PAD4144 Final

Vision and Values

▪ Vision Statement - Complete in the first phase of the strategic planning process. • A description of an ideal future. ✓Internal - The future of the organization. ✓External - The ideal world that the organization is thriving to shape. • Examples: ✓The Nature Conservancy - To leave a sustainable world for future generations. ✓Kiva - We envision a world where all people hold the power to create opportunity for themselves and others. ✓America's preeminent news institution. ▪ Values - Guiding principles.

Carver's Policy Governance Model

▪ The board's responsibility is to make policy and the CEO's role is to implement it. • Board committee responsibilities often coincide with those of senior managers, and the staff prepares materials for committee meetings. • Steers boards away from the mundane, the show-and-tell presentations, and merely rubber-stamping the staff's recommendations. • But, it could prevent the board from staying focused on big picture issues. ▪ Boards lead by developing and maintaining policies in four areas: • Ends to be achieved. • Means to the ends. • Board-staff relationships. • Process of governance.

Developing and Managing the Budget

▪ The budget is the document that guides action. • Operating budget • Capital budget • Cash budget ▪ A budget: • Is political as well as financial. • Reveals the organization's true strategy. • Can be structured based on an organizational or center basis. • Can be developed incrementally or allow for redistribution.

501(c)(4) Advocacy Organizations

▪ Their purpose is to advance a cause or work for social change. ▪ Tax exemption versus tax deductibility • Tax Exemption: Exempt from federal income taxes. • Tax Deductibility: The gifts they receive are non-taxed; Not the case for (c)(4)s. ▪ Case of the Sierra Club (Box 2.2)

Expenditure Limits on Lobbying

▪ There are specific rules for foundations: • They may not endorse or oppose legislation in communication with legislators or the general public if the communication includes a call to action. • May provide technical assistance to legislature if asked to do so. • Can support non-partisan activities. • Barred from participating in political campaigns (same as 501c(3) nonprofits). • Cannot designate a grant to support lobbying activity. • Can provide "unrestricted operating support" to an organization that lobbies.

Nonprofit Role in Lobbying and Advocacy

▪ They help to: • Bring attention to the issue. • Influence attitudes. • Build support for change. • Directly participate in lobbying for new laws. • Advocate for people who are disadvantaged. • Advocate for causes that initially only concerned minorities. ▪ Stages in the Life Cycle of a Social Change Issue • 8 stages in page 286 of the textbook.

Mechanisms for Accountability

▪ Transparency - Increasing influence from charity watchdog organizations that proactively examine nonprofit organizations. • Charitynavigator.com • Greatnonprofits.org • Better Business Bureau • Guidestar.org

Overview of the Nonprofit Sector:

▪ What do you think when you hear the word "nonprofit"? ▪ Sometimes difficult to distinguish the line between nonprofits and government, and between nonprofits and for-profit businesses. • Almost one-third of revenue for charitable nonprofits comes from government grants and payments for services. • Some nonprofits start as for-profit enterprises to supplement funds they receive from the government. ✓Teen Challenge in Tallahassee has car wash • Some nonprofits operate in all three sectors.

The Governing Board's Responsibilities

▪ Duty of care - Must pay attention and exercise due diligence in monitoring the organization's finances and supervise the action of its management. ▪ Duty of loyalty - Members of the board put the interest of the organization above their own. ▪ Private inurement - Anyone who is an insider cannot reasonably benefit from the organization's funds. ▪ Duty of obedience - Requires that the board make sure that the organization is complying with the law and that any decisions or actions taken are consistent with the organization's mission and governing documents, including its charter.

Types of Governing Boards

▪ Elected boards - Elected by the membership of the organization. • Popular in professional associations and advocacy organizations. • Can result in uncertainty in regard to who will govern the organization from year to year. ▪ Self perpetuating boards - Members are selected by the existing board who identify and enlist individuals according to criteria established by the board itself. • Creates a relatively stable environment. • Can craft its own board membership, adding people with necessary skills or background. • May result in underrepresentation of minority or constituency. • May result in out of touch board.

The Failure Theories

▪ Externalities - consumption of goods that either positively or negatively affects others. ▪ Market failure - when the market doesn't allocate well or work effectively. Why? • Information asymmetry ▪ Government failure - the government steps into correct market failure but fail. Why? • Political, structural, or systemic reasons.

Mechanisms for Accountability

▪ Formal Mechanisms: • Federal government ✓Organizations with revenues greater than $50k - Form 990, 990-EZ or 990-PF ✓Organizations with revenues less than $50k - 990-N (aka "postcard") ▪ Informal Mechanisms: • Independent Sector - Panel on the Nonprofit Sector ✓Recommendations and 33 principles of good governance and ethical conduct was established in 2007 and revised in 2015. Looks at: o Legal compliance and public disclosure o Effective governance o Strong financial oversight o Responsible fundraising • Accreditation

Volunteer Program Practices

▪ Practices of effective volunteer programs • Assess the need for volunteers. ✓ Regular volunteers are unpaid, but they are not free. ✓ Reasons to involve volunteers may include: community relationships, inject passion into the organizational culture, or open doors to new sources of funding. • Determine the structure of the volunteer program. ✓ Have defined roles. ✓ Clearly define supervision. ✓ Match the volunteers' interest to the program. • Develop volunteer job descriptions. ✓ Communicate that they are taking on significant responsibility and their assignment involves real work. ✓ Communicates expectations clearly. • Develop formal volunteer policies. ✓ Spell out expectations, rules, and standards by which the volunteers will be evaluated, and if necessary terminated. ✓ Carry liability insurance to protect both organizational assets and volunteers.

Volunteer Program Practices

▪ Practices of effective volunteer programs • Provide a sufficient budget and personnel to manage volunteer programs. ✓Adequate resources; volunteer manager • Recruit and hire volunteers as if they were employees. ✓Targeted recruitment; Warm body recruitment • Provide orientation and training to volunteers. • Set clear goals, evaluate performance, and recognize achievement. ✓Recognition of goals and achievements is a primary reward for volunteers since they are not paid.

The Marketing Mix

▪ Price Discrimination - Charging people different prices based on their market segment to which they belong, determined by objective variables. • It does not mean charging people different prices based on their race, ethnicity, sex, religion or other personal characteristics. • To cover the actual higher costs of serving a particular segment. • To match the price to the perceived value of the experience. • To shift utilization.

Overview of Lobbying Laws

▪ Nonprofits registered under a 501c(3) license must comply with legal restrictions on their lobbying activities. • Restricted because of the implications to the tax deductible gifts, which are viewed as a form of public subsidy to the organization. ▪ A 501c(4) is the required registration for a nonprofit that engages in lobbying without restriction. • Can endorse, NOT as primary purpose. • Cannot directly contribute to candidates' campaigns. • Gifts are not tax-deductible. ▪ 501c(5) and 501c(6) organizations • Similar lobbying laws as 501c(4). • Permitted under Section 527 to engage in partisan political activity. • Gifts are not tax-deductible.

Setting Objectives

▪ Objectives: • Specific • Quantified • Represent steps toward accomplishing the goals. • Have at timeline • Examples: ✓Double the number of visits to our website from x to y within the next year

Developing Strategies

▪ Organizational Strategies - Broad directions and those that relate to mission, vision, trends, competitors, partners, and market position. ▪ Programmatic Strategies - Related to the programs and activities implemented to achieve specific outcomes. ▪ Operational Strategies - Those that aim at enhancing administrative efficiency, preparedness and execution.

Isomorphism

▪ Organizations in the same field start to become more like each other as a result of facing similar influences from the environment. • Coercive isomorphism - Forced upon the organizations, such as new federal regulations. • Mimetic isomorphism - Organizations have a tendency to start mimicking each other. • Normative isomorphism - Organizations are influenced by the same standards of professional practice.

Explaining Nonprofit Organizations

▪ Organized entities - Look informal groups of people, but chartered as formal organizations. ▪ Private - The control of the organization lies outside the sphere of government and have considerable autonomy in their own strategies, design their own programs, pursue revenues through multiple means, and select those who will benefit from their services. ▪ Nonprofit distributing - They do not distribute any excess of revenues over expenditure to benefit the individual owners. ▪ Self governing - Not controlled by government or by individual owners. ▪ Noncompulsory - Participation is voluntary.

Measuring Performance

▪ Performance management - The process of defining, monitoring and using objective indicators of the performance of organizations and programs to inform management and decision making on a regular basis. ▪ Tools available to help nonprofits develop performance management systems: • Urban Institute - https://www.urban.org/policy-centers • Performwell.org - http://performwell.org/ • Guidestar's Chart Your Impact - https://learn.guidestar.org/update-nonprofitreport/charting-impact

The Marketing Mix

▪ Product - The good or service being offered. In nonprofits this is your main service delivery (education, health care, counseling, etc). • Tangible and intangible • Nonprofit versus for-profit products are not the same thing, even if they are in the same industry. ▪ Place - The location at which the product or service is available. • Involves consideration about both the physical and virtual worlds. ▪ Promotion - The visible activity that everyone sees. • Part of marketing. • Make potential clients and donors available of the services and products. • To whom should the nonprofit's programs and services be promoted?

Using Financial Ratios

▪ Profitability - Describes the change in net assets on the statement of activities. ▪ Liquidity - Possessing sufficient cash to pay obligations as they come due. ▪ Management of Fixed Assets - The amount of money that is being used and generated for buildings, equipment, etc. ▪ Long-term solvency - Evaluating whether the organization is financially strong or in jeopardy, and requires looking at the statement of financial position.

Board Effectiveness

▪ Twelve principles that power effective boards: • Constructive partnership - Working in collaboration with the CEO. • Mission driven • Strategic thinking • Culture of inquiry - Creates a culture of asking questions, mutual respect and constructive debate. • Independent mindedness - Stay away from groupthink and make decisions based on the best interest of the organization. • Ethos of transparency - Promote transparency by ensuring stakeholders of the public have access to appropriate information. • Compliance with integrity - Promotes strong ethical values. • Sustaining resources • Results oriented • Intentional board practices • Continuous learning • Revitalization

Organizational Finance

▪ Types of Accounting: • Cash basis of accounting - Financial transactions are recorded only when the money actually changes hands. It does not account for accounts payable or accounts receivable. • Accrual basis of accounting - Takes into account the money that a nonprofit has earned, and is entitled to receive, as well as obligations for expenditures that it has not yet incurred. It presents a more accurate portrayal of the nonprofit's actual situation and is mandated for external financial reporting.

A Continuum of Relationships

*PICUTRE* ▪ Movement across the continuum from left to right is accompanied by increasing integration of the organization. ▪ The amount of integration is defined by the extent to which the relationship affects the organization's corporate structures, their operations or programs, the distribution of responsibility within them, and their economic or business models.

A Revolution in Management:

- Revolution is driven by: • Competition • Changes in funding patters • Growth in the sector - it's big business! • An increasing demand for accountability - Additional Factors: • Devolution of government • Outsourcing of human services • Increasing concerns by funders for results and impacts • Macro view of the organization

The Strategic Planning Process

1. Prepare for planning 2. Identify strategic issues 3. Develop goals, strategies, and objective 4. Write and communicate the plan 5. Develop implementation plan 6. Execute & Evaluation

The Strategic Planning Process

Mission - The reason the organization exists. Purpose Vision - Description of an ideal future. Vision of success Values - Principles the organization holds as the most important. Guiding principles Goals - Directions that the organization will pursue with respect to the strategic issues. Strategic goals, directions, objectives Strategies - Actions that the organization intends to take to achieve its goals. Objectives - Specific, quantified targets that represent steps toward accomplishing the goals. Goals.

Theory of the Commons

Private goods • Benefit only their consumer. • Should be paid for by consumer. ▪ Public goods • Provided by government. • Benefit everyone. • Should be paid for by everyone. ▪ Common goods • Cannot be consumed individually, only collectively. • May not be universally desirable.

Population Ecology

▪ Internal dynamics • e.g., Leadership; Organizational policies. ▪ External environment • e.g., Funding, Competition, etc. ▪ Feedback • e.g., Losing funding forces NP to learn how to do more with less. ▪ Open system versus closed system • Closed - Impervious to surrounding environmental stresses like funding. • Open - Must react to surrounding environmental stresses.

Week 3:

file:///C:/Users/Sophia/Downloads/Brown%20and%20Guo_2010%20(2).pdf file:///C:/Users/Sophia/Downloads/The%20Effective%20Not-for-Profit%20Board%20(3).pdf https://www.youtube.com/watch?v=MIF9yJVldwQ

Week 4:

file:///C:/Users/Sophia/Downloads/Ebrahim%202005%20(1).pdf file:///C:/Users/Sophia/Downloads/Nonprofit%20Performance%20Management%20(2).pdf file:///C:/Users/Sophia/Downloads/The%20art%20of%20performance%20management_nonprofit%20style%20(2).pdf https://www.ted.com/talks/anne_milgram_why_smart_statistics_are_the_key_to_fighting_crime

Week 12:

file:///C:/Users/Sophia/Downloads/Foster%20and%20Fine_2007_HowNonprofitsGetReallyBig%20(2).pdf file:///C:/Users/Sophia/Downloads/Tuckman%20Chang%201991%20(2).pdf http://www.espn.com/espn/otl/story/_/id/9109024/top-athletes-charities-often-measure-charity-experts-say-efficient-effective-use-money

Week 2:

file:///C:/Users/Sophia/Downloads/Frumkin%202012%20(2).pdf https://www.youtube.com/watch?v=GYkb6vfKMI4

Week 5:

file:///C:/Users/Sophia/Downloads/Frumkin%20and%20Andre-Clark_2000%20(1).pdf file:///C:/Users/Sophia/Downloads/Moore%202000%20(1).pdf https://www.youtube.com/watch?v=TXrrzudmK-8

Week 7:

file:///C:/Users/Sophia/Downloads/Hager%20Brudney%202004%20Urban%20(1).pdf file:///C:/Users/Sophia/Downloads/The%20Accelerated%20Millennial%20Manager%20FlipBook%20Final%20(2).pdf https://www.ted.com/talks/amy_cuddy_your_body_language_shapes_who_you_are?language=en

Week 6:

file:///C:/Users/Sophia/Downloads/MakingSenseOfNonprofitCollaborations%20(1).pdf file:///C:/Users/Sophia/Downloads/Najam%202000%20(1).pdf https://www.youtube.com/watch?v=iVDGSMvlwQM

Week 1:

file:///C:/Users/Sophia/Downloads/McKeever_2015.pdf file:///C:/Users/Sophia/Downloads/IRS%20Activity%20and%20NTEE%20Core%20Codes%20(2).pdf https://www.ted.com/talks/melinda_french_gates_what_nonprofits_can_learn_from_coca_cola

Week 10:

file:///C:/Users/Sophia/Downloads/SuccessStory--MakingFriends%20(1).pdf file:///C:/Users/Sophia/Downloads/SuccessStory--MereMom%20(1).pdf

Week 8:

https://blog.capterra.com/nonprofits-successful-content-marketing-campaigns/ https://www.classy.org/blog/11-nonprofit-videos-that-inform-and-inspire/

Collaborations and Mergers with National Nonprofits

▪ Intermergers - Collaborations or mergers between or among nonprofit organizations that were previously legally independent. ▪ Intramergers - Combining units within a single corporate entity. ▪ National nonprofits take on two forms: • Chapter form - A single corporation under a one charter where chapters are essentially local branches or offices governed by a single national board. • Federation form - Local chapters have separate charters and are governed by independent boards.

Measuring Performance

▪ Common Indicators - https://www.urban.org/policy-centers/cross-centerinitiatives/performance-management-measurement/projects/nonprofitorganizations/projects-focused-nonprofit-organizations/outcome-indicatorsproject ▪ Balanced Scorecard - A way to monitor indicators across various dimensions: • The financial perspective • The customer or client perspective • The internal business perspective • The innovation and learning perspective ▪ Dashboard • Current results • Underlying performance (appropriateness & cost effectiveness of programs and support) • Risks • Assets and capabilities • Change projects (projects intended to bring improvements in the organization)

Some Basic Definitions

▪ Communication - The transmission or exchange of information. ▪ Strategic communications - Communication that is undertaken in the context of a master plan and in pursuit of specific organizational goals. ▪ Public Relations - Not the same thing as marketing. Strategic communication processes that build mutually beneficial relationships between the organization and the public. ▪ Marketing - A process that uses communication but with a very specific purpose to influence the behavior of someone else. • Focuses on exchanges.

Performance Measurement: The Continuing Debate

▪ Concerns about spending too much time on performance measurement include: • Time and effort • Analysis paralysis • Disconnected managerialism

Defining Your Goals

▪ Derived from strategic issues. ▪ Do not have to be measurable, but should use specific action verbs. • Improve certain service quality(ies) • Increase X • Expand Y

Collaborations, Partnerships, and Mergers

▪ "High impact nonprofits work with and through other organizations - and they have much more impact than if they acted alone." Crutchfield and Grant (2012) • Partnership - More formal than a collaboration. • Collaboration - Voluntary linking of organizations to share information, resources, activities, capabilities, risks, and decision making to achieve an agreed upon outcome. ✓Four types: Philanthropic collaborations; Strategic collaborations; Commercial collaborations; Political collaborations.

Size of the U.S. Nonprofit Sector

▪ 1.6 million tax exempt organizations. • 501(c)(3) charitable organizations: 1.1 million • 501(c)(4) health maintenance or advocacy organizations: 97k ▪ In 2010, nonprofits employed 13.7 million people. • 10% of the workforce • 9.2% of all wages paid • $587 billion in wages and benefits

The Governing Board's Responsibilities

▪ 1996 - Federal legislation passed providing the IRS with authority to impose intermediate sanctions. • Intermediate sanctions - Financial penalties to punish individuals who engage in or permit improper transactions. ▪ Sarbanes-Oxley Act (2002) - Placed new requirements on the governance of publicly traded for-profit corporations. The destruction of documents and protection for whistle-blowers requirements apply to nonprofit. ▪ Form 990 - Revised in 2009 so that nonprofits with more than $50,000 in annual revenues are required to file. • Changed to include both finances and governance practices by the nonprofit's BOD. ▪ State of governance - The majority of nonprofits are compliant with many, but not all of the principles covered in Form 990s. • Governance practices vary across organizations depending upon certain characteristics.

Managing Volunteers

▪ 63 million Americans volunteer providing almost 8 billion hours of service. ▪ Women are more likely to volunteer than men, across all ages, education levels or any other characteristics. ▪ Each hour of volunteer time contributed to nonprofits is estimated to be worth $22.55. ▪ Types: • Sport volunteers - Participation is casual, such as clean up a park or help with an event. • Episodic volunteers - Help for a short period of time like during holiday seasons. • Regular volunteers - Help on a regular basis. • Marginal volunteers - Pressured to engage in service for their organization or other purpose. • Virtual volunteers - Volunteer online from somewhere else.

Defining and Ensuring Accountability

▪ Accountable - Being required to answer or take responsibility for one's actions. ▪ Accountability - Encompasses demonstrated effectiveness to achieve the purposes for which the nonprofit exists. ▪ Federal regulation - Carried out by IRS Division on Tax Exemption and Government Entities. • Intermediate sanctions • Revoke tax exemption • Eliminate ability to raise tax deductible gifts • Require to pay income taxes

Definitions of Key Concepts

▪ Accounting - Refers to rules in which financial transactions are classified and reported. • Financial Accounting - Deals with financial information published for use by parties outside of the organization. • Managerial Accounting - Deals with information useful to the organization's managers. ▪ Financial Management - Broader than accounting, meaning relying on financial statements and accounting data, but focusing on the meaning of those figures. • Analyze financial ratios to provide indicators of trends and organization's overall health. ▪ Principle issue is generating enough revenue to meet short-term operating costs and long-term capital needs. • Earned income • Trade benefits • Endowment funds - A pot of gifts collected over time that produces annual investment income from interest.

Implementing an Advocacy Program

▪ Determine the reason for lobbying and how it advances the nonprofit's mission. ▪ Understand the legislative process. ▪ Identify the source of funds to be used for lobbying. ▪ Undertake research to develop an understanding of the public policy issues related to the organization's mission and to obtain data needed to make the case with legislators. ▪ Develop an infrastructure to support the lobbying program. ▪ Inventory existing relationships and identify decision makers. ▪ Use a strategic mix of tactics. ▪ Form a coalition.

Basic Distinctions

▪ Advocacy - Taking action in support of a cause or an idea. • Advocacy is a basic right of every individual and organization in the U.S. • May be practiced without limits. • Is considered an exercise of free speech protected by the U.S. Constitution. ▪ Lobbying - Action taken to support or oppose specific legislation at any level. • Does not include contacting members of the executive branch, unless that member is in a position to influence legislation. ▪ Organizing - Identifying people you think will share your positions and enlisting them to be a part of your base of support, which may enhance the effectiveness of your advocacy and lobbying. ▪ Political Campaign Activity - Action taken in support of, or opposition to specific candidates for office. • Includes publication and distribution of statement or printed materials. • Does not included conducting nonpartisan activities such as get-out-the vote efforts or sponsoring a candidate debate forum.

Political Campaign Activity

▪ All charitable nonprofits and foundations are banned from participating in campaigns and endorsing candidates either implicitly or explicitly. • There have been controversial cases in terms of the fine line between what is permissible advocacy and what is illegal involvement in electoral politics by charitable organizations. ▪ Citizens United v. FEC in 2010 - Now corporations can make independent expenditures from their general treasury to expressly support or oppose candidates for the U.S. Hose, Senate, and President. • Social welfare, labor unions, and business associations which are under 501c(4), c(5), or c(6) can engage in political activities so long as these activities are not the organizations' primary purpose.

Alternatives to Nonprofit

▪ Alternative terms: • Not-for-profit: Just wrong vernacularly. • NGO's typically work internationally. • Independent sector: Independent from what? • Third sector: Implies a rank order. • Charitable sector: Charitable gifts are not the only revenue source. • Voluntary sector: Not all organizations have volunteers. • Tax-exempt sector: Preferred by accountants and attorneys. • Civil society sector: Overly abstract? • Social enterprise: Commercial principles in generation of revenue.

Types of Governing Boards Continued

▪ Appointed and Hybrid Boards • Appointed by some authority outside of the organization. ✓Typical for public organizations. • Hybrids - Some members are elected, some appointed, some self-perpetuating, some serving ex officio. ▪ Advisory Boards and Councils • No legal responsibilities or authority. • Multiple reasons for creation.

Managing Endowment Funds

▪ Are subject to market condition. ▪ Are intended for long-term use. ▪ Term Endowments - Established for a set period of time, after which the funds may be spent, invested differently, etc. ▪ Ways to invest endowments: • Bonds; Stocks; Mixed portfolios ▪ You want to maximize total return, that is total interest, dividends, and appreciation in the value of stocks and other assets, with consistent levels of risk that the organization's board has determined to be acceptable. ▪ The amount withdrawn and spent is determined by the spending limit, or payout rate, established by the board.

Nonprofit Management as a Field of Study:

▪ Began in the 1970's with the "Filer Commission". ▪ Significant attention in the 1990's. ▪ Viewing the subject sector either as social institutions or social enterprises. • Social institutions: Pursuing social changes, expressive roles, democratic society as stewards. • Social enterprises: Focusing on social "entrepreneurship"; operations and functions focused on similarities with businesses.

Measuring Performance

▪ Benchmarking - Comparing data from organizations that are similar in their mission, size, location and other characteristics. Comparing similar organizations is the heart of benchmarking. ▪ Corporate-style benchmarking - Identifies the most effective or efficient methods of performing specific functions and seeing how the subject organization is compared with the best. The organization conducting the benchmarking would then adopt these practices to increase its own performance.

Building the Brand

▪ Brand - A name, term, sign, symbol, design, or a combination of these that is intended to identify the goods and services of one seller or groups of sellers and differentiate them from those of the competitors. ▪ Brand Attributes - A shorthand for a collection of perceived qualities of the organization or its products. ▪ Brand Equity - The value of your brand.

Conditions for Success

▪ Building successful relationships is built on: • Driven by mission. • Commitment from top leadership. • Trust. • Relatedness - Based on connections between mission, constituency, organization or structure, and geography. • Process - Takes time to effectively operationalize the relationship.

Capacity Building

▪ Capacity is everything an organization uses to achieve its mission. ▪ Capacity building is a process to develop, sustain, and improve the delivery of a nonprofit's mission. • Systematically investing in developing an organization's internal systems and its external relationships. ▪ The elements of capacity include: • The organization's mission, vision, and strategy • Its governance and leadership • Its ability to deliver programs and ensure the impact of its programs • Its strategic relationships • Its internal systems and management

Managing Nonprofit Boards

▪ Chair - The individual responsible for leading the board. ▪ Governance committee - Identifies new board members and develop the board. ▪ Board professionals - Committees which have responsibilities for working with staff to develop policy recommendations put forth to the board for adoption.

Governance as Leadership

▪ Chait et al. (2005) - Boards should be leading organizations and not reacting to staff initiatives. ▪ Three modes of governance: • Fiduciary mode - Concerns for matters such as stewardship of tangible assets, faithfulness of missions, etc. • Strategic mode - Creates a strategic partnership with management to address the organization's long-term directions and goals. • Generative mode - Be a visionary leader and help to make sense of current situations so that they may provide insight that leads to setting new directions and goals.

Achieving Collective Impact

▪ Collective Impact - A comprehensive, coordinated approach to achieving a greater impact via cross-sector collaboration. Gained recent attention due to complex challenges spanning multiple sectors. • Kania and Kramer (2011) - It "envisions an even higher standard of collaboration that requires long-term commitment and consensus from all" • Five key conditions essential to successful collective impact partnerships. ✓Common Agenda ✓Shared Measurement ✓Mutually Reinforcing Activities ✓Continuous Communication ✓Backbone Support

Organizational Finance

▪ Forms of Revenue: • Operating Income - The funds that flow into your checking account or the nonprofit's operating account, may be restricted or unrestricted. ✓ Restricted - Can only be used for certain purposes. ✓ Unrestricted - Can be used for any purpose, typically is earned income, fees for services, and unrestricted git sources. • Operating Reserves - Rainy-day funds for organizations. Typically are invested in shortterm, secure investment instruments. • Endowments - Funds that are not intended to be spent (principal money). They generate investment income that may be expended for current operating expenses, but the principal is preserved in perpetuity. ✓ Permanent or pure endowments - Funds were given by donor(s) who specified that the principal to be retained and invested in perpetuity, meaning forever. Board has limited or no flexibility. ✓ Board-designated endowments - Money that the organization's board ahs decided to invest as an endowment. The board has the authority to withdraw the funds if it determines to be necessary or desirable. ▪ Physical Assets - Illiquid assets such as buildings, vehicles, equipment.

The Governing Board's Responsibilities

▪ Functional responsibilities - There is a division of tasks that are the board's responsibility versus the CEOs. Below are the principal activities in which the board should be engaged. • Appoint, support, and evaluate the CEO. • Establish a clear institutional mission. • Approve the organization's programs. • Ensure sound financial management and the organization's financial stability. • Establish standards for organizational performance and hold the organization accountable.

Nonprofit Governance

▪ Governing board - Those that have a legal responsibility for governing their organizations. • Board of directors • Board of trustees • Board of governor's • Governing council • Advisory board; Councils ▪ Organizations must identify the founding board on their IRS forms. • Minimum of 3 in most states. • Authority to develop bylaws (specify max number of board members; length/number of terms) ▪ President, Chair - Person who heads the board. ▪ Director, Executive director, CEO - Paid staff who heads the organization.

Human Resources Management

▪ HRM - Design of formal systems to ensure the effective use of individuals' knowledge, skills, abilities, and other characteristics to accomplish organizational goals. Includes: • Recruitment; Selection; Training; Development; Compensation/benefits; Retention; Evaluation; Promotion. ▪ Ensures compliance with laws. • Organizations receiving government funding have stricter employment laws to abide by. • Variety of federal, state, and local laws about wages, hours, workplace safety, and etc. • Federal laws prohibit discrimination based on race, national origin, religion, sex, age, and disability. • Discrimination applies to how a person is treated throughout the employment, not just hiring process. • Courts extended application of some laws beyond specific wording

Defining the Mission

▪ Have a plan for planning. ▪ Define the mission statement • Examples: ✓Area Agency on Aging for North Florida - To enhance the quality of life for older adults, persons with disabilities and caregivers through advocacy, education and support. ✓Big Bend Cares - Provides education and comprehensive support to people infected with or affected by HIV/AIDS. ✓Kids Incorporated of the Big Bend - Supporting and educating families with young children through quality early learning, health & family services. ✓The Nature Conservancy - To conserve the lands and waters on which all life depends.

Board-Centered Leadership

▪ Herman & Heimovics (2005) • Realizing executive psychological centrality since CEOs are seen as centrally responsible for what happens. • CEOs are suggest to exercise board-centered leadership by engaging six behaviors: ✓Facilitating interaction in board relationships. ✓Showing consideration and respect toward board members. ✓Envisioning change and innovation for the organization with the board. ✓Providing useful and helpful information to the board. ✓Initiating and maintaining structure for the board. ✓Promoting board accomplishments and productivity.

Nonprofit Theories across Disciplines

▪ History - NP sector reflects voluntary traditions of early America, changing social needs, and the tax structure as it evolved throughout US history. ▪ Sociology - Involvement in NPs helps socialize individuals, reinforce norms and values, and develop social capital. NPs are mediating structures that help people interact with bureaucracies like governments. ▪ Political Science - NPs exist to accommodate diversity, undertake social experimentation, provide freedom from bureaucracy and address minority needs. • Accommodate diversity; Undertake experimentation; Provide freedom from bureaucracy; Attention to minority needs. ▪ Economics - Nonprofit organizations fill gaps left by market failure and government failure. Some nonprofits arise because of action on the supply side, that is social entrepreneurs or donors who are motivated to solve problems or promote a cause.

Examples

▪ Humane Society: • Our most important goal is to prevent animals from getting into situations of distress in the first place. ▪ Ducks Unlimited: • Ducks Unlimited conserves, restores, and manages wetlands and associated habitats for North America's waterfowl. ▪ National Right to Life: • Through education and legislation, National Right to Life is working to restore legal protection to the most defenseless members of our society who are threatened by abortion, infanticide, assisted suicide and euthanasia.

Emerging New Models

▪ Hybrid organizations that blur the lines between the for-profit and nonprofit models are developing. • Increasing use of "business practices" in nonprofits. • Increasing for-profit companies becoming socially concerned and aware. ▪ New cross-sector collaborations are occurring which is identifies as Collective Impact. ▪ The Benefit Corporation was recognized in 26 states in 2014. Social responsibility is included in the corporation's charter, granted by the state. • New legal form of organization • 1,050 certified B corps

Integrated Marketing Communication

▪ Integrated Marketing Communication - Ensuring that all communications represents a coherent message. ▪ Building an effective message: • Tailored to one- and two-way communication. • Brief • Suitable for an elevator pitch. • Communicate in the way the receiver wants. • Communicate a message that: ✓Reinforce positive values. ✓Affects those who already hold your organizational values. ✓Does nothing to strengthen the negative attitudes of those who may not agree with your organizational values or purpose.

America's Nonprofit Sector: A Historical Overview

▪ Lega foundations are drawn from the Statute of Charitable Uses and the Poor Law passed in 1601 in England. ▪ Alexis De Tcqueville (1835): The propensity of Americans to form voluntary associations to address social and political objectives. ▪ 20th Century: Wealthy individuals and families taking the social responsibility voluntarily to give back to the society. • Rockefeller; Carnegie; etc. • Continued as a American tradition: The Giving Pledge (https://givingpledge.org/) ▪ Charity: Giving intended to meet current individual human needs or to alleviate current human suffering. ▪ Philanthropy: Rational form of long-term investment in the infrastructure of society.

A Distinct Profession:

▪ Many of the same skills as business... BUT... ▪ Managing a nonprofit is different because: • Ability to integrate mission, resources, and strategy • Requires constant trade-offs among • Diversified revenue sources • Focus on relationship building • Needs special skill in negotiation and compromise • Flexible organizational structures • Relies on the work of volunteers • Boards of directors • Double bottom lines

The Marketing Mix

▪ Market Segmentation - A subset of the general population. • Demographic variables - Age, gender, race, ethnicity, income, and geography. • Behavioral measures - Patters of past behaviors that divide people into identifiable groups. • Psychographics - Combining demographic data with knowledge about individuals' lifestyles, defined by their activities, interests, and opinions. ✓ Passive homebodies; Active sports enthusiasts; Inner-directed self-sufficients; Active homebodies; culture patrons; Social actives. ▪ Price - What we pay to obtain what we want in the marketplace. • Cost-oriented pricing - The price charged to the customer or client is set to cover what it costs to the organization to produce or provide it. • Competition-oriented pricing - Looking towards the competitors' prices and charging less or providing a better product at the same price. • Value-based pricing - Takes into consideration the perceive value of the product or service to the customer, which may not be closely related to the costs of production.

Theories of Human Motivation

▪ McClelland's Three Needs Theory • Focused on managers' principal psychological needs. • The need for achievement; The need for power over others; The need for affiliation. ▪ Herzberg's Two-Factor Theory of Work Motivation • Motivators (satisfiers) - job-goal achievement, intrinsic enjoyment of work itself, responsibility, and advancement. • Hygiene Factors (dissatisfiers) - organizational rules and administration, physical working conditions, job security, and compensation. ▪ Myers-Briggs Type Indicator (MBTI) • 16 personality types based on certain trait dimensions. • Provides individuals with insights about their own perspectives and preferences.

Obstacles to Collaboration and Merger

▪ Motivations - Much more complex in the nonprofit world and often center around identity, values, and philosophies. ▪ Culture - The integration of two cultures can be an incredibly complex process and often involves the use of certain language. ▪ Egos - The personal identity of the founder may be bound up within the organization or led by a competitive CEO that has difficulty approaching any relationship without protecting the interest of their own. ▪ Brand Identity - If the nonprofit is well known within the community, this can create a barrier for merger. ▪ Community or Political Objections - Loyalty to an existing organization's identity or to concerns about the implications for services, accountability and control. ▪ Costs - May require substantial investment or resources to get a relationship going.

Differentiating the Nonprofit Sector

▪ National Taxonomy of Exempt Entities (NTEE) • Maintained by the National Center for Charitable Statistics (NCCS). ✓https://nccs.urban.org/ ✓Total 26 major groups under 10 broad categories. ✓Maintains the Nonprofit Program Classification System. ▪ IRS Classification • More than 30 different categories. • How an organization is classified under tax code is also the greatest significance of who governs and manages it. • 501(c)(3) - Public charities • 501(c)(4) - Advocacy and social welfare organizations • 501(c)(5) - Labor and agricultural organizations • 501(c)(6) - Trade associations

Financial Statements

▪ Nonprofit accounting is governed by the rules set under the Financial Accounting Standards Board (FAS) and defines the generally accepted accounting principles (GAAP). • No. 93 - Accounting for Depreciation • No. 95 - Statement of Cash Flows • No. 116 - Accounting for Contributions Received and Contributions Made • No. 117 - Financial Statements of Not-For-Profit Organizations • No. 124 - Accounting for Certain Investments Held by Not-For-Profit Organizations ▪ Nonprofit organization prepare four financial statements to meet the standards, which are also available through their Form 990s. • Statement of Financial Position; Statement of Activities; Statement of Cash Flows; Statement of Functional Expenses

Drivers of Collaborations and Mergers

▪ Nonprofit engage in collaboration because: • External Drivers ✓Increased competition ✓Shifting priorities or demands of private and government funders ✓Political changes • Internal Drivers ✓Financial - Reduced overhead ✓Managerial - Gain access to specialized talent ✓Programmatic - Expand services • Liability - Reduced oversight requirements, reduced risk. • Survivability - The ability to adapt, change, or survive major challenges. • Viability - Increased impact or mission expansion.

Nonprofits as Gap Fillers

▪ Nonprofit organizations are essentially gap fillers - filling the gaps left by market failure and government failure. Providing the goods and services that the other two sectors could not. ▪ Contrasting View: • Supply-side theories - Nonprofits don't exist because of market failure, but because of motivations and incentives given to those who produce a good or a service. • Theories of altruism - Focus not on those who consume the goods and services the NP provides but rather on those who supply the funds to support the work of nonprofits.

Commercialization and Tax Exemption

▪ Nonprofits are not always tax exempt. • Only exempt from activities related to their social mission. ▪ Unrelated business income tax (UBIT) if it applies to three: • It is a trade or a business. • Regularly carried on. • Not substantially related to the exempt purpose of the nonprofit.

Measuring Performance

▪ Program Evaluation - The application of systemic methods to address questions about the operations and results. This may include ongoing monitoring of a program as well as one-shot studies of program processes or program impact. • https://education.fsu.edu/degrees-and-programs/program-evaluation ▪ Financial Ratios - Uses data that is readily available, objective and easily compared across either the nonprofit sector or particular subsectors. Examples: • The ratio of program expenses to contributed income. • The ratio of fundraising expenditures to private support received. • The percentage of total expenditures applied to charitable programs or activities. • The percentage of total expenditures applied to fundraising and administrative costs (overhead). • Accumulated cash and asset reserves in relation to operating budget.

501(c)(3) Charitable Nonprofits

▪ Public charities & private foundations • Figure 2.1 ▪ To qualify for 501(c)(3), the organization must demonstrate 3 things: • Organized and operated for 1 of 8 purposes: charitable, religious, educational, scientific, literary, testing for public safety, fostering sports competitions, and prevention of cruelty to children or animals. • Assets cannot be used to benefit individual owners and managers are not being personally enriched with excessive compensation. • Must limit political activities. ▪ IRS Activity Codes.

Assessing the Situation

▪ SWOT - Strengths, Weaknesses, Opportunities, and Threats. • Develop a comparison between the organization's own strengths and weaknesses and the opportunities and threats facing it in the external environment, in order to identify the strategic issues that need to be addressed. • Internal - Strengths and weaknesses of the organization may be analyzed in terms of assets or competencies. • External - Opportunities and threats that the organization may be facing such as demographic trends, grant making or government funding.

Measuring Performance

▪ Social Return on Investment - A way to put a dollar figure on the social value created by the organization. Considered an indicator of the organization's worth and impact. • Produces a ratio that can be used to compare programs against programs. • Model was built on and had the tendency to focus attention upon, cost savings to society, while it did not adequately incorporate many of the ways that social enterprise employment improved people's lives. ▪ Balanced Value - Builds on social return on investment by adding the impact on the environment. • It is the value created which consists of economic, social, and environmental value components, and that investors, simultaneously generate all three forms of value through providing capital to organization.

Volunteers

▪ Staff ▪ Service volunteers • Provide direct services. • Can bring insider type knowledge to a board. • May or may not be allowed to be board members. ▪ Policy volunteers • Serve on a board or a council. • May or may not also be service volunteers.

Strategic Planning and Management

▪ Strategic Planning - Begins with where the organization is, defines some new place where it wants to be, and develops a plan to get there, all in the context of the mission and values and the realities of the environments in which it operates. • Vision Approach - Starts with the leader's vision and work backwards to determine resources, actions, tactics, and strategies needed. • Incremental Approach - The strategy evolves out of experience as the organization goes along, one decision at a time, buffered by bargaining, and the push and pull of its constituencies. • Analytical approach - Using logic and in-depth analysis to improve the strategic fit between your organization and the environment.

Strategic Planning and Management

▪ Strategic Planning versus Long-Range Planning - LRP involves projecting trends and data into the future. ▪ Strategic Planning versus Business Plan- Business plans are more specific to programs, initiatives, or ventures to be undertaken by the organization. ▪ Strategic Planning versus Operational Plan - Operational plans relate more to actions necessary to implement the strategic plan. ▪ Strategic Management - An integrated approach to managing the organization that is based upon the strategic plan and includes the entire cycle of strategy formulation, implementation, and evaluation. • Links strategy and implementation

Theories of Human Motivation

▪ Table 9.1 on Page 230! ▪ Maslow's Hierarchy of Needs • Needs hierarchy - Human needs are hierarchically met from the lowest to the highest level. ✓1) Physiological needs; 2) Safety needs; 3) Needs for love and belongingness; 4) Esteem needs; 5) Self-actualization needs. ▪ McGregor's Theory X and Theory Y • Theory X - Workers are motivated by economic factors, threats, and punishment. ✓External controls of management. • Theory Y - Premised on assumptions that individuals intrinsically enjoy work and embrace responsibility, prefer not to be micromanaged, and possess the ingenuity to solve complex problems through creative means. ✓Management driven by individuals' self-determined job goals, delegations of authority, and participation.

Marketing

▪ Target-audience mind-set - Focusing on the customer's needs, wants, etc, as opposed to focusing on the product. ▪ Commercial marketing - To attract additional customers to programs and services. ▪ Social marketing - Intended to change human behavior and improve society. ▪ Cause marketing - A partnership between a nonprofit and a corporation intended to increase sales of the for-profit's products and financial and other benefits going towards nonprofit organizations or a cause.

Resource Dependency

▪ The behavior of the organization is reliant on the external constituencies - revenue, information, etc. • Goal displacement - Actions taken by the NP to alter its goals and activities to satisfy the contributor of funds. • Internal impact - External resource dependencies affect power relationships and structures within the organization. • Adaptation ✓Change to accommodate the external demands. ✓try to alter the environment in a way that ameliorates the demands.

The Governing Board's Responsibilities

▪ The board's responsibilities are unambiguous as they are defined by law. • Most are state laws. • 1974 Sibley Hospital Case - Parents of children who had been patients at the hospital alleged that members of the BOD had mismanaged the hospital's assets and placed hospital funds in accounts at banks in which they had personal financial interests. ✓Found to breach their fiduciary duties; since then, boards were required to adopt a new policy that articulated the standard of legal responsibility of nonprofit boards that still applies today.

Overview of Lobbying Laws

▪ What lobbying can a 501c(3) engage in? • Must not be a "substantial part" of the organization's activities as defined by the Substantial Part Test. ✓Some courts have said nonprofits are safe if they spend less than 5% on lobbying. • Public Law 94-455 (The 1976 Lobby Law) - says: ✓Meets the requirements of the Substantial Part Test - OR - ✓File Form5768 with the IRS to be covered under the specific expenditure guidelines of Section 501(h) of the Internal Revenue code. Advantages include: • Limits do not consider the amount of time or effort devoted to lobbying, decision is based only on how much the organization spends on lobbying activity. • Lobbying that does not include a specific expenditure is not limited at all. ▪ Grassroots Lobbying - Attempts to influence legislation by trying to affect the opinion of the public with respect to the legislation and encouraging the audience to take action with respect to the legislation.

Motivations of Volunteers

▪ Who volunteers? • People with more diverse friendships, education, and greater insight of religious beliefs. • More likely to engage in religious activities, social networking, and social groups. ▪ Why volunteers? • Motivated by the mission of the organization. • Overall, it's complex and multifaceted. • Impure admirable. ▪ Who stays? • Those who experience positive relationships with other volunteers. • Those who find the mature of the work rewarding. • Those who value opportunities to learn new skills. • Those who feel they have competent supervision.

The Board and the CEO

▪ Working board - Volunteer members who have a hands-on role and perform all of the organization's operations, from fundraising, to balancing its bank accounts, to making decisions about its programs. ▪ In any nonprofits, the relationship between the board and the CEO can become complicated. • Who is actually in charge? • Situation becomes more complex when the organization is led by their founders. • Many times CEOs know more about their organization. ✓Even determines what information reaches the board.