Nonprofit Management Crash Course

							Nonprofit Management:
    Crash Course

          PREPARED FOR THE
        FISHER BOARD FELLOWS
            MARCH 12, 2010

       STEPHANIE MOULTON, PHD
 JOHN GLENN SCHOOL OF PUBLIC AFFAIRS
      THE OHIO STATE UNIVERSITY
        MOULTON.23@OSU.EDU
On Being Nonprofit
 Defining Characteristics of Nonprofit Organizations


 Non-Distribution Constraint


 Self-Governing


 Non-Compulsory


 Public Benefit/ Public Purposes
    Types of Nonprofit Organizations


                                                Percent of
Tax Code   Type                                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
http://www.fas.org/sgp/crs/misc/R40919.pdf


     What is the largest source of revenue for nonprofit
                        organizations?
        Why do Nonprofits Exist?                        Peter Frumkin




                          Demand Side              Supply Side
                           Orientation             Orientation


                        Service Delivery

               Provides needed services and
Instrumental
               responds to government and market
  Rationale
               failure.




Expressive
Rationale
        Why do Nonprofits Exist?                         Peter Frumkin




                           Demand Side              Supply Side
                            Orientation             Orientation


                         Service Delivery

               Provides needed services and
Instrumental
               responds to government and market
  Rationale
               failure.




                 Civic and Political Engagement

Expressive     Mobilizes citizens for causes, and
Rationale      builds social capital within
               communities
      Why do Nonprofits Exist?                                      Peter Frumkin




                           Demand Side                          Supply Side
                            Orientation                         Orientation


                         Service Delivery                 Social Entrepreneurship

               Provides needed services and         Provides a vehicle for
Instrumental
               responds to government and market    entrepreneurship and creates social
  Rationale
               failure.                             enterprises that combine commercial
                                                    and charitable goals.



                 Civic and Political Engagement

Expressive     Mobilizes citizens for causes, and
Rationale      builds social capital within
               communities
      Why do Nonprofits Exist?                                       Peter Frumkin




                           Demand Side                           Supply Side
                            Orientation                          Orientation


                         Service Delivery                 Social Entrepreneurship

               Provides needed services and         Provides a vehicle for
Instrumental
               responds to government and market    entrepreneurship and creates social
  Rationale
               failure.                             enterprises that combine commercial
                                                    and charitable goals.



                 Civic and Political Engagement               Values and Faith

Expressive     Mobilizes citizens for causes, and   Allows volunteers, staff, and donors to
Rationale      builds social capital within         express values, commitments, and
               communities                          faith through work
Managing Nonprofits to
   Increase Impact
                      Capacity for Impact

Defining Capacity                      Building Capacity

 Capacity is everything an             Building organizational
  organization uses to achieve its       capacity is essential to
  mission                                achieving maximum social
  (Light 2004)                           impact
           Vision & Planning            (Adapted from McKinsey, VPP)

    Board Governance & Structure
        Financial Management
    Human Resource Management
 Fundraising & Resource Development
        Programs & Evaluation
   Public Relations & Collaboration
Capacity Assessment & Capacity Building




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




       “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. 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’s
33 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
           The Nonprofit Leadership Crisis

      Replacement Theory                   Stuck On Arrival

 75% of nonprofit executive         Only 17% of the executives
  directors plan to leave their       planning to leave their job
  job within the next five            were going to retire, or leave
  years.                              the sector.
     2001 survey, Daring to Lead        2006 survey, Daring to Lead
     2006 survey, Daring to Lead    No room at the top?
 640,000 vacant nonprofit               Transition and job design strategy
  senior management                       rather than recruitment strategy

  positions over the next 10             Working Across Generations:
                                          Defining the Future of
  years (Bridgespan, 2006)
                                          Nonprofit Leadership (2009)
                    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