American Society for Public Administration Series in Public Administration and Public Policy Advancing excellence in public service.., EFFECTIVE NON-PROFIT MANAGEMENT Context, Concepts, and Competencies SHAMIMA AHMED ( r oc) CRC Press VV^ J Taylor & Francis Group ^ "~" Boca Raton London New York CRC Press is an imprint of the Taylor & Francis Croup, an Informa business
Contents Preface Acknowledgments xv xvii 1 Introducing Non-Profit Organizations (NPOs) 1 1.1 Non-Profits: The Essential Characteristics 2 1.2 Different Categories of Non-Profits 5 1.3 Growth of Non-Profits 8 1.4 Scope and Significance of Non-Profits 11 1.4.1 Significance of Non-Profits 12 1.4.1.1 Economic Significance 12 1.4.1.2 Service Provisions 13 1.4.1.3 Innovation and Entrepreneurship 13 1.4.1.4 Policy Making 13 1.4.1.5 Providers of "Common Goods" 14 1.4.1.6 Individualism and Plurality 14 1.4.1.7 Social Mobilization and Advocacy 15 1.4.1.8 Social Bonding 15 1.4.1.9 Democracy. 15 1.4.1.10 Preservation 16 1.5 Contemporary Issue: The Non-Profit Sector's Identity Crisis 16 Discussion Questions 20 Web Resources 21 End-of-Chapter Review of Terms 21 References 22 Endnotes 24 2 Essential Linkages Non-Profits, Government, and Business 25 2.1 Shared Features among Non-Profit Organizations (NPOs), Government, and Business Organizations.'.: 26 2.1.1 The "Publicness" of NPOs: Shared Characteristics with the Public Sector 26 2.1.2 Look-Alike: Shared Characteristics with the Business Sector 29 VII
viii Contents 2.2 Cross-Sectoral Relationships 31 2.2.1 Forms of NPO and Government Relationships 31 2.2.1.1 Non-Profits as a Supplement to Government 33 2.2.1.2 Non-Profits as a Complement to Government... 34 2.2.1.3 Non-Profits in a Collaborative Relationship with the Public Sector 35 2.2.1.4 Non-Profits and Government in an Adversarial Relationship 37 2.2.2 Forms of NPOs and Business Relationships 39 2.2.2.1 Collaborative Relationship Continuum 40 2.2.2.2 NPOs and For-Profits in an Adversarial Relationship 44 2.2.2.3 NPOs and For-Profits' Engagement in Each Others' Areas of Operation 44 2.3 Collaboration Challenges and Cross-Sectoral Learning 45 2.3.1 Effective Linkages: Collaboration Essentials 47 2.3.2 Cross-Sectoral Learning 47 2.4 Contemporary Issue: The Faith-Based Initiative 49 Discussion Questions 57 Web Resources 57 End-of-Chapter Review of Terms 57 References 58 Endnotes 62 Non-Profit Laws and Regulations 63 3.1 Tax Exemption and Non-Profit Organizations (NPOs) 64 3.2 Types of 501 (c) NPOs 65 3.2.1 Public Charities versus Private Foundations 65 3.3 Creating an Incorporated Non-Profit Agency 67 3.3.1 The Process of Incorporation 68 3.4 Operating a Non-Profit Organization: The Essential Requirements...75 3.4.1 Reporting Requirements 75 3.4.1.1 Federal Requirements: Annual Financial Return Form (Form 990) 75 3.4.1.2 State Requirements 77 3.4.2 Public Document 78 3.4.3 Unrelated Business Income Taxes 78 3.5 Legal Restrictions '. 79 3.5.1 Political Campaign Activities 79 3.5.2 Limitations on Private Inurement 81 3.5.3 Lobbying Rights and Restrictions 82 3.5.4 The Sarbanes-Oxley Act (2002) 83 3.6 Private Foundations 85
Contents ix 3.7 Contemporary Issue: Who Deserves Tax Exemption? 87 Discussion Questions 92 Web Resources 93 End-of-Chapter Review of Terms 93 References ^ 93 Endnotes 94 Non-Profit Governance 95 4.1 Non-Profit Governance: Who Governs? 96 4.1.1 The Traditional Approach 96 4.1.2 The Shared Partnership 97 4.1.3 The Situational Approach 97 4.2 Boards of Non-Profit Organizations (NPOs) 99 4.2.1 Roles and Responsibilities 100 4.2.1.1 Legal Responsibilities 100 4.2.1.2 Functional Responsibilities 103 4.2.2 Board Recruitment, Selection, and Development 106 4.2.2.1 Recruitment and Selection 107 4.2.2.2 Board Size and Committees 108 4.2.2.3 Development and Training 110 4.2.2.4 Evaluations Ill 4.2.2.5 Important Policy Documents Ill 4.3 Chief Executive Officer (CEO) 113 4.3.1 Common Job Duties and Responsibilities 113 4.3.2 Required Competencies of the CEO 115 4.4 Key Leadership Roles 116 4.4.1 Strategic Planning 116 4.4.2 Promotion of Public Interest The Contemporary Notion of NPO Governance 120 4.5 Contemporary Issue: Non-Profit Executive Leadership Challenges 122 Discussion Questions 127 Web Resources 127 End-of-Chapter Review of Terms 127 Appendix 4.1: An Example of a Sample Skill Inventory 128 References 129 Endnotes.'. 131 Human Resource Management in Non-Profit Organizations 133 5.i Laws and Relevant Legal Issues 134 5.1.1 Fair Labor Standards Act (FLSA), 1938 135 5.1.2 The Equal Pay Act (EPA), 1963 135 5.1.3 Civil Rights Act (CRA) of 1964 136
Contents 5.1.4 The Age Discrimination in Employment Act (ADEA), 1967 v 137 5.1.5 The Americans with Disabilities Act (ADA), 1990 137 5.1.6 Sexual Harassment 138 5.1.7 Family and Medical Leave Act (FMLA), 1993 139 5.2 Volunteer Management 140 5.2.1 Volunteer Management Program 140 5.2.1.1 Needs Assessment 142 5.2.1.2 Organizational Preparation for Volunteers 143 5.2.1.3 Budget.' 143 5.2.1.4 Written Job Descriptions 143 5.2.1.5 Recruitment, Selection, Orientation, and Training 144 5.2.1.6 Retention 146 5.2.1.7 Formal Policies Volunteer Handbook or Manual 147 5.2.1.8 Evaluation 147 5.2.1.9 Risk Management 148 5.2.2 Volunteer Motivation 150 5.2.2.1 Altruism as a Motivator 150 5.2.2.2 Instrumental Theory 150 5.2.2.3 Reinforcement Theory 151 5.2.2.4 Maslow's Need Hierarchy 151 5.2.2.5 McClelland's Needs Theory 151 5.3 Current Issue: NPO Executive Compensation 152 Discussion Questions 158 Web Resources 158 End-of-Chapter Review of Terms 159 Appendix 5.1: Ideas for Volunteer Recognition 159 References 160 Endnotes 161 Resource Acquisition and Management 163 6.1 Non-Profit Organization (NPO) Revenue Sources 164 6.2 Fundraising 168 6.2.1 Government Regulations 176 6.3 Financial Management { 177 6.3.1 NPO Financial Reporting and Accounting Uniqueness... 177 6.3.2 Basic Financial Statements of an NPO 179 6.3.2.1 Statement of Financial Position 179 6.3.2.2 Statement of Activity 181 6.3.2.3 Statement of Cash Flows 181
Contents xi 6.4 Financial Leadership 183 6.5 Issue: Perils of Government Dependency The Recent Funding Issue with Planned Parenthood 186 Discussion Questions 189 Web Resources 189 End-of-Chapter Review of Terms 190 Appendix 6.1: Code of Ethical Principles, American Fundraising Professionals 191 References 192 Endnotes 193 Non-Profit Organizations and Information Technology 195 7.1 Why Information Technology (IT)? 196 7.2 v Information Technology and Strategy 197 7.3 IT Uses and Applications 200 7.3.1 E-Mail 201 7.3.2 Online Presentations and Meetings 201 7.3.3 Posting Digital Signs 202 7.3.4 Using RSS (Really Simple Syndication) 202 7.3.5 Text Messaging 202 7.3.6 Cell Phones and iphones 203 7.3.7 Podcasting 203 7.3.8 Blogging 205 7.3.9 Hyperlinks 205 7.3.10 Internet Interactive Functions 206 7.3.11 Twitter 206 7.3.12 YouTube 206 7.3.13 Social Networking Sites 207 7.3.14 Microsites 208 7.4 Specific Uses of IT 209 7.4.1 Online Fundraising 209 7.4.2 Recruitment and Management 209 7.4.3 Marketing 210 7.4.4 Disseminating, Affecting, and Monitoring Public Policy Issues 210 7.5 Issue Digital Divide in the Non-Profit Sector 211 Discussion Question.'. 214 Web Resources 214 End-of-Chapter Review of Terms 215 References 215 Endnotes 216
xii Contents 8 Non-Profit Marketing. 217 8.1 Non-Profit Marketing 218 8.1.1 Difference between For-Profit and Non-Profit Organization (NPO) Marketing 219 8.1.2 Reasons for Marketing 222 8.2 The Strategic Marketing Process 223 8.2.1 Organizational Readiness 224 8.2.2 Market Research 224 8.2.3 Strategic Marketing Plan 225 8.2.3.1 Marketing Mix 226 8.2.3.2 Branding 228 8.2.3.3 Effective Communication 228 8.2.4 Using Social Media in Marketing 229 8.3 Issue: Will Marketing Put the Civil Society at Risk? 231 Discussion Questions 235 Web Resources on NPO Marketing 236 End-of-Chapter Review of Terms 236 References 237 9 Nongovernmental Organizations (NGOs) International Dimension 239 9.1 Defining Nongovernmental Organizations (NGOs) 240 9.2 Scope and Growth 243 9.3 Differences across Countries 246 9.3.1 Formation and Legal Structure 246 9.3.2 Political Activity 249 9.4 International Non-Governmental Organization (INGO) Structure and Organization 250 9.4.1 Doctors Without Borders 250 9.4.2 Amnesty International 251 9.4.3 Transparency International 252 9.5 NGO Roles 252 9.5.1 Relief 253 9.5.2 Social and Economic Development 253 9.5.3 Political 255 9.6 Issues 259 9.6.1 Strategy 259 9.6.2 Accountability, 261 9.6.3 Legitimacy 262 Discussion Questions 265 Web Resources 266 End-of-Chapter Review of Terms 266 References 266 Endnotes 268
Contents xiii 10 Non-Profit Effectiveness and Accountability 269 10.1 NPO Accountability: Scope and Challenges 270 10.1.1 Accountability to Whom, for What and How? 271 10.2 NPO Effectiveness 274 10.2.1 Challenges of Measuring NPO Effectiveness 275 10.2.2 Measurement Methods and Approaches 277 10.2.2.1 Goal Approach 278 10.2.2.2 System Approach 278 10.2.2.3 Multi-Constituency Approach 280 10.2.2.4 Multidimensional Approach 280 10.2.2.5 Outcome Assessment 282 10.3 Charity Rating Agencies and Watchdogs 283 10.4 Issue: Measuring NPOs' Impact on Society 286 Discussion Questions 290 Web Resources 290 End-of-Chapter Review of Terms 290 Appendix 10.1: Common Outcome Framework for Health and Human Services 291 References 292 Endnotes 293 11 In Conclusion 295 11.1 Social: Demographic Changes 295 11.2. Economic: Financial Distress or Recession 297 11.3 Professional: Increasing Need and Opportunities for Professionalism 299 11.4 Changing Nature of Non-Profit Leadership A Unique Style of Leadership '. 300 References 301 The Author 303 Index 305