Reflection Paper #1: The Nonprofit Sector•1. Connect your organization’s mission and services to the discussions we have had in class, including (consider these to be topic suggestions – do not address them all):•How would you situate this organization within the framework of nonprofit theories discussed in chapter three? How has the social issue or population being addressed been addressed historically? What role does the organization play in a democratic society? How would you analyze your organization in light of economic theory? •How is the management of this particular organization similar to that of a for-profit organization? How is it not?
• How does this organization measure and demonstrate its impact? What is their strategic planning process? Conduct your own SWOT analysis of your organization. How do their strategic plans fit or not fit with your analysis?
• Connect your early experiences with this organization to your understanding of your own role in the nonprofit sector and to your role as a member of a community with the capacity to make positive change for others. For example, how do you personally respond to opportunities to do direct volunteer service vs. advocate for policy changes vs. provide administrative of fundraising support for an organization that does these things? Is there a lever of change that you would prefer to work in? Why?
Importance of Gifts to Nonprofit Importance of Gifts to Nonprofit OrganizationsOrganizations
• Charitable or philanthropic giving is an important source of revenue for many nonprofits, though relative importance varies among subsectors• Health services organizations -- low reliance• Educational institutions and civic, social, and fraternal
organizations -- medium reliance• Religious organizations and human services
organizations -- high reliance• Private giving can often be used to address
organizational priorities rather than support specific programs or services• Core operations or capacity building• Building new facilities• New initiatives that lack paying customers or grants
• Religion (35%)• Foundations (14%)• Corporations (5%)• Education (14%)• Human Services (9%)• Public and Society Benefit Orgs (8%)• Health (8%)• Bequests (8%) • Arts, Culture, Environ (less that %5)
The Financial Impact of the The Financial Impact of the Current Economic ClimateCurrent Economic Climate• Foundation investments reduced due to significant drop in stock
market; some limiting support to current grantees only
• Corporate giving levels continue to decline; some corporations plan to be more strategic in their giving supporting local rather than national organizations; doing fewer sponsorships, more business-nonprofit marketing deals and partnership programs
Definitions and DistinctionsDefinitions and Distinctions• Charity and philanthropy
• Charity -- giving to meet immediate human needs• Philanthropy -- giving to develop institutions that serve
human needs or enhance human development over the long run
• Fund-raising, development, and institutional advancement• Fund-raising -- an activity undertaken with the goal of
eliciting charitable or philanthropic giving• Development – encompasses fund-raising, but involves a
more comprehensive approach to the long-term growth of an organization or institution
• Institutional advancement -- encompasses fund-raising and development, along with the related activities of communications, marketing, and other programs for constituent relations
Fund-Raising Efficiency and Fund-Raising Efficiency and EffectivenessEffectiveness
• Debate about the costs of fund-raising• Charity watchdog organizations• U.S. Supreme Court• Form 990 and public transparency
• Potential problems with putting strict limits on fund-raising costs• Unfair to organizations that are new or controversial• Difficult to determine the true total costs of fund-
raising• Attempts to measure efficiency and effectiveness
Staff Performance and Staff Performance and AccountabilityAccountability
• Problems with evaluating performance solely based on the amount of money each staff member raises• Major gifts rarely result from the work of a single
individual• Potential to create perverse incentives for fund-raisers
• Alternative methods of evaluating performance• Measuring specific activities (e.g., donors visited or
proposals written)• Formulas that factor in both activities and money raised
• Compensation as a topic of current discussion and debate• Incentive-based compensation• Compensation based on a percentage of gifts raised as
• Misleading or dishonest representations• Using donor relationships for personal benefit
• Donor behavior• Donating funds that were illegally obtained• Gifts from a company that makes products it knows to be harmful• Gifts from individuals or companies with unsavory reputations
• Restricted gifts• Gifts that require an organization to undertake new programs• Donor requests for inappropriate controls or influence
• Protecting the privacy of donors and prospects• Growing sophistication of prospect research• Creation and distribution of donor profiles• Reports with information from donor visits or second-hand sources
Reasons for Adopting Earned Income Reasons for Adopting Earned Income StrategiesStrategies
• 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
Partnerships With BusinessPartnerships 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• 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
• Operational relationships – corporation acts as a supplier, improves training, offers benefits for employees
Building Successful PartnershipsBuilding 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
Creating a Nonprofit Business VentureCreating a Nonprofit Business Venture• Identifying business opportunities
• Marketable assets• 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
Elements of a Typical Business Elements of a Typical Business PlanPlan1. Executive summary
2. Description of the business3. Management, organizational structure, key personnel4. Market analysis and marketing plan5. Description of products and services6. Operational plan7. Financial assumptions8. Detailed financial plan9. Uncertainties and risks10.Plan for growth or exit
Grants, Contracts and FeesGrants, Contracts and FeesGrants•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 installmentsContracts•Legal agreement; recipient is obligated to provide goods/services to achieve defined results•Failure to provide services could result in breech of contractFees•Nonprofit eligible to charge fees which are reimbursed by the government (Medicare, student aid grants, etc.)
Seeking Government SupportSeeking Government Support1. 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
Nonprofits in the Policy ArenaNonprofits 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
