PREPARED FOR THE FISHER BOARD FELLOWS

MARCH 12, 2010

STEPHANIE MOULTON, PHDJOHN GLENN SCHOOL OF PUBLIC AFFAIRS

THE OHIO STATE UNIVERSITYMOULTON.23@OSU.EDU

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 Code TypePercent of

Total (2000)501(c)3 Religious, Charitable 59%501(c)4 Social Welfare 10%501(c)5 Labor, Agricultural Organizations 5%

501(c)6 Business Leagues 6%501(c)7 Social and Recreational Clubs 5%501(c)8 Fraternal Beneficiary Societies 6%501(c)19 War Veteran's Organizations 3%

Funding for Nonprofit Organizations

What is the largest source of revenue for nonprofit organizations?

http://www.fas.org/sgp/crs/misc/R40919.pdf

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 CapacityDefining Capacity Building CapacityBuilding 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 programsand keeping administrative costs low instead of building the

organizational capacity necessary to achieve their aspirationseffectively and efficiently”.

http://www.vppartners.org/learning/reports/capacity/capacity.html

Aspirations (Vision) and Strategy

Moore, Mark H. 2000. Managing for Value: Organizational Strategy in For-Profit, Nonprofit, and Governmental Organizations. Nonprofit and Voluntary Sector Quarterly 29:183-208.

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’s33 Principles in 4 areas:

1. Legal Compliance and Public Disclosure

2. Effective Governance

3. Strong Financial Oversight

4. Responsible Fundraising

www.nonprofitpanel.org

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

http://www.probonopartner.org/PBPGuide/frame.htm

Replacement TheoryReplacement Theory Stuck On ArrivalStuck 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: http://www.afj.org/for-nonprofits-foundations/

resources-and-publications/about-advocacy-getting-1.html

See specifically: http://www.afj.org/assets/resources/resource1/Comparison-of-501C3S-501C4S.pdf

Unearned Business Income Tax (UBIT) and Nonprofits (some good examples too): http://www.irs.gov/pub/irs-pdf/p598.pdf