The Routledge Companion to Nonprofit Management

Helmut Anheier, Stefan Toepler, Helmut K. Anheier, Stefan Toepler, Helmut Anheier, Helmut K. Anheier, Stefan Toepler

• Publisher: Routledge
• Year: 2020
• Print ISBN: 9781032652511
• eBook ISBN: 9781351721059
• Topic: Betriebswirtschaft
• Subtopic: Non-Profit- & gemeinnützige Organisationen

Over the past three decades or so, the nonprofit, voluntary, or third sector has undergone a major transformation from a small cottage industry to a major economic force in virtually every part of the developed world as well as elsewhere around the globe. Nonprofit organizations are now major providers of public services working in close cooperation with governments at all levels and increasingly find themselves in competition with commercial firms across various social marketplaces. This transformation has come with ever-increasing demands for enhancing the organizational capacities and professionalizing the management of nonprofit institutions. The Routledge Companion to Nonprofit Management is the first internationally focused effort to capture the full breadth of current nonprofit management research and knowledge that has arisen in response to these developments.

With newly commissioned contributions from an international set of scholars at the forefront of nonprofit management research, this volume provides a thorough overview of the most current management thinking in this field. It contextualizes nonprofit management globally, provides an extensive introduction to key management functions, core revenue sources and the emerging social enterprise space, and raises a number of emerging topics and issues that will shape nonprofit management in future decades. As graduate programs continue to evolve to serve the training needs in the field, The Routledge Companion to Nonprofit Management is an essential reference and resource for graduate students, researchers, and practitioners interested in a deeper understanding of the operation of the nonprofit sector.

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NONPROFIT MANAGEMENT

Introduction and overview

Stefan Toepler
PROFESSOR OF NONPROFIT STUDIES AND MPA DIRECTOR, SCHAR SCHOOL OF POLICY AND GOVERNMENT, GEORGE MASON UNIVERSITY, ARLINGTON, VA

Helmut K. Anheier
PROFESSOR, HERTIE SCHOOL, BERLIN, GERMANY, AND LUSKIN SCHOOL OF PUBLIC AFFAIRS, UCLA, CA, USA

Introduction

Nonprofit organizations (NPOs), also known as civil society and non-governmental organizations (CSOs; NGOs) and a myriad of other designations depending on context, are private, voluntary organizations that are self-governed and legally required to apply surplus (“profit”) to the pursuit of their mission rather than distributing it to members, officers, or directors (Anheier, 2014). Over the past three decades or so, these organizations have experienced significant growth in terms of their socio-economic importance. As increasingly indispensable providers of key social, healthcare, educational and cultural services, they account for significant shares of overall employment and economic value generation in many parts of the world (Salamon et al., 1999). Simultaneously, the stature of nonprofits and NGOs has also grown in the context of civic participation, social engagement, giving voice to minority interests, and the promulgation of values. The resurgence of civil society concepts and the evolution of neo-Tocquevillean thought, triggered by Robert Putnam’s social capital argument (2000), placed additional spotlights on nonprofits and led to a worldwide increase in the visibility of the sector, but also brought a new set of challenges and expectations (Anheier, 2014). In a way, this has been both a boon and a bane for nonprofits. While favorable political rhetoric and expressions of support for the sector have increased, so have public scrutiny and critical media coverage of misconduct and management scandals (Eng et al., 2016; Smith, 2017).

The greater policy relevance has come with a diverse set of expectations of what nonprofits could and should do (Anheier et al., 2019): New public management and governance approaches have focused attention on nonprofit service provision, which is expected to be more efficient than government agencies and more trustworthy than for-profit alternatives (Salamon and Toepler, 2015). Nonprofits are also seen as a key mechanism for achieving social cohesion, serving as a locus of social capital creation and contributing to community resilience. Finally, social innovation is emerging as a new area of emphasis (Anheier et al., 2018), as governments aim at identifying, vetting, and scaling up new solutions to build more flexible responses to entrenched public problems.

Nonprofits accordingly find themselves cast into a variety of different roles, which are not always easily reconciled. But how to combine service provision, social innovation, and cohesion? Neo-Tocquevillean visions of civic activities may at some point run counter to the increasingly complex and competitive management reality of nonprofit service providers and social enterprises. Perceptions of a misfit between new political visions and organizational realities bring with it the potential for eventual public disillusionment and the risk of political backlash. This in turn makes it harder for nonprofit managers to find their way around the new and at times conflicting demands and expectations that they are facing.

To address the challenges inherent in these developments, there has been a surge of interest in, and need for, management knowledge, skills, and training that are specific to the characteristics of nonprofit organizations. Student demand at both undergraduate and master’s levels has globally led to a mushrooming of the field of nonprofit studies (Mirabella and McDonald, 2012; Mirabella et al., 2015), which in turn fostered an increase in the number of PhD students entering the field ( Jackson et al., 2014; Shier and Handy, 2014) and led NASPAA, the Network of Schools of Public Policy, Affairs, and Administration, to recognize nonprofit studies as a core element of public affairs education in 2019.

The proliferation of nonprofit management graduate programs over the past decade, particularly within the public administration discipline (Mirabella et al., 2015), has been fed by various ideas and concepts emanating either from the business world or public administration itself. The new public management and more recent collaborative governance strands in the public sector have brought concerns about outcomes versus outputs, efficiency versus effectiveness, as well as accountability and performance measurement to nonprofit management (Salamon and Toepler, 2015). From the business side, an increased consumer-orientation, marketing management concepts, social entrepreneurship (Defourney et al., 2014; Kerlin, 2017; Young et al., 2016), and hybridization (Skelcher and Smith, 2015) entered the field. Between these various concepts and pressures, nonprofit management teeters on a narrow edge: On one hand, nonprofits run the danger of losing their community-rootedness and turning into mere implementers of government policies (e.g., Banks et al., 2015), or of becoming too business-like, on the other (Maier et al., 2016). Social enterprises and newly emerging hybrid forms, moreover, are perceived by some as a potential threat to traditional nonprofits (Toepler, 2018).

Structural differences between nonprofits, business, and government

A key challenge for nonprofit management and nonprofit management educators, therefore, is to maintain a sense of the distinctiveness of nonprofits. They differ structurally from both the business corporations and government agencies, with which they frequently engage in complementary or competitive relationships. These differences occur along a number of key dimensions, including objective functions, outputs, resources, distribution criteria, goals, accountabilities, participants, and work motivation, among others (see Toepler and Anheier, 2004; and Anheier, 2014, for more detailed discussion).

More specifically, as shown in Table 1.1, government is concerned with optimizing overall social welfare by redistributing resources and providing for basic needs that are not otherwise met. Outputs are pure and impure public or collective goods that are not privately provided due to the free-rider problem or where market provision would lead to socially inefficient solutions. Equity and social justice are the primary distribution criteria for publicly provided goods and services. Private firms pursue the key objective of profit-maximization for owners through the production of private goods. Production is regulated by the interplay of supply and demand and the distribution is based on exchange relationships. Nonprofits typically aim at maximizing often value-based member or client group benefits (e.g., the homeless, students, opera lovers, faith adherents). Products have either club or collective good character and distribution is based on solidarity between members or with the client groups. Nonprofits also produce private goods, but do so to cross-subsidize their collective good provision (James, 1983; Weisbrod, 1998). Accordingly, organizations across the three sectors principally differ in the way they generate financial resources as well. Public agencies are predominantly financed in a coercive manner through the government’s power to tax. Business firms employ commercial means of financing by way of charging market prices. Nonprofits, by contrast, ideal-typically rely on donative resources, dues, and public subsidies.

At the organizational-structural level, the bottom-line measure of profit allows business firms to set clear and specific goals that are also easily monitored and measured. High goal specificity translates into clearly delineated tasks and a formalized structure. Decision-making is top-down and the controlling authority is vested in the owners or shareholders to whom the firm is also primarily accountable. Government agencies, by contrast, lack a clear bottom-line measure. Goals and mandates are both complex and ambiguous due to changing and at times conflicting political imperatives as well as interventions of outside interest groups. External accountability and the locus of control are split with public agencies being ultimately accountable to the voters, while direct control is vested in elected officials which serve as the electorate’s proxies. Similar to public agencies, nonprofits also lack clear-cut bottom lines. Missions tend to be broad and vague and members and stakeholders may join and support the organization for a diverse set of reasons leading to complex and diffuse sets of goals.

Table 1.1 Selected differences between nonprofits, government agencies and business firms

Regarding organizational participants, participation in the state is typically automatic (citizenship) and, given eligibility requirements, the same is also true for public sector agencies for entitlements. In some types of public agencies, such as schools, prisons, or the military, participation is or can also be coercive. Participation in business firms is voluntary, although necessitated by economic needs. Participation in nonprofits is typically purely voluntary. Choices concerning work participation can also be understood as a managerial sorting process (Weisbrod, 1988; Steinberg, 1993) that depends on organizational objective functions and individual preferences, motivations, and perceived incentives. There are basically three types of incentives and corresponding organizational logics: material, solidary, and purposive incentives (Clark and Wilson, 1961; Etzioni, 1975). Material incentives, such as tangible, monetary rewards, dominate in business firms; whereas government agencies attract participants that respond more to purposive incentives, that is goal-related, intangible rewards. Many nonprofits, by contrast, are associated with intangible solidary incentives resulting from the act of association itself, but purposive incentives frequently also motivate participants (e.g., religious and political groups, human rights campaigns).

Distinctive functions

Whether collaborating with government or competing with private firms in mixed industries, based on these differences, nonprofits typically perform a set of special roles and functions that makes them further distinctive from the other sectors. Ralph Kramer (1981, 1987) distilled these distinctive functions into four key roles:

• Service Provider Role: Since government programs are typically large scale and uniform, NPOs perform various important functions in the delivery of collective goods and services. They can be primary service providers, where neither government nor the business sector are either willing or able to act. They can provide services that complement the service delivery of other sectors, but differ qualitatively from it. Or they can supplement essentially similar services, where the provision of government or the market is insufficient in scope or not easily affordable.
• Vanguard Role: NPOs innovate by experimenting with and pioneering new approaches, processes, or programs in service delivery. In their fields, they serve as change agents. If innovations prove successful after being developed and tested by NPOs, other service providers, particularly government agencies with broader reach, may adopt and scale them up.
• Value Guardian Role: Governmental agencies are frequently constrained – either on constitutional grounds or by majority will – to foster and help express diverse values that various parts of the electorate may hold. Businesses similarly do not pursue the expression of values, since this is rarely profitable. NPOs are thus the primary mechanism to promote and guard particularistic values and allow societal groups to express and promulgate religious, ideological, political, cultural, social and other views and preferences. The resulting expressive diversity in society in turn contributes to pluralism and democratization.
• Advocacy Role: In the political process which determines the design and contours of policies, the needs of underrepresented or discriminated groups are not always considered. NPOs thus fill in to give voice to the minority and particularistic interests and values they represent. In turn, they serve as critics and watchdogs of government with the aim of affecting change or improvements in social and other policies.

But despite this common core of features and functions, the nonprofit sector is nevertheless marked by its notable diversity, including the diversity of organizational types: Not all nonprofits are alike and not every nonprofit performs each of Kramer’s four roles. But the great significance of Kramer’s role conception is that it focuses attention beyond the economic aspects of service delivery to the value base that underlies all nonprofit activity. Indeed, despite their great diversity in purpose and form, among the many ways nonprofits are distinct from both business firms and public agencies (Table 1.1), three dimensions are particularly salient:

• First, most nonprofits are based on values and have a distinct normative foundation. These values can be religious, political, humanitarian, moral, and even highly esoteric. The realization of these values is the raison d’être of nonprofits. These values can be deeply embedded in the organization, and their role is complex: From a management perspective, they can be enabling or restraining, protecting or stifling, leading or misleading, as well as invigorating or distracting.
• Second, to a greater extent than business firms and public agencies, nonprofits have, and are subject to, the presence and influence of multiple stakeholders. These include trustees, staff, volunteers, users, clients, members, public and private funders, regulatory agencies, among many others. These stakeholders can have very different expectations of nonprofit operations and performance that reflect their respective normative foundations. As a result, many nonprofits become inherently political organizations.
• Finally, managing nonprofits means managing multiple revenue sources – from market or quasi-market income to membership fees and sales, from various forms of transfers from, and contracts with, government to different kinds of monetary and in-kind donations by private funders, etc. At the same time, price mechanisms, the best indicators of performance, are absent, which means that nonprofits manage multiple revenue streams under performance uncertainty...

Table of contents

• Cover
• Half Title
• Series Page
• Title
• Copyright
• Contents
• List of contributors
• 1 Nonprofit management: Introduction and overview
• PART I Management context
• PART II Leading and planning
• PART III Managing internally
• PART IV Managing externally
• PART V Funding sources
• PART VI The social enterprise space
• Index