Nonprofits; Change Management, Nonprofits: Chapter 8: Capacity and Collaboration, Nonprofit Chapter 9: Managing Paid Staff and Service Volunteers, Nonprofits Chapter 10: Marketing and Communications, Nonprofit Chapter 12: Earned Income Strategies, No...

Patterns of Support

The 1960s: • The introduction of Medicare and Medicaid • Major federal student aid programs • National Endowments for the Arts and Humanities The 1970s: • The introduction of drug and alcohol treatment programs • Domestic violence shelters, runaway youth shelters • Rape crisis programs The 1980s: • The development of block grants: permit states the flexibility to allocate the money to meet the local needs • States expanded their spending; They were able to do this by redefining some human needs as medical conditions in order to qualify for coverage under Medicaid

Form a Powerful Guiding Coalition

- Assemble a group with enough energy and authority to lead the change effort. - Encourage this group to work together as a team

Create a Clear Vision

- Create a Clear Vision - Create a vision to direct the change effort - Develop strategies for achieving the vision

Establish a Sense of Urgency

- Examine market and competitive realities - Identify and discuss crises, potential crises, or major opportunities

Empower Others

- Get rid of obstacles to change - Change systems or structures that seriously undermine the vision - Encourage risk taking and nontraditional ideas, activities, and actions

Creating a Nonprofit Business Venture

- Identifying business opportunities • Marketable assets: things they have, the things they do, or things they know; can be tangible, such as space or may include relationships with particular constituencies, knowledge of specific cultures, or the organization's reputation or brand • Market opportunities • Organizational capacity for entrepreneurial activity - Conducting a feasibility analysis • Outward‐‐size, outlook, competitive factors, ease of entry, profitability • Inward ‐‐ fit with mission, skills and expertise, material resources, managing risk - Creating a business plan • Detailed, comprehensive document • Encompasses elements of strategic, marketing, business, and operational plans • Internally used as a guide development of the business • Externally used as a sales document for enlisting donors or investors

Nonprofit Revenue from Government Funds

- In 2010, almost one‐third of nonprofit revenue came from public sources including: • 8.9 percent from grants • 23.2 percent from payments for goods and services -does not include tax exceptions -Hospitals and other nonprofit health care institutions receive the largest portion of government funds in reimbursement under Medicare and Medicaid. -Government payments represent 65 percent of funding for human service organizations.

Reasons for Adopting Earned Income Strategies

- Push factors • Decline in government funding for social programs • Shift toward a voucher approach in government funding • Use of competitive contracts in government outsourcing • Increase in the number and needs of nonprofit organizations - Pull factors • Diversifying sources of revenue, thereby gaining protecting from changes in funding environment • Using earned income strategies to help advance specific missions • Increasing focus and sharpening goals and management skills throughout the organization • Increasing visibility via partnerships and promotion

Building Successful Partnerships

- Successful partnerships have a logic to them • Home Depot and KaBOOM • Reader's Digest and Reading Is Fundamental - Strategies for nonprofit organizations (Sagawa and Segal, 2000) • Begin with self‐understanding • Seek out partners with comparable values • Engage in discussion and conduct due diligence • Use small‐scale tests before expanding the partnership

Nonprofit Business Ventures

- Three principal activities • Services • Manufacturing • Distribution or retail - Examples • Retail stores operated by Goodwill or the Salvation Army • DC Central Kitchen and Fresh Start Catering • Triangle Residential Options for Substance Abusers - Caveats • Earning income from commercial ventures is often no easier than earning income from donations • Extremely high failure rate for small businesses

Partnerships With Business

- True partnership as a relationship that advances the goals of both the nonprofit organization and the business • Contrast with corporate philanthropy • Partnerships are not necessarily earned income strategies - Most common types of partnerships • Licensing agreements - permits for‐profit company to use nonprofit's name or logo in return for a royalty payment to the nonprofit • Sponsorships - corporation pays the nonprofit for use of sponsor's name/logo with nonprofit's products/events • Cause‐related marketing - nonprofit and corporate identities are combined, including licensing and sponsorships, an arrangement under which the company contributes either a fixed amount for each sale of a product or a specified percentage of its sales of a product to the nonprofit. Usually this is in connection with a short term promotion • Operational relationships - corporation acts as a supplier, improve straining, offers benefits for employees, ex GoodWill

Thinking Critically About Earned Income Strategies

- Two opposing perspectives • Nonprofits should consider only ventures that are aligned with their missions, and should not undertake solely to produce additional revenue. • Nonprofits should look almost exclusively at whether a business venture is financially profitable - Framework evaluating opportunities based on profitability and relationship with mission (Young, 2006)

Communicate the Vision

- Use every possible means to communicate the new vision and strategies - Teach new behaviors using the example of the guiding coalition team

Size of Nonprofit Sector in US

-1.9 million tax‐exempt organizations • 1.4 million charitable nonprofits ‐‐ 501(c)(3) • 138,000 501 (c) (4) • 13.5 million employees (10% of U.S. workforce) • $668 billion in wages and benefits to employees • $1.1 trillion in spending (5% of U.S. GDP) • $4.3 trillion in total combined assets of all nonprofits -a significant component in US economy -number increased due to: 1) devolution of federal programs to state and local government, 2) outsourcing of the provision of many services to nonprofits by governments at all levels, 3) booming economy of 1990s, 4) reawakening of public service (Katrina, 9.11), 5) community service requirement in high school, 6) volunteer opportunities for employees, 7) public service becoming a priority for federal government `

Herman Perspectives

-Balancing mission, money and management -Decisions must be consistent with the mission and ethical values of the organization -Constant trade‐offs among mission, acquisition of resources and strategy

IRS Classifications: Public Charities and Private Foundations

-Both are 501(c)(3) organizations • Definitions • Public charities ‐ organizations that receive most of their support from a relatively diverse set of donors or from government • Private foundations ‐‐ organizations with that receive most of their support from a single donor or a small group of donors • Differences in treatment • Taxes (different tax treatment from public charities) • Limits on lobbying (private foundations are allowed no lobbying at all, public foundations are allowed but it is limited)

Nonprofits in the Policy Arena

-If nonprofits hope to secure and continue government funding, they must be involved in the public policy process in the following ways: • Maintain relationships with individuals in government • Maintain ongoing engagement with their communities, constituencies, and public agencies and officials • Participate as a member of an association representing the interests of multiple nonprofits

Growth in the Study

-National Association of Schools of Public Affairs and Administration (NASPAA) -Certified fund‐Raising Executive (CFRE) -Dramatic growth in undergraduate and graduate programs in nonprofit management across the country

Hybrid Models and Controversy over Commercialization

-Sabeti (2009) • Increasing use of business methods by nonprofits • Growing responsiveness of **business** to social concerns • Movement to create a new legal category that recognizes hybrid models • Low‐profit, limited liability company • Controversy over commercialization • Pro ‐‐ Reduces nonprofits' dependence on government and charitable giving, allowing for greater independence • Con ‐‐ Leads some nonprofits to focus on the financial bottom line at the expense of their social missions

marketing for a nonprofit

-We will market according to the mission -Our marketing materials, our marketing efforts all have to be mission drive -a vital portion of running a nonprofit organization in an effective way

capacity definition

-actions that improve nonprofit effectiveness -the concept as actions that enhance a nonprofits ability to work towards its mission -similar to the concept of organizational development, organizational effectiveness, and/or organizational performance management in a for‐profit organization -examples: granting operating funds, granting management development funds, providing training and development sessions, providing coaching, supporting collaboration with other nonprofits

common vocabulary

-does not fully capture the purpose or diversity of organizations in the sector -Possible alternatives -independent sector: dependent on resources from government and private donors, subjected to state and federal law -third sector: placing nonprofits along side the comercial economy and government -charitable sector: -voluntary sector: relying on volunteers, but paid staff far exceeds number of volunteers -civil society sector: -tax-exempt sector: status under US Tax law, they are exempt from paying federal income tax and generally from state and local taxes -social enterprise and social sector: have a social objective, but blend traditional nonprofit methods and comercial principles in there generation of revenue

Positive path of change

-involve your team -communicate constantly -plan properly -don't let up *all equals that team will treat change as opportunity

Strategiesfor Categorizing Nonprofits

-organized into 26 major groups into 6 broad categories based on: • Purposes and activities • National Taxonomy of Exempt Entities (NTEE) • IRS classifications • Who benefits from nonprofit activities • Salamon's Anatomy: -public serving: exist to serve the public, ex. churches, foundations -member serving: to secure benefits for the members or those who they support (ex. fraternities) • Degree to which nonprofits are commercial -diagram provided on slides

Negative path of change

-poor planning -end users are not consulted -poor follow up

National Nonprofit Collaboration and Mergers

1) Intermerger - merger between or among nonprofit organizations that previously were legally independent; two separate entities that have never been aligned with each other and merging together in order to move forward in a strong capacity 2) Intramerger - the combining of units within a single corporate entity such as consolidation of local chapters of a national organization

4 responses to change

1) Victim: terrified they won't cope 2) Bystander: hopelessly hoping things will stay the same 3) Critic: worse response, trying to rally others to resist the change 4) Navigator: handles it in stride

Nonprofit Functions vs. Government

1. Accommodate diversity - Since government's obligation is to treat all citizens equally, nonprofits provide voice and services in areas that are not addressed by government; advocacy 2. Undertake experimentation - Nonprofits have greater freedom to begin new programs on a smaller scale than government is allowed to using public funds. 3. Provide freedom from bureaucracy - Government moves slowly by virtue of its bureaucracy while nonprofits can respond to social needs more quickly and efficiently. 4. Attention to minority needs -Government priorities must match those of the majority of voters while nonprofits fill the gaps.

Nine Suggested "Ways of Acting" for Nonprofit and Public Sector Managers(Denhardt et al., 2009)

1. Be reflective and proactive about their own motivation 2. Be aware that what motivates them is not necessarily what will motivate others 3. Have realistic expectations about the extent to which they can influence the motivation of others 4. Participate in setting clear and challenging goals 5. Think about the salience of various rewards 6. Be honest with people about what rewards are possible and what rewards are not 7. Treat people equitably and fairly 8. Make the work satisfying and meaningful 9. Think about the life stages of the people they work with and offer appropriate support

Elements of a Typical Business Plan

1. Executive summary 2. Description of the business 3. Management, organizational structure, key personnel 4. Market analysis and marketing plan 5. Description of products and services 6. Operational plan 7. Financial assumptions 8. Detailed financial plan 9. Uncertainties and risks 10.Plan for growth or exit

Seeking Government Support

1. Identify grant opportunities • Seek out suitable matches for funding requests • Read the request for proposals (RFP) to determine suitability 2. Evaluate grant opportunities • Assess using criteria: eligibility, conditions, match requirements, allowable costs, program purpose, funding amount • Ensure that the purpose, terms and conditions of the grant are consistent with the organization's mission and values 3. Prepare and submit applications or proposals • Follow the specific guidelines in the RFP • Use collaboration when appropriate • Solicit letters of endorsement as needed

Nonprofit/Government Models

1. Supplementary to government - nonprofits provide public goods and services to fill gaps left by government programs and services 2. Complimentary to government - nonprofits work with government, use government funds and work somewhat in a partnership, possibly combined with private funds to provide goods and services that the government desires, but may be able to full provide as effectively or efficiently itself, both parties bring complementary strengths to the relationship, On the side of the government, we have financial resources; And on the side of the nonprofit sector we have special skills and the relationship with the community or the constituents being served 3. Adversaries of government - nonprofits may oppose current government policy and advocate for change, continuum government monitors and regulates nonprofit activities, if a nonprofit violates the law or regulations, the government may impose penalties or sanctions

Right Person, Right Place, Right Time

Alignment Model • Seeks to integrate the major leadership theories • The leader's fit with the organization involves traits, skills, leadership style and situation • Alignment must be achieved between the leader, the organization, and the community Founder Syndrome • Organization's need for leadership may change over time due to nature of nonprofit life‐cycle theories • Can pose challenge and even crisis for a nonprofit Executive Transitions • Preparation should take place before a transition is needed • Viable plan and procedure to be proactive vs. reactive

Generational Motivations

Baby Boomers - Born between 1946 and the mid‐1960s •Committed to institutions and organizations •Most likely motivated by praise, money, and position Generation X - Born in the 1970s and 1980s •May be distrustful of large organizations •Motivated by independence and involvement Millennials - Born after 1980 •Seek work that provides meaning and makes a difference •Focused on meaning and purpose •Arrive at the top of Maslow's hierarchy of needs

Grants, Contracts and Fees

Grants • Government funding made directly to an organization • Requires nonprofit to provide specific goods/services to the government or its citizens • May be paid upfront or in installments Contracts • Legal agreement; recipient is obligated to provide goods/services to achieve defined results • Failure to provide services could result in breech of contract Fees • Nonprofit eligible to charge fees which are reimbursed by the government (Medicare, student aid grants, etc.)

Charity Vs. Philanthropy

Charity: giving intended to meet current individual human needs or to alleviate current human suffering that is often emotionally driven and impulsive -feeding the homeless, aid victims of a natural disaster Philanthropy: giving designed as longterm investment in the infrastructure of society -construction of hospitals, endowments for universities, charitable foundations intended to exist in perpetuity

Historical Overview

Deep Roots in American History: -Greco-Roman: -community -Citizenry -social responsibility -Judeo-Christian culture of helping others

Generational Differences

Generational differences are shaped in part by the economic conditions that prevailed during the formative years and critical historical events that occurred within their lifetimes. • Baby Boomers - Born between 1946 and the mid‐1960s • The Cold War, Watergate, the civil rights movement, and the Vietnam War • Generation X - Born in the 1970s and 1980s • The Challenger disaster, the fall of the Berlin Wall, the invention of the computer • Millennials (also called "Generation Y") - Born after 1980 • The development of the Internet, terrorist attacks on 9‐11‐01, Enron, the Iraq War, the Columbine shooting

Improving Relationships

Government: • Standardize and simplify applications and reporting formats • Create feedback mechanisms • Collect/report data on contracting practices and assess their impact on nonprofits Nonprofits • Help create feedback mechanisms on contracting processes • Participate in efforts to simplify and standardize • Encourage foundations and private funders to accept standard reporting formats • Build capacity to support government grants

Managers and Leaders

Managers: • Concerned with mastering routines • Adopt impersonal or passive attitudes toward goals • Excel in problem solving and work design • Work with people in carefully controlled ways • See themselves as conservators or regulators -day to day Leaders: • Concerned with vision and judgment • Active and visionary about the future • Seek out opportunities and take risks • Passionate about their work and likely to cause turbulence • See themselves as agents of change -more purpose of moving towards the goal

Revolution

No longer "business as usual" for nonprofit organizations • Changes in funding patterns led to competition among nonprofits • Economic downturn led to decrease in donations • Foundations changed focus to sustainability and capacity building rather than program support • Federal funding reduced or eliminated • Growth increased in the sector to meet needs • Greater demand for accountability

Industrial Revolution

The rise of great wealth resulting from the Indistrial Revolution led to modern era -John D. Rockefeller: universities, libraries, other institutions -Andrew Carnegie's Gospel of Wealth: a classic statement of the philanthropic effort. "it is a disgrace for someone to die wealthy" and a difference between charity and philanthropy

Volunteer Motivation

Volunteers are motivated by any number of the following: • The mission of the organization • The desire to advance a cause • Desire to repay for some benefit the individual received • Benefits they receive by volunteering: • A feeling of emotional satisfaction • Gaining increased job skills • Building or enhancing a resume • Making social contacts Baby Boomers • Recognition such as plaques or certificates • Development opportunities Generation X • Social events with friends and family, personal care/spa or other individual‐focused gifts • Development opportunities that increase career marketability Millennials • Social events, online recognition, gift cards • Web‐based learning opportunities

"Parable: From Crisis to Opportunity at Samaritan Inns

You can see that through legislation in Washington the source of their participants in their program dried up. So they had a choice to make. What are they going to do? There's a 28 day rehab program. They lost their source of participants in their program, so they could have said, "Oh, well. We can't operate anymore because we lost our supply source; we're not going to have people referred to us anymore." Or they could kind of regroup and move forward. So, they decided that what would be best is insourcing. And as you read the article you can see that it would have several benefits. Insourcing would allow Samaritan Inns to have their own clientele and not depend on hospitals for referrals, and would also them to have a more coherent three‐phased model. So they came up with the new hope initiative and they tried to get funding, they looked at social return on investment. And the new hope initiative was very well organized and also successful. By 2001, Samaritan Inn was operating a comprehensive, three phased program to combat addiction and homelessness, composed of one 28 day rehabilitation facility; five temporary assisted living facilities, and three SRO facilities. The New Hope Initiative fundraising campaign raised $6.5 million to underwrite these new initiatives. Meanwhile, the annual capacity of the program had grown to 600 individuals a year, more than double the previous amount, while that staff had grown to 40 and the budget was close to 2 million. So this is a really great example of taking a crisis and turning it into an opportunity

Case 3.2, The National Trust for Historic Preservation

freedom from federal support

serve America act

included a nonprofit capacity building program to provide grants for organizational development to small and midsized nonprofits

Higgins Perspectives

• Board, staff, and constituents have a passion for the mission • Each person has different goals, perspectives and agendas • CEOs have a difficult time dealing with those entities

Case 3.1 The Smithsonian Institution and the C. B. Reynolds Foundation

who gets to decide how donations will be used?

Charismatic Leadership

• A leader is someone who behaves in certain ways that cause others to see him or her as charismatic • Behaviors that cause others to see a person as charismatic (Rainey, 2003) 1) Advocates a vision that is different from the status quo but still acceptable to followers 2) Acts in unconventional ways in pursuit of the vision 3) Engages in self‐sacrifice and risk taking in pursuit of the vision 4) Displays confidence in his or her own ideas and proposals 5) Uses visioning and persuasive appeals to influence followers, rather than relying mainly on formal authority 6) Uses the capacity to assess context and locate opportunities for novel strategies • Need for social distance (Fisher, 1984): leaders can not permit to be too social with their followers, a line must be drawn

Defining and Understanding Marketing

• Approaches to marketing • Commercial marketing ‐‐ seeks additional customers for programs and services • Social marketing ‐‐ seeks to change human behavior and improve society • Marketing mind‐sets • Product mind‐set ‐‐ effective marketing depends on the quality of the product • Sales mind‐set ‐‐ effective marketing depends on convincing consumers • Target‐audience mindset ‐‐ effective marketing depends on focusing on the needs and wants of consumers

Best Practices for Volunteer Management

• Assess the need for volunteers • Determine the structure of the volunteer program • Develop volunteer job descriptions • Develop formal volunteer policies • Provide a sufficient budget and personnel to manage the volunteer program • Recruit and hire volunteers as if they were employees • Provide orientation and training to volunteers • Set clear goals, evaluate performance, and recognize achievement

Internal Structures and Organizational Culture

• Attempt to explain why some organizations are relatively bureaucratic and centralized, while others are more entrepreneurial and flexible • Task environment ‐‐ internal structure as a reflection of the day‐to‐day transactions that make up an nonprofit organization's work • Organizational culture - the unwritten rules that prescribe dress, manner of doing business, social mores in the office • In Search of Excellence (Peters and Waterman, 1982) • Built to Last: Successful Habits of Visionary Companies (Collins and Porras, 1994 )

Branding Terminology

• 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 group of sellers and differentiate them from those of competitors" (Burnett, 2007, p. 179) 1) differentiation, where you start with your mission 2)credibility, people have to believe that your organization had the ability to deliver on its promise 3) authenticity, getting people to identify and care about your cause • Brand attributes ‐‐ the collection of perceived qualities of the organization or its products • Brand promise ‐‐ the expectations that you have about what you will receive when you buy a specific product or service • Brand equity ‐‐ the monetary value that a brand image brings to an organization

Defining and Understanding Capacity

• Capacity ‐‐ "everything an organization uses to achieve its mission" (Light, 2004) • Breaking down overall capacity into smaller components • Internal and external elements (Hudson, 2005) • Connolly and Lukas (2002) • Mission, vision, and strategy • Governance and leadership • Ability to deliver programs and ensure the impact of its programs • Strategic (external) relationships: critical to bringing in revenue and so forth • Internal systems and management: HR, the financial piece, technology, the facilities, risk management, programming regarding volunteer recruitment and volunteer management, how our management and staff get along with one another, how they get along with volunteers • Letts et al. (1999) • Program delivery capacity • Program expansion capacity • Adaptive capacity

Salamon's Anatomy

• Classifying nonprofit organizations by who receives the principal benefit of the organization's activities • Member serving versus public serving • Member serving organizations exist primarily to secure benefits for the people who belong to them or who support them • Public serving organizations exist primarily to promote some aspect of social welfare

Relationships Between and Among Nonprofit Organizations

• Collaboration ‐‐ two or more organizations work together toward common objectives • Merger ‐‐ two or more organizations are combined into one corporate entity • La Piana's Continuum of Nonprofit Relationships • Two axes • Effort and complexity • Integration • Three categories • Collaborations • Strategic alliances • Corporate integrations

CEO Responsibilities

• Commit to the mission: keep it first and for most when making decisions • Lead the staff and manage the organization: what kind of culture does this nonprofit operate on? • Exercise responsible financial stewardship: CEO must manage assets, revenue, and expenditures, and protect against fraud or waste • Lead and manage fund‐raising: must have a strong ability to bring in funds • Follow the highest ethical standards, ensure accountability, and comply with the law: transparency • Engage the board in planning and lead implementation: initiating planning for the future • Develop future leadership: smooth transitions • Build external relationships and serve as an advocate: advocate for the organization • Ensure the quality and effectiveness of programs: that the right questions are asked and the right data is collected • Support the board

Commercialization and Tax Issues

• Common misunderstandings ‐‐ nonprofit organizations cannot earn profits and are always exempt from taxation • Nonprofits are exempt from taxation on revenues related to activities that directly address their social missions • Revenues from activities that are not related to the mission are subject to the unrelated business income tax (UBIT), subjected to this tax if it is 1) a trade or business, 2) if it is regularly carried on, 3) it is not substantially related to the exact purpose of the organization • Concern about engaging in unrelated business activities • Substantial reliance would put the organization's tax exempt status in jeopardy

Communication and Marketing

• Communication and marketing are not synonymous • Communication ‐‐ the transmission or exchange of information • Marketing ‐‐ communications with the purpose of influencing the behavior of someone else • Communication as broader and more complex • Understanding the principles by which information is transmitted and received • Understanding the various technologies that can be employed • Marketing may encompass communications with a very specific purpose • Draws on theories of communication

Drivers of Collaborations and Mergers

• Complex motivations (Sowa, 2009) • Benefits in providing services • Benefits to the individual organization, being proactive, financial incentives • Nonprofit collaboration from a theoretical perspective • Resource dependency theories‐‐ resource constraints and the need for organizations to reduce uncertainty in their environments • Institutional theory ‐‐ need for organizations to develop a shared response to problems and to achieve legitimacy • External and internal drivers • Liability, viability, and survivability (McCormick, 2001)

Social Enterprise Spectrum

• Derived from Enterprising Nonprofits: A Toolkit for Social Entrepreneurs (Dees et al., 2001) • Two extremes • Purely philanthropic • Purely commercial • Organization's placement on the spectrum • General motives, methods, and goals • Relationships with key stakeholders

Obstacles to Successful Partnerships (Sagawa and Segal, 2000)

• Differences in language and communication, ex. different jargon with nuances that may complicate communication across sector lines • Differences in cultures, ex. a corporation may be used to top down decision making and a nonprofit may need to build consensus before acting • Differences in status, ex. the corporation has money that the nonprofit needs and it may expect greater deference than the nonprofit anticipates providing • Differences in world views, ex. nonprofit organizations may be skeptical about business motives • Differences in bottom lines, ex.the nonprofit is mission driven while the corporation exists to generate a profit and generate more wealth for its owners

Theories Explaining the Nonprofit Sector

• Discipline‐centered explanations • Historical - • Distrust of government • Voluntary associations • Religion based • First Amendment Rights • Population Diversity, • Income tax and tax deductions • Shifts in Public Policy • Social - • Socialization • Reinforcing Norms and Values • Social Capital: interpersonal bonds of trust • Nonprofits as mediating structure: buffers between individuals and larger institutions of government and business • Political - • Accommodating Diversity • Experimentation • Freedom from Bureaucracy • Attention to Minority Needs

Timeline for the Study

• Early management theorists did not distinguish between management in business, public, and nonprofit sectors • 1960s ‐‐ recognition of differences between business and public management • 1970s ‐‐ recognition of differences unique to nonprofit management • 1980s ‐‐ government outsourcing delivery and management of social and human services draws attention to nonprofit sector • 1990s ‐‐ significant attention paid to nonprofit management by scholars and writers • 2000's- Literature sought to adapt the theories and skills of business management to the planning, managing and financing of nonprofits • 2010's- The Stanford Social Innovation Review continues to publish groundbreaking information through online journals, blogs, and other forums related to nonprofit management, social innovation, social entrepreneurship and other forums related to nonprofit management

Earned Income: Introduction

• Earned income ‐‐ income from payment for goods or services that the nonprofit has provided (in contrast to contributed income) • Most revenue in the nonprofit sector is earned income, especially in the education and health care subsectors • Most government funds received by nonprofit organization are earned income - Medicare and Medicaid - Scholarship funds

Theories, continued

• Economic - • Private (person gains full benefit of their purchase) Versus Public (benefits many other people) Goods/things • Externalities (buying for your enjoyment but it effects someone else in a different way) and Free Riders (someone benefits at no cost to themselves because someone else payed for it) • Market and Government Failures • Nonprofits as GAP FILLERS: more motivated by alturism, a buffer for individuals and large government • Supply‐Side Theories • Push Side • Pull Side • Motivation theories‐ • Altruism: an unselfish concern for the welfare of others (do people really do this or is there another reason), social exchange (positive feelings) • Self‐interest • Theory of the Commons • Commons Refers to Nonprofit Organizations Themselves • Introduces by Roger Lohmann, nonprofits are their own category

Demands on Nonprofit Executives

• Find dependable sources of income • Produce measurable results • Evaluate the effectiveness of your services • Be strategic • Build diversity • Spend more time on advocacy

Effective Nonprofit CEO Behaviors

• Focus on mission • Focus on the board • Focus on external relationships • Share leadership and empower others • Focus on key roles and priorities • Use the "political frame": a perspective of seeing and understanding things • Right person, right place, right time: the leaders fit in the organization, their leadership style • Alignment model (Dym & Hutson, 2005) • Founder syndrome and life‐cycle theories • Executive transitions and leading change

Overview of Management Theories

• Frederick W. Taylor • Scientific management - emphasizes procedures and systems • Time and motion studies - people operate more like machines • Hawthorne plant experiments • Influence of social and psychological factors; we preform better with positive reinforcement • Attention of supervisors influenced worker performance • Continued evolution of management theory

IRS Classifications: Social Welfare Organizations

• IRS tax code - 501(c)(4) • Vast majority are advocacy organizations: organizations "to further the common good and general welfare of the people of a community" • Small number are HMOs and other medical and dental insurance plans • Key differences between 501(c)(3) and 501(c)(4) status • Both groups are tax exempt, but gifts made to 501(c)(4) organizations are not tax deductible • 501(c)(4) organizations do not face the same limitations on political activity as 501(c)(3) organizations

IRS Classifications: Charitable Nonprofits

• IRS tax code ‐‐ 501(c)(3) • Requirements for receiving 501(c)(3) status • Organization's mission and work must fall under at least one of eight categories defined by the IRS • Organization must meet the non‐distribution test • Individual owners are not receiving benefits from the organization's assets • Managers are not being personally enriched through excessive compensation • Organization must limit its political activities • Cannot support or oppose candidates for public office • Limits on expenditures on lobbying

Effective Marketing

• Integrated Marketing Communication (IMC) ‐‐ the messages and values that an organization communicates permeate every aspect of the organization's work • Marketing and branding as rooted in reality • Organization's brand unlikely to settle too far from the reality of what the organization actually does or what it really is • Official publications and communication via news media unlikely to outweigh firsthand knowledge and communication via word‐of‐mouth • Effective messages are those that CRAM (Andresen, 2006) • Connection ‐ establish a connection • Reward ‐ promise a reward • Action ‐ inspire action • Memory - stick in memory • American Cancer Society

Case Study 2.2 ‐ Ben and Jerry's

• Is it realistic for a public, for‐profit corporation to remain committed to social purposes, or will the demands of shareholders and investors for maximum profit inevitably win out?

Leadership Theories: Introduction

• Key questions: • Are leaders born or made? • If they are made, what specific knowledge or skills do individuals need to acquire in order to be strong leaders? • What are there specific behaviors that are associated with effective leadership? take risk/experiment, ask questions, enable others to act, encourage the heart and recognize the contributions of others, modeling the way, inspire shared vision by helping others invision the future • Key caveats: • Most of the theories are generic (i.e., intended to apply to all types of organizations, not just nonprofits) • There may be no one right theory of leadership that is applicable in every situation, at all times

Organizational Life Cycles

• Life cycle models ‐‐ describe how organizations grow, mature, and may eventually decline • Different life cycle models developed by various authors • Capacity and organizational life cycle • Capacity is important at every stage of an organization's life • Elements of capacity that are most relevant may be different in each stage • Types of capacity building activities undertaken vary according to the organization's size and age (Light, 2004) -young organizations: concerned mostly with developing their mission, looking at programming, securing funds, and ensuring accountability of their organization. A growing organization might need to devote time and attention to organizational structure, management systems, and that type of thing

Concerns About Earned Income Strategies

• Limits on public access to nonprofit goods and services • Government funding of nonprofit organizations using earned income strategies • Balance between public interests and nonprofit organization's need for revenue • Limits on transparency and disclosure due to contractual agreements • Role of perception and public relations - Eroding confidence in the nonprofit - Creating the impression that it no longer needs other sources of support

as an Independent Field of Study

• Management functions performed throughout civilized history, but not recognized as an independent field of study until the late 19th century • Henry R. Towne article (1886) • Wharton School (1989) • First doctoral dissertation in management (1915) • Early study of management focused on business organizations

Andreasen and Kotler Perspectives

• Management is more than increasing the market share • Dealing with serious and multi‐faceted social issues • Balancing the double bottom line: mission and money

Human Motivations

• Managers' explicit and implicit beliefs about human nature help shape their management style • Maslow's hierarchy of needs (1954) ‐‐ human needs progress from lower levels to higher levels as lower‐level needs are met (pyramid on slides) • McGregor's Theory X (negative theory, workers are lazy and resistant to change) and Theory Y(positive, workers are supportive in the work environment) (1960) ‐‐ authoritarian management versus participative management • McClelland (1961) ‐‐ managers have their own psychological needs that influence how they behave with regard to their subordinates • Need for achievement • Need for power over others • Need for affiliation or good relationships with others • Myers‐Briggs type indicator ‐‐ personality test based on the theories of the psychologist Carl Jung, introvert vs extrovert factor • Provides individuals with insights about their own perspectives and preferences • May help them understand their own behavior and that of others with whom they work • Herzberg (1968) ‐‐ Motivators (satisfiers) and hygiene factors (dissatisfiers) (table on slides), decrease dissatisfiers and increase satisfiers • Other relevant theories • Expectancy theory • Social learning theory • Goal‐setting theory

Implications for Nonprofit Managers

• Nonprofit management as a balancing act • Organization's mission against financial sustainability • Nonprofit sector's unique traditions against rapid changes in competitive markets • Social and political forces against core values and independence • Nonprofit management requires a unique blend of skills, distinguishing it from management in government or the for‐profit sector

Need for Marketing

• Nonprofit organizations operate in a competitive environment • Competition for funding from corporations, foundations, and individuals • Competition in advocating a particular cause or social goal • Competition for attention amidst everyday "noise" • Competition against other nonprofits, for‐profit companies, and public organizations engaged in similar activities • Generic competition against alternative uses of individuals' time and money • Caveat ‐‐ marketing must serve the mission and not become the primary driver of the nonprofit organization

Obstacles to Collaboration and Conditions for Success

• Obstacles to collaboration • Motivations: is going to go much better if the motivation is mission instead of money • Culture: provide a culture where they can produce, they can thrive, they can flourish and then the mission is therefore being served in an exemplary manner • Egos: two CEO's can possibly have their feelings heard as to who would lead the collaborative effort • Costs: there's a lot of money that needs to be invested and sometimes in collaboration, but in a merger there's due diligence that has to occur • Conditions for Success • Mission‐driven • Commitment From Top Leadership • Trust • Relatedness • Process: self‐examination period, a decision to explore the possibility of collaboration, identifying potential partners, the initial contact, efforts to assess the degree of mutual interest, a side by side analysis where you take both organizations and look at them in many areas, you then move into negotiation and then implementation

External Environment

• Open systems ‐‐ nonprofits are dependent on and interact frequently with their external environments • Shift away from emphasizing the internal mechanics of an organization's operation (e.g., bureaucracy) • Focus on the relationship between an organization and its external environment (e.g., social context) • Resource dependency ‐‐ nonprofits are dependent on external constituencies for revenue, information, and other resources • Goal displacement: actions taken by the nonprofit to alter its goals and activities to satisfy the contributor of funds • Performance measurement: resources dependency in terms of government funders, foundations, and federated funders who can impose performance standards on nonprofits that receive their support and establish the achievement of certain goals as conditions for future support • Internal Impact: those who bring in funds for a NP involves the power structure (CEO holds more power) • Adaptation: organizations maintaining their independence • Management: of resources to maximize their independence • Isomorphism ‐‐ nonprofits in the same field tend to become more like each other as a result of facing similar influences from their environments

a Distinct Profession

• Organizational trade‐offs between mission, acquisition of resources, and strategy • Complex relationships among various stakeholders • Double bottom line of social and financial results • Addressing problems that are exceptionally difficult and intractable

Common Characteristics of Nonprofit Organizations

• Organized Entities - chartered as formal organizations; most incorporated under state law • Private - not agencies of the government but may receive some funding from the government • Non‐Profit Distributing - excess revenues are reinvested in the organization; no dividends to individuals or investors • Self‐Governing - control lays with a board of directors or board of trustees responsible for the overall welfare of the nonprofit • Voluntary - board of directors and some service providers are volunteers • Of Public Benefit - exists to serve a social purpose deemed to be of public benefit

The Marketing Mix

• Product ‐‐ the good or service being offered (including intangibles) • Place ‐‐ the location at which the product or service is available • Promotion ‐‐ the visible efforts undertaken to gain visibility and notice for the organization's products • Market segmentation and target markets • Demographic variables, geography, and behavioral measures • Psychographics: combines demographic data with knowledge about the individual's life style. This is defined by their activities their opinions about things, and what they're interested in • Marketing to the individual • Price ‐‐ the cost of the good or service (or the benefits exchanged) • Cost‐oriented pricing • Competition‐oriented pricing • Value‐based pricing • Price discrimination

Opportunities for Government Support

• Public officials perceive that purposes of nonprofits more closely align with the purposes of government • Nonprofits have closer relationships with local officials than do for‐profit firms • Dependence on government contracts makes nonprofits more flexible and responsive to government officials • Government officials trust nonprofits more, monitor them less than for‐profits, and may award contracts for longer periods of time

IRS Classifications: Charitable Subsectors

• Religious congregations • Arts, culture, and humanities (museums, radio/tv) • Education (students, colleges, schools, libraries) • Environment and animals (preservation organizations, recycling organizations, zoos) • Health (very large, hospitals, nursing homes, hospice centers, treatment programs, public health organizations) • Human service (most number of organizations but themselves are small) • International and foreign affairs (peace and security efforts, humans rights organizations) • Funding intermediaries (directing money to other nonprofits, umbrella organizations)

Observations About CEO Responsibilities

• Significant overlap between CEO responsibilities and governing board responsibilities • Mission, financial stewardship, fund‐raising, accountability, planning, performance standards, and the work of the board itself • CEO responsibilities involve both managing and leading • Management ‐‐ generally concerned with day‐to‐ day operations, emphasizing policies, procedures, rules, and processes • Leadership ‐‐ more about purpose, vision, and direction: more about the "where" and "why" rather than the "how

Literature

• Social scientists who study nonprofit organizations • Organizational theory, theories of organizational behavior, and management theory from the business and public sectors • Practitioners, including consultants, working in and with the nonprofit field

Challenges in Working with Government

• Some government grants require nonprofits to obtain matching funds to cover portions of the program costs • Government funds rarely support indirect costs such as administrative expenses (rent, fundraising, etc.) • Payments may be delayed forcing the nonprofit to use other sources of funding in order to maintain services • Terms of contracts may change unilaterally after approval • Costs of administering the grant are usually not covered by the award • Contracts are increasingly performance‐based and payment or renewal may be contingent on meeting outcomes goals • Contacts may be terminated during the grant period

Anheier Perspectives

• The nonprofit is responsible to many stakeholders. • Its structure must be flexible and multi‐ faceted to meet the needs of those constituents.

Leadership Theories: Overview

• Trait theories ‐‐ emphasis on innate characteristics of leaders • Skills theories ‐‐ emphasis on specific skills leaders possess • Technicalskills - knowledge of the job/profession/task • Human skills - ability to work with people • Conceptual skills - ability to understand ideas and principles • Behavior theories ‐‐ emphasis on behavior or actions • Task behaviors - actionsthat relate to the work to be done • Relationship behaviors - actions that focus on the feelings of subordinates • Managerial grid (Blake and Mouton, 1985) 1) Authority-Obediance management (dictatorship), 2) country club management (low concern on production), 3) impoverished management (uninspiring dreadful place to work), 4) team management (high concern for people and production) • Contingency theories ‐‐ emphasis on the situation: situational aspects: combination of task oriented and relationship oriented behaviors; 1) lead-member relations (degree of trust, cooperativeness, and friendliness between leader and followers), 2) task structure (job is clear and specific or ambiguous and uncertain), 3) position power of the leader (formal position of leader is key), -best situation is when all three are high • Servant leadership ‐‐ emphasis on values and commitment; leaders begin with values and commitment, more concerned with others than themselves

Transformational Leadership

• Transactional leadership - rewards or punishment exchanged for behaviors of others, similar to management • Transformational leadership ‐‐ inspiring and empowering individuals to go beyond self‐interest and pursue goals that are in the common interest • Emphasis on developing personal relationships • Appealing to shared values and ideals • Transactional versus transformational leadership (Burns, 1978) • Transformational leaders use transactional techniques, but should not overemphasize them

Capacity‐Building Movement

• Transition from replicating programs to building strong nonprofit organizations that can sustain them • Problems with traditional models of grant making • Support the development and delivery of programs rather than the building of organizations • Encourage organizations to keep overhead costs low (i.e., maximizing resources spent on direct program services) • Problems resulting from lack of capacity: without building capacity organizations can't grow successful programs to a larger scale, there is the toll that inadequate capacity takes on the staff and volunteers of the nonprofit and results in higher rates of burn out, higher rates of staff turnover • Difficulty expanding successful programs • High burden on nonprofit staff and volunteers • Potential to undermine the effectiveness of programs or performance of the organization over the long run: could really deprive clients of quality services, and it also deprives society of the benefits that could be received from a really well‐run nonprofit organization

Terminology

• Two prominent examples of earned income strategies - Partnerships with business corporations - Business ventures undertaken by nonprofits themselves, feels they need to make more money and figures out how to do that in a creative manner • Unsettled terminology - Social enterprise - Affirmative business - Nonprofit business venture - Earned income ventures - Community wealth - Social entrepreneurship

Types of Volunteers

• Volunteers are a major component of the workforce of many nonprofit organizations • Types of volunteers (Shin and Kleiner, 2003) • Spot volunteer - participation is casual; usually not repeated • Episodic volunteer - often for a special event • Regular volunteer - serves essentially as unpaid staff • Marginal volunteer - encouraged or mandated to volunteer • Virtual volunteer - participation is usually via electronic technology (phone, Internet, etc.)

Online Media

• Websites - static or interactive • Social network presence • Facebook • LinkedIn • Social media presence • Twitter • YouTube • Flicker

as an Evolving Field

• Where should nonprofit management be taught? • Schools of business or management • Schools of public administration and public policy • Other academic units • What is the primary role of nonprofit organizations? • Social institutions responsible for preserving social values (emphasizing process) • Social enterprises responsible for achieving a defined mission (emphasizing results)

Issues Regarding Mergers

•Turf •Ego •Culture •Allocation of resources