fewer that are reviewed or well regulated. 6. The need for management has increased along with the expectation for measurable results. 7/ Wealthy donors expect to see their money used for effective programs and services and they expect long term organizational capacity and sustainability. 8. The proliferation of nonprofit literature in the 1990's primarily argued for organization building that would allow their programs to "go to scale"= grow and be more sustainable over time : - This led to a new professionalism in nonprofit management. - It also led to a proliferation of nonprofit organizations who market their programs as more effective than others. -It has also led to more accountability in fund management.

Nonprofit management is different ( cont)

5. Change in nonprofit organizations often reflects a behavioral change to a perceived social advancement of humanity whereas change in a for profit organization often results in an improvement in profitability. 6. Measuring the success of nonprofit organization's value laden missions are much more difficult than measuring profitability of for profit organizations or even outcomes in typical public organizations that provide services based on tax revenues.

Nonprofit Managers

Advice for Nonprofit managers - Focus on finding dependable sources of income -Produce measurable results -Evaluate whether you are making a difference -Be strategic, not opportunistic. -Build diverse boards. -Spend more time on advocacy -Collaborate with other organizations: J.Rogers ( 2006 ) Foundations are Burning out CEO's .

Nonprofit Organizations Today

Is there a "new norm" of limited resources matched with high demand? Did the recession of 2007-2009 signal a new direction for nonprofit organizations? Has the emphasis shifted from addressing global needs to addressing "crisis at home"? What are some of the critical skills for nonprofit managers, leadership and management, fundraising and financial management, lobbying and advocacy skills?

Nonprofit Organization Background Information

The study of nonprofit organizations differs from both public and for profit organizations in two major ways; 1. The use of a volunteer work force ( which leads to a rise in needed leader motivation and management skill sets) 2. The dependence on donor contributions ( which leads to a rise in needed leader communication and marketing skill sets)

Nonprofit Organization Perspectives

There are extremes of definition represented at both ends of the spectrum : - Nonprofit organizations as stewards of moral and religious charitable giving -Nonprofit organizations as self-sustaining ( often through profitable enterprises) social enterprise that benefit humanity.