Managing Nonprofit Organizations in a Policy World

Shannon K. Vaughan, Shelly Arsneault

• Publisher: CQ Press
• Year: 2013
• ISBN:
  9781483322773
• Edition: 1
• Topic: Politics & International Relations
• Subtopic: Public Affairs & Administration
• Index: Politics & International Relations

If nonprofits influence policy, make policy, are affected by policy, and are subject to policy, then shouldn?t every nonprofit manager fully understand the policy world in which they operate? In explicitly tying the policy realm to management skills, Vaughan and Arsneault?s foundational book sheds new light on how nonprofit managers can better navigate policymaking and regulatory contexts to effectively lead their organizations. Vaughan and Arsneault provide a comprehensive overview of the nonprofit sector and the policy environment, with a focus on skills and strategies managers can use to advance the causes of their organizations. Abundant examples and rich case studies explore the complexity of the policy-nonprofit relationship and highlight both management challenges and successes. While coverage of the nuts-and-bolts is in here, what sets this book apart is tying everyday management to the broader view of how nonprofits can thrive within the policy ecosystem.

Part I. Fundamentals and Environment of the Voluntary Sector

1 What is the Nonprofit Sector?

Our sacred promise to improve lives has been—and must continue to be—our ultimate purpose for existing…. Americans have high expectations for us: We are the primary outlet for their humanitarian impulses, their conduits of goodwill and generosity. We are the way individuals give back, so that we as a society can move forward.

Diana Aviv, President and CEO, Independent Sector

Imagine that it is 1980 and a second-grade teacher learns that one of her 7-year-old students has been abused by a trusted family member. Once the teacher completes her mandatory call to police, the child is taken from her home by uniformed officers and subjected to a thorough examination in a sterile room at the hospital. Following a series of tests and questions, she is then taken to the police station and asked even more confusing questions before being handed over to a child protective services employee, who sits on a cold bench with her as she waits to be retrieved by her grandparents. As frightening and bewildering as all of this must be for her, the ordeal is far from over for this young victim. In the months that follow, she is taken to the police station several more times, is assessed by various counselors, and questioned by prosecutors and other court staff; in essence, she continues to be traumatized.

Throughout her ordeal, this young victim has interacted with professionals in government (the police officers, child protective services employee, and the state prosecutors), the private sector (the physician), and the nonprofit sector (since the hospital in which she was examined is likely a not-for-profit entity). Various public policies affect the process she endured, from the legal requirement that teachers notify law enforcement of possible abuse to the specific statutes which classify the type of abuse and the penalties associated with conviction. Aside from these legal requirements, however, in 1980 there were no public policies or programs designed to reduce the trauma of navigating the legal and health care systems imposed on victimized children. As is often the case, this problem took years to recognize and years more to address; as is also often the case, those involved pursued a nonprofit option to solve this systemic problem. The nonprofit National Children's Alliance and hundreds of children's advocacy centers have been developed nationwide to provide that systemic solution through provision of child-centered services; most of these centers are nonprofits and are discussed further below.

Policy Implications of Nonprofit Organizations

• Nonprofits are inextricably linked to public policy.
• Our history as a British colony facilitates our understanding of the origins of the U.S. nonprofit sector, e.g. through the impact of the Statute of Charitable Uses and the Revolutionary spirit which defined the Constitution and also informs the proclivity for both voluntary and government action.
• The nonprofit sector has grown dramatically in size in recent years and represents a diversity of interests. This leads to competition for resources and for attention from policymakers.
• U.S. tax policy is also relevant for the growth and diversity of the sector, particularly with regard to the incentives for the development of philanthropic foundations and their ability to direct resources.

Nonprofits and Public Problems

As will be discussed throughout this book, nonprofit organizations in the United States address public problems and are imbued with public policy. It is impossible to understand the formation, operation, and management of nonprofits without a commensurate understanding of the public policy context they inhabit. Not-for-profit organizations both act and are acted upon with regard to public policy; in order to pursue their missions, they often advocate for government support and must comply with government mandates. The nonprofit sector has a symbiotic relationship with public policy—each is influenced to varying degrees by the other; this is the central theme of our book. Nonprofits are inextricably linked to public policy, and understanding the relationship between the two is a significant factor in successful nonprofit management.

For example, let us return to the issue of child abuse. Although there is now nearly universal recognition of child abuse as a public problem in the U.S., that was not always the case. In fact, the first case of child abuse was prosecuted in 1874 under an animal cruelty statute because at the time there was no law aimed specifically at the protection of children. As a result of this case the first child protective services agency, the nonprofit New York Society for the Prevention of Cruelty to Children (NYSPCC), was formed in 1875 by Henry Bergh and Elbridge Gerry.¹ By 1908, similar societies were in existence in 44 states, as well as Great Britain and most other European countries plus India, South Africa, Australia, and South America.² By the mid-1940s, city, county, and state government agencies had taken over most of the primary tasks of the nonprofit Societies for the Prevention of Cruelty to Children (SPCC), which from that time forward have served in partnership with government in the protection of children.³

This is one of many examples in which nonprofit action helped define as well as address a public problem. SPCC agencies were on the leading edge of delivery of services to abused children—receiving complaints, conducting investigations, and taking cases to trial—prior to adoption of legislation stipulating specific protections for children; most subsequent child abuse legislation can be traced back to their advocacy efforts.⁴ These organizations were in effect changing public policy by taking responsibility for a public problem in the 1870s. More than a century later, Bud Cramer, then district attorney for Madison County, Alabama, and his colleagues organized a new nonprofit response to child abuse—namely the alleviation of the trauma of prosecution inflicted on child victims of sexual abuse, such as the little girl described in the opening vignette. Through Cramer's leadership and the efforts of many volunteers, the National Children's Advocacy Center (NCAC) was established in Huntsville, Alabama, in 1985.

NCAC has become a model for centers throughout the United States and other countries⁵, and led to the creation of National Children's Alliance (NCA), which provides information “and technical assistance to promote the development and operation of children's advocacy centers (CACs) across the United States.”⁶ Children's advocacy centers provide an alternative and collaborative approach to standard criminal justice procedures in the handling of child abuse cases. A children's advocacy center is a centralized, child-friendly facility in which law enforcement, social services, legal, medical, victims’ advocate, and counseling professionals come together as a team to interview, examine, and provide support services to child victims. Importantly, as noted earlier, most children's advocacy centers are nonprofit organizations.

While many think of nonprofits and their involvement in public policy as relatively new phenomena, not-for-profit organizations have taken on public roles and purposes for generations. Indeed, by 1835, Alexis de Tocqueville had observed that Americans were constantly forming civil associations: “If it is proposed to inculcate some truth or to foster some feeling by the encouragement of a great example, they form a society.”⁷ By the time of Tocqueville's writing, public work was already being facilitated through the efforts of nonprofit organizations including churches, museums, colleges, and universities. As Hammack explains, there was little government opposition to nonprofit organizations in the early decades of the nineteenth century. Most courts and legislatures by this time “had accepted the view that nongovernment, nonprofit organizations provided essential services, reinforced religious education in ways important to civil peace, reduced the need for tax-supported government action, permitted variety and flexibility in the provision of services.”⁸

Examples of the varied influence of the nonprofit sector in the realm of public policy, therefore, abound in American history. The American Red Cross delivered direct services to victims of forest fires as early as 1881, and in 1958 the policy advocacy efforts of the Child Welfare League of America facilitated federal legislation requiring states to hire full-time child welfare caseworkers. An example of nonprofit influence on public policy through the court system comes from the Police Foundation's research on the use of deadly force. Their findings were extensively cited in the 1985 U.S. Supreme Court decision Tennessee v. Garner, which modernized police policy by reserving the use of deadly force by officers to cases in which a life is threatened. Each of these examples illustrates the ways in which public policy has been encouraged, informed, tested, or delivered by nonprofit entities.

Since all nonprofits operate within the public policy arena, it is critical for those working in not-for-profit organizations as well as in government entities to understand the very important role that nonprofits play. Similarly, it is important to recognize that public policy influences nonprofit organizations and their management. From their tax status, to the federal policies that affect their personnel practices, to the mandates required by government contracts, not-for-profit organizations are both guided and limited by public policies as they pursue their missions; they affect and are affected by public policy.

It is the aim of this book to set the work of nonprofit organizations firmly within the milieu of public policy and to highlight the fact that effective nonprofit management requires a keen understanding of the complex relationship between the nonprofit sector and the policy world. In order to meet the broader needs of society it is essential that not-for-profit organizations and the public agencies that work with them are able to successfully navigate this complexity.

What is a Nonprofit?

Nonprofit organizations are generally understood to provide goods or services but are neither private businesses nor government operated. The term “nonprofit,” however, is a misnomer. These organizations can and often do have revenues that exceed expenditures—that is, they make a profit—but the distinction between nonprofits and private business is that nonprofits must retain excess revenues for the benefit of the organization; excess revenues in private business are distributed to owners/shareholders. Not-for-profit is therefore a more precise descriptor, but the two are used interchangeably throughout this text. While “nonprofit” is the more dominant term throughout the general literature, other terms sometimes used include “charitable,” “voluntary,” or “philanthropic organizations.” All refer to the same type of tax-exempt organizations, and exemption from taxes is the primary characteristic that affects legal designation of nonprofits and the rules and regulations pertaining to them.

As will be discussed in greater detail in Chapter 4, a determination letter from the Internal Revenue Service (IRS) is considered the primary document needed for legal recognition as a tax-exempt organization. According to the IRS, however, nonprofit status is actually a concept of state law; registration within a certain state grants the organization certain benefits with regard to exemption from state taxes. Exemption from federal income tax requires separate action and compliance with additional requirements. Exemption from local, state, and federal income taxes are significant incentives for the development of not-for-profit organizations, but first and foremost, nonprofits exist to address a public problem or need that, for whatever reason, is not adequately served thr...