introduction of competition resulting from changes in funding, including foundations and individual donors, Demand for nonprofit organizations to show measurable results, focus on organizational capacity ad sustainability, growth in the nonprofit sector and its assets.
Operational level of non profit
operation of non profit requires many of the same skills that are also important in government or business.
How a non profit is unique
First, nonprofit management uniquely requires the ability to integrate mission, the acquisition of resources, and strategy. 2) complex relationships among various stakeholders. have to be good at negotiation and compromise. 3) addressing problems that are exceptionally difficult and intractable. 4) They have to manage a double bottom line instead of just a bottom line.
double bottom line
1) has to pursue a social mission and success must be measured in terms of its ability to achieve that mission. 2) financial bottom line - the non profit exists to serve a social purpose. But the execute has to pay attention to the financial and social.
Management as a field of study
performed throughout history but not recognized as an independent field of study until the late 19th century.
Henry R. Towne article 1886
was the first call for the development of management as an independent field of study with its own literature
Wharton School at University of Pennsylvania (1898)
the nations first school of management
First Doctoral Dissertation in Management
written in 1915. The interest in management was increased by the experience of American manufacturing during WWII.
The generica approach
until 1960's theorists argued that their theories applied equally in all types of organizations. However by the 1960's some authors began to challenge this approach and to call for more research focused specifically on the management of public agencies.
Study by Commission on Private Philanthropy and Public Needs
attention was drawn to the nonprofit sector during the period of 1973 to 1975. The commission issued a report titled giving in America which was the most detailed study of philanthropy in the U.S.
Yale Program on NonProfit Organizations
first academic center devoted to the study of non profits, was founded in 1978 and social scientists began to turn their attention to understanding the role of nonprofit organizations in economic and political life.
recognition of differences between business and public management
recognition of differences unique to nonprofit management
government outsourcing delivery and management of social and human services draws attention to non profit sector. this further increased the need for professional management in nonprofit organizations and captured the interest of some students previously aiming for careers in government.
significant attention paid to nonprofit management by scholars and writers. Even though a lot was going on in nonprofit, there was a lack of recognition of nonprofit management as worthy attention.
The Literature of Nonprofit Management 3 principle areas
The work of Social Scientists who study nonprofit organizations as social and economic institutions; 2) organizational theory, theories of organizational behavior, and management theory from the business and public sectors. 3) a rich practitioner literature that offers important understandings.
Growth in study of Nonprofit
426 programs in nonprofit management, offered at 238 colleges and universities. Number of undergraduate programs grew by 36 percent between 2002 and 2006. number of Graduate programs grew by 26 percent between 1196 and 2006
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 organization
social institutions responsible for preserving social values and achieving a defined mission.
A group of persons organized for a particular purpose; an association
popular image of nonprofit organization
small band of volunteers intending to do good, working with minimal resources, serving people in need, and sharply distinct from business annd government is far from the reality of many noprofit organizations today
Importance of organizations
Bring together resources to achieve desired goals and outcome. Produce goods and services efficiently. Facilitate innovation. Use Modern Manufacturing and info technologies. Adapt to and influence a changing environment. Create values for owners, customers and employees. Accommodate ongoing challenges of diversity, ethics and the motivation and coordination of employees
Private sector (for profit), public sector (governmental sector), nonprofit sector
structure of nonprofit secter
Religious congregations - tax exempt under 501 c3 but not required to register with the IRs
tax - exempt organizations regestered under section 501c
Tax-exempt organizations registered under IRC sections other than 501c
section 501c4 social welfare advocacy organizations
section 501C3 charitable nonprofits
other nonprofits registered under section 501c
to study nonprofits and they found out that this sector actually does a lot. In the 80s the government couldn't give as much money anymore but the sector steeped up and did.
emphasis on community, citizenry and social responsibility
Judeo Christian ethic
helping others as "two diverse ideological steams" that influenced these traditions in Western societies.
modern nonprofit sector
rise of great wealth resulting from the industrial Revolution.
to address social and political objectives
The Gospel of Wealth
published in 1889 remains a classic statement of the philosophy understanding the American tradition of philanthropy.
is appropriately defined as giving intended to meet current individual human need or to alleviate current human suffering. ex. to feed the homeless or aid the victims of a natural disaster.
is a more rational form of long-term investment in the infrastructure.
is a very active process that requires active involvement with either the beneficiaries directly or an organization or a group that serves a specific population
changes in government funding
account in part for the growing commercialization of the nonprofit sector itself, the increased need for professional nonprofit management, and the demands that nonprofits demonstrate greater accountability and results.
Filter Commission findings
initiation and development of new ideas, public policies and processes. The support of minority, local and foreign interests, the supplementation or direct provision of services to gov, the citizenry and for profit organizations.
really refers to one that non profits don't do. they don't distribute profits to individual owners in the form of dividends or use those profits to enhance the wealth of owners through the increasing value of the enterprise.
nonprofits that work internationally are known as this
distrust of government, voluntary associations, religion, first amendment rights, population diversity, income tax and tax deductions
socialization, reinforcing norms and values, capital, nonprofits as mediating structures
private versus public goods, externalities, market and government failures, nonprofits as gap fillers
is the term most commonly used to describe the sector
this term emphasizes the important role these organizations play as a "third force"outside of the realm of government and private business.
the term emphasizes the support these organizations receive from private, charitable donations. Yet, private charitable contributions do not constitute the only or major source of their revenue.
is one of the foundations of the sector, and many organizations do indeed rely on volunteers. But the term does not reflect the reality that in many nonprofits, paid staff members far outnumber volunteers
tax exempt sector
commonly used by accountant, attorneys, and other tax specialists, is similar to nonprofit. It identifies organizations entirely in terms of their status under U.S tax law.
civil society sector
is like voluntary sector in that it emphasizes the citizen base of these organizations.
nonprofits that have a social objective but blend traditional nonprofit methods and commercial principles in the generation revenue
this term emphasis the economic classification of nonprofit organizations. Emphasizes the significant input that volunteers make to the management and operation of this sector.
number of nonprofit organizations
1.9 million nonprofit organizations
number of charitable nonprofits
1.5 million 501(c)(3)
Social welfare nonprofits
nonprofits differ from private sector organizations
revenue is a means to an end (the mission), fewer options for raising capital, no clear bottom line
nonprofits differ from governmental organizations
few if any mandates, freedom to identify constituencies, no assured revenue streams
national Taxonomy of Exempt Entities
One way to point at the nonprofit sector is to use this. a program of the center on nonprofits and philanthropy at the Urban Institute, the NTEE divides the universe of nonprofit organizations into 26 major groups under 10 broad categories. These are based on the organizations purposes, activities and programs.
Internal revenue service. the exemption of nonprofit organizations from the corporate income tax, so the IRS places nonprofits into more than 30 categories that reflect the basis for their tax exemption.
all organizations that qualify under section 501 (c) of the IRS code are tax exempt, they dont have to pay federal taxes on their income. only 501c(3) can receive donations as well
people give money to non profits so they can have it deducted off taxes
Characteristics of Nonprofit organizations
private formal organizations, no ownership rights, non distribution of profit, rooted in tradition of voluntarism, Self Governing, public Benefit
No ownership rights
nobody owns a non profit.
rooted in tradition of voluntarism
nobody is forcing anybody to do anything
you are given rules to govern but the government does not govern you
Legal and Governance Foundations
Tax exempt, ownership of the entity, exempt purposes and activities, Generation and distribution of a profit or surplus that is an excess of revenues over expenditures.`
state charters/state law
Ownership of the entity and fiduciary responsibilities of directors
belongs to board
tax exempt vs. tax deductible
only 501c3 are tax deductible but all non profits are tax exempt from federal income tax.
the donar can deduct from their personal income tax
income tax - federal
all non profits exempt the donors of 501c3 are exempted from their person income tax
exemption is determined by state or local jurisdiction
reserved fro 501c3 but depending on jurisdiction it is in.
Tax exempt bonds
if you can hold a bond or buy a bond sometimes you can be exempted
exemption from certain local taxes
depends on jurisdiction
Reduced postal rates
if in bulk
able to require lower prices and fees if non profit usually buying something they will have lower prices for on profits
No Quid Pro Quo
what is good for the non profit does not mean it is good for everyone else. Non profits operate under different things and prices.
Lower labor costs
volunteers = free labor. sometimes they will lower salaries and say that they did it because they had no money
opportunity for a non profit to get a contract with a government
are defined as 501 (c)3 - religious, education, charitable, scientific, literacy, testing for Public safety, to foster national and international amateur sports competition, or prevention of cruelty to children or animals
nonprofit organizations can be organized in ay of the following, the first 8 and then, professional, musical, patriotic, political, social and athletic
to qualify under section c3, the nonprofit corporation must pass this. The organizing document must forbid the nonprofit from participating in any political campaign on behalf of a specific candidate.
charter must prohibit the nonprofit from distributing any of its asses or income to individuals as owners or as managers except for fair compensation for services rendered.
need for nonprofits
as the nation grew, movements such as urbanization, industrialization and immigration increased the need for nonprofit organizations to serve diverse populations. The evolution of the U.S law further supported the growth of the nonprofit sector.
4 major functions that nonprofits perform in relation to gov.
nonprofits give voice to groups with differing values, beliefs and practices that cannot be fully accommodated within government, with its obligation to treat all citizens equally
nonprofits can undertake research and development for social programs
Provide freedom from bureaucracy
nonprofits may be able to respond more efficiently and quickly to new needs because they do not have the large bureaucracies that characterize government
Attention to minority needs
governments priorities must be consistent with those of the majority of voters
products that are things, but include services and intangible benefits
products or services that we buy and consume as individuals
their consumption affects other people negatively or positive.
those who benefit without paying
the market does not work effectively or efficiently
a breakdown in the ideal or typical realtionship between a buyer and a seller
organization's mission and work must fall under at least one of the 8 categories defined by the IRS (organizational test). Must meet the asset and political test
501(c)4 civic leagues/ social welfare / local association
they are organized to promote community welfare, charitable and educational or recreational through aspects of lobbying.
IRS tax code 501 (c) 4
vast majority are advocacy organizations to further the common good and general welfare of the people of a cummunity.
Key differences between 501 C (3) and 501 (c) 4
both groups are tax exempt, but gifts made to 501c4 organizations are not tax deductible. 501c4 organizations do not face the same limitations on political activity as 501c3 organizations
Mission statement of 501 c 7
usually centers around the mutual benefit members derive in pleasure, recreation, and socially - related activities.
nonprofits are dependent on and interact frequently with their external environments
nonprofits are dependent on external constituencies for revenue, information and other resources.
that is actions taken by the noprofit to alter its goals and activities to satisfy the contributor of funds
helps explain some recent trends and issues in the nonprofit sector
external resource dependencies also can affect power relationships and structures within the organization
they may try to make changes to accommodate to external demands, perhaps by undertaking internal reforms
nonprofits in the same field tend to become more like each other as a result of facing similar influences from their environments
5 basic parts of organization
the lowest core
they are managing the technical core and report to top management
helps the middle and technical do their jobs
they support things like finances
amount of written documentation they have.
the degree that the person is doing the more specialized the more structural
Hierarchy of Authority
the degree to which someone is answering to someone else
where decisions are made.
how well you are doing your job
number of people to the person that is an authority
take form United Nations which has become widely accepted to as referring to a legally constituted, non governmental organization created by natural or legal persons
Civil society sector
collection of organizations that reside between government and the private sector
Government operated Nongovernmental organizations
nonprofit organizations operated by gov
International Nongovernmental Organizations
International Nonprofit Organizations
governance is within and maintains a fous on its home country
Global nonprofit organizations
activities throughout the world and governance structure is reflective of individuals from multiple countries