1. Strategic Issues in Not-for-Profit Organizations
Chapter 13
Strategic Issues in
Not-for-Profit Organizations

2. Not-for-Profit Organizations
Not-for-Profits:
Account (on average) for 1 in every 20 jobs around the world
1990 – 1995 jobs grew by 23%
Whole economy grew by 6.2%
Employ > 25% of U.S. workforce
Own about 15% of nation’s wealth

3. Not-for-Profit Organizations
Not-for-Profits:
Private nonprofit corporations
Hospitals, private colleges, charities
Public governmental agencies
Prisons, welfare departments, universities

4. Not-for-Profit Organizations
Not-for-Profits Importance:
Public or collective goods
Paved roads, police protection, museums, schools
Preferred tax status
501(c) (3) U.S. Tax Code

5. Not-for-Profit Organizations
Key Differentiator:
Source of revenue
Profit-making firm
Sale of goods and services to customers
Not-for-profit firm (NFP)
Dues, assessment, or donations from membership of sponsoring agency

6. The Effects of Sources of Revenue on Patterns of Client-Organization Influence

7. Not-for-Profit Organizations
Constraints on Strategic Management:
Service is often intangible
Difficult to measure
Client influence may be weak
Client payments - small source of funds
Strong employee commitments
To professions
To “causes”

8. Not-for-Profit Organizations
Strategic Decision Making:
Pattern of influence
Derives from source of revenue
Key to understanding management of NFP
Who pays for the delivered services

9. Not-for-Profit Organizations
NFP Strategies
Strategic Piggybacking:
Development of a new activity for the NFP that would generate the funds needed to make up the difference between revenues and expenses.

10. Not-for-Profit Organizations
Something to Sell
Management Talent
Piggybacking
Resources
Trustee Support
Entrepreneurial
Venture Capital

11. Not-for-Profit Organizations
NFP Strategies
Mergers
Focus on reducing costs
Strategic alliances
Developing cooperative ties with other organizations