PREPARED FOR THE FISHER BOARD FELLOWS MARCH 12, 2010 STEPHANIE MOULTON, PHD JOHN GLENN SCHOOL OF PUBLIC AFFAIRS THE OHIO STATE UNIVERSITY

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Presentation transcript:

PREPARED FOR THE FISHER BOARD FELLOWS MARCH 12, 2010 STEPHANIE MOULTON, PHD JOHN GLENN SCHOOL OF PUBLIC AFFAIRS THE OHIO STATE UNIVERSITY Nonprofit Management: Crash Course

On Being Nonprofit

Defining Characteristics of Nonprofit Organizations Non-Distribution Constraint Self-Governing Non-Compulsory Public Benefit/ Public Purposes

Types of Nonprofit Organizations Tax CodeType Percent of Total (2000) 501(c)3Religious, Charitable59% 501(c)4Social Welfare10% 501(c)5Labor, Agricultural Organizations5% 501(c)6Business Leagues6% 501(c)7Social and Recreational Clubs5% 501(c)8Fraternal Beneficiary Societies6% 501(c)19War Veteran's Organizations3%

Funding for Nonprofit Organizations What is the largest source of revenue for nonprofit organizations?

Demand Side Orientation Supply Side Orientation Instrumental Rationale Service Delivery Provides needed services and responds to government and market failure. Expressive Rationale Why do Nonprofits Exist? Peter Frumkin

Demand Side Orientation Supply Side Orientation Instrumental Rationale Service Delivery Provides needed services and responds to government and market failure. Expressive Rationale Civic and Political Engagement Mobilizes citizens for causes, and builds social capital within communities Why do Nonprofits Exist? Peter Frumkin

Demand Side Orientation Supply Side Orientation Instrumental Rationale Service Delivery Provides needed services and responds to government and market failure. Social Entrepreneurship Provides a vehicle for entrepreneurship and creates social enterprises that combine commercial and charitable goals. Expressive Rationale Civic and Political Engagement Mobilizes citizens for causes, and builds social capital within communities Why do Nonprofits Exist? Peter Frumkin

Demand Side Orientation Supply Side Orientation Instrumental Rationale Service Delivery Provides needed services and responds to government and market failure. Social Entrepreneurship Provides a vehicle for entrepreneurship and creates social enterprises that combine commercial and charitable goals. Expressive Rationale Civic and Political Engagement Mobilizes citizens for causes, and builds social capital within communities Values and Faith Allows volunteers, staff, and donors to express values, commitments, and faith through work Why do Nonprofits Exist? Peter Frumkin

Managing Nonprofits to Increase Impact

Defining Capacity Building Capacity Capacity is everything an organization uses to achieve its mission (Light 2004) Vision & Planning Board Governance & Structure Financial Management Human Resource Management Fundraising & Resource Development Programs & Evaluation Public Relations & Collaboration Building organizational capacity is essential to achieving maximum social impact (Adapted from McKinsey, VPP) Capacity for Impact

Capacity Assessment & Capacity Building “All too many nonprofits focus on creating new programs and keeping administrative costs low instead of building the organizational capacity necessary to achieve their aspirations effectively and efficiently”.

Aspirations (Vision) and Strategy Moore, Mark H Managing for Value: Organizational Strategy in For- Profit, Nonprofit, and Governmental Organizations. Nonprofit and Voluntary Sector Quarterly 29:

Governance and Board Responsibilities Duty of Care  Understand Mission, Purpose, Governing Documents  Attend Meetings and Come Prepared; Informed Decisions Duty of Loyalty  Interest of Charity is Always First, Not Personal Gain  Disclosure and Avoidance of Conflicts Duty of Obedience/ Compliance  Familiar with State and Federal Laws for Nonprofits Duty to Maintain Accounts  Financial Oversight  Prudent Investment and Use of Resources

Assessing Nonprofit Governance Independent Sector’s 33 Principles in 4 areas: 1.Legal Compliance and Public Disclosure 2.Effective Governance 3.Strong Financial Oversight 4.Responsible Fundraising

Human Resource Management The role of people in nonprofit organizations  What is unique about the nonprofit sector?  What is the same about the nonprofit sector? Motivating people  Fit (KSAs)  Embeddedness Unique Nonprofit Sector Motivations?  Intrinsically motivated  Desire to produce quality service  Desire to assist in production of public good for society  Other utility than profit

Human Resource Policy Adopt an Employee Handbook  Clearly communicates all employment policies and has been reviewed for legal compliance Adopt an Ethics Policy  Employment on merit, qualifications and competence; laws for fair employment followed Document Employee Evaluation Process Constantly Review and Update Policies for Fairness Designate an Individual Responsible for Policies  Typically the ED in smaller organizations Consistently Apply Policies  Consistently apply within each group (exempt, non-exempt) Periodically audit and update policies and practices  See items to review

Replacement Theory Stuck On Arrival 75% of nonprofit executive directors plan to leave their job within the next five years.  2001 survey, Daring to Lead  2006 survey, Daring to Lead 640,000 vacant nonprofit senior management positions over the next 10 years (Bridgespan, 2006) Only 17% of the executives planning to leave their job were going to retire, or leave the sector.  2006 survey, Daring to Lead No room at the top?  Transition and job design strategy rather than recruitment strategy  Working Across Generations: Defining the Future of Nonprofit Leadership (2009) The Nonprofit Leadership Crisis

Managing Fundraising Engaging individuals is a strategic decision for the nonprofit organization to increase impact- not just raising money  Habitat for Humanity Give people concrete experiences  Not just opportunities to volunteer; appeal to need to belong  Allow people to express themselves Create evangelists  Spread the cause Sustain communities  Create communities of givers

Other Resources Types of Nonprofit Organizations and Political Advocacy:  and-publications/about-advocacy-getting-1.html and-publications/about-advocacy-getting-1.html  See specifically: of-501C3S-501C4S.pdf of-501C3S-501C4S.pdf Unearned Business Income Tax (UBIT) and Nonprofits (some good examples too): 