Non-Profit

11 Key excerpts on "Non-Profit"

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  Fundraising

  Principles and Practice

  • Michael J. Worth(Author)
  • 2015(Publication Date)
  • SAGE Publications, Inc

    (Publisher)

  nondistribution constraint, meaning that they cannot distribute profits to owners. They are exempt from the federal corporate income tax and most state taxes.

  Nonprofit organizations are classified according to the National Taxonomy of Exempt Entities (NTEE) and by the Internal Revenue Code. The latter includes many different classifications, including social welfare organizations, exempt under section 501(c)(4), and charitable nonprofits, which are exempt under section 501(c)(3). Both are tax exempt as organizations, but only the latter can receive gifts that are tax deductible to the donor. For that reason, the latter are most relevant to this book's focus on fundraising and philanthropy.

  There are two types of charitable nonprofits: private foundations and public charities. Most private foundations are funding intermediaries—they receive funds from individuals or corporations and then distribute them as grants to operating nonprofits. Some public charities are also funding intermediaries, including for example, United Way. The latter are called supporting public charities.

  The largest source of revenue to the nonprofit sector overall, accounting for 50 percent, is fees for services and goods provided. Philanthropy accounts for 13 percent. But if universities and hospitals are excluded, philanthropy is more significant, accounting for 24 percent of total revenue (Roeger et al., 2012). Since nonprofit organizations receive gifts, nonprofit financial management includes some unique concepts. Operating funds may be unrestricted, but some are restricted to purposes identified by donors or grantors. Funds may be temporarily restricted, until the purpose has been fulfilled, or permanently restricted. The latter include endowment funds

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  Managing a Nonprofit Organization in the Twenty-First Century

  • Thomas Wolf(Author)
  • 2009(Publication Date)
  • Free Press

    (Publisher)

  Suppose you asked someone, “What is an elephant?” and the person answered, “An elephant is a nonhorse.” You would probably find the answer unsatisfactory. Yet, the term nonprofit organization describes something that is not something else—it suggests a business enterprise not organized to make a profit. But it tells us very little about the essential characteristics of this type of entity.

  It is not easy to describe nonprofit organizations and this is partly what makes managing them such a difficult task fraught with challenges and problems. Unlike management issues in the profit sector, which tend to be clear and related to specific economic measures, issues in the nonprofit environment are more nebulous because they relate to the somewhat abstract concept of public service. In a profit-making company, a manager generally knows whether he or she is doing a good job, but it is often less clear in a nonprofit organization in which the primary purpose is not to make money but to serve the public.

  Some say that the essential defining characteristic of nonprofit organizations is the fact that they are established to provide a service to the public, and to some extent this is true. But this idea of a public service mission can be misleading. For one thing, there are a number of nonprofit organizations that are not organized to serve the public (for example, country clubs and labor unions). For another, the idea that nonprofit organizations are simply organized to solve some societal problem or deliver some much-needed public service flies in the face of the exclusivity often associated with their respective constituencies. This is perhaps most clear when nonprofit organizations are compared to public (or government) organizations and agencies working in the same field. Although the nonprofit organizations often have a stated public service mission, they do not necessarily have a requirement of equity (that is, a mandate to serve everyone) the way public agencies usually do. As a result, the nonprofit organization’s actual constituency may be far more limited than that of a public agency working in the same field.

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  Financial Management for Nonprofit Organizations

  Policies and Practices

  • Jo Ann Hankin, Alan Seidner, John Zietlow(Authors)
  • 2011(Publication Date)
  • Wiley

    (Publisher)

  The trustees are legally responsible for periodically reviewing the nonprofit organization’s bylaws and articles of incorporation to ensure that they accurately reflect what is happening in the organization. It is also the trustees’ responsibility to ensure that those provisions of the governing documents are followed.

  Once these two documents are in place, the trustees should develop policy manuals covering their own service, personnel, finances, equipment, and other areas. These policies should address issues related to the operational and financial means of implementing the organizational mission, such as conflict of interest, human resource management, cash controls, cash management, investment guidelines, debt and liability guidelines, risk management, property, and facility use.

  1.2 CHARACTERISTICS OF NONPROFIT ORGANIZATIONS

  A nonprofit organization has most or all of these characteristics:

  • Public service mission
  • Organizational structure of a not-for-profit or charitable corporation
  • Governance structures that preclude self-interest and personal financial gain
  • Exemption from paying federal taxes
  • Special legal status stipulating that gifts made to the organization are tax-deductible

  We shall introduce the mission and the organizational structure in this chapter. We detail these items as well as governance structures and tax and legal provisions in subsequent chapters.

  (a) ORGANIZATIONAL MISSION.

  One essential difference between a nonprofit and for-profit corporation centers on its mission. The ultimate mission of for-profit organizations is to make money for the owners/shareholders, ranging from an individual, as sole proprietor, to corporate ownership through the purchase of shares.

  A nonprofit organization does not include the concept of ownership and, therefore, has a completely different thrust. Its mission is to serve a broad public purpose, which is clearly incompatible with ownership and personal gain. This prohibition of “private inurement” does not prevent nonprofit organizations from paying salaries to their employees, including the chief executive officer or chief financial officer. The board members typically donate their time as a public service and receive no compensation.

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  Performing Arts Management (Second Edition)

  A Handbook of Professional Practices

  • Tobie S. Stein, Jessica Rae Bathurst, Renee Lasher(Authors)
  • 2022(Publication Date)
  • Allworth

    (Publisher)

  It’s important to distinguish the difference between for-profit and nonprofit corporations. A for-profit corporation exists to make a profit. For-profit corporations have investors or shareholders who own the corporation and can make money based on its profits. The primary purpose of a nonprofit is to serve a public, nonprofit purpose. In fact, it must be clearly stated in the articles of incorporation (the state-required document for forming a corporation, also known as the certificate of incorporation) that the primary purpose of the corporation is nonpecuniary—that it is not in the business of making a profit. In fact, if there is a surplus in any given year, it must be allocated to support the nonprofit corporation and its mission, not distributed among its employees, directors, or officers. However, if a nonprofit organization is doing well and can reasonably afford to raise salaries without compromising its programs, a well-deserving manager can certainly be given a raise, as long as it is considered to be reasonable and customary according to industry standards in the given geographic area. (It should be noted that the managers, directors, and officers of a nonprofit corporation manage it for the benefit of the public. They do not own it.)

  Along with having a public purpose, the nonprofit corporation must meet annual local, state, and federal filing and reporting requirements for the rest of its existence until it dissolves. (Remember, corporations—unless their creators choose otherwise—are created with perpetual life.). For the most part, nonprofit performing arts organizations are incorporated in the state where they do business, though they have the option of incorporating elsewhere and registering to do business in the state in which they reside. Corporate formation is governed by state law and, since laws vary from state to state (though the general principles are the same), it’s necessary to contact the attorney general, secretary of state, or other state government office responsible for forming corporations to determine the requirements for formation.

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  The Nonprofit Organizational Culture Guide

  Revealing the Hidden Truths That Impact Performance

  • Paige Hull Teegarden, Denice Rothman Hinden, Paul Sturm(Authors)
  • 2010(Publication Date)
  • Jossey-Bass

    (Publisher)

  They are likely to struggle with the balance in their interactions with government and end up in contradictory conversations around their ability to innovate and be flexible in relation to their desire to have efficient processes that allow them to serve more people. Legal Mandates In practice, the primary legal mandate that distinguishes nonprofit organizations from private business is the nondistribution constraint: nonprofit organizations can only retain and distribute revenue and assets for specified organizational pur-poses. Nonprofit organizations (like all corporations) must be governed by boards of directors; the directors’ legal duties vary by state, but usually include a duty of obedience to the organization ’ s mission. The duty of obedience to mis-sion is somewhat different from the duties of directors of for-profit businesses. An additional difference is that traditionally board members of nonprofits are volunteers. There are many IRS categories for nonprofit organizations. For 501 (c)(3) organizations, their purpose must be charitable. In some ways, legal and procedural requirements are expressions of the political and economic theo-ries about why nonprofits exist, and further distinguish nonprofits from business and government (Oleck, 1988). The echoes of economic theories about the existence of nonprofits are seen in the nondistribution constraint. A nonprofit organization ’ s net proceeds can-not be distributed among members or owners. An underlying idea here is that a nonprofit organization is not driven by the goal of maximizing the finan-cial bottom line and, instead, focuses on quality or on serving more people. (A similar concept was expressed in the contract failure theory; nonprofits are trustworthy because they are not profit driven.) In many organizations, this emphasis on quality and quantity has led to the placing of heightened value on the professional opinion of the staff providing services or running programs.

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  The Nonprofit Sector

  • Göran Sonnevi, Rosanna Warren, Rika Lesser(Authors)
  • 2006(Publication Date)
  • Yale University Press

    (Publisher)

  One set of tradeoffs facing a nonprofit organization is be-tween mission purity and the extensiveness of their opera-tions. For example, government contracts may allow Non-Profit social services providers to serve more clients but at the same time restrict their ability to select exactly the clien-tele they most wish to serve. These considerations add to models of the nonprofit firm a complexity that is largely ab-sent in models of for-profit firms, where decisions are as-sumed to be based on profit maximization. 1 The differences in the tax and statutory treatment of Non-Profits exist precisely because of a presumption that Non-Profits have a mission that is of general public interest. Some purposes receive greater government support than others; the nonprofits that qualify as 501(c) (3) organizations under U.S. tax law must serve charitable, religious, educational, scientific, or literary purposes, and donations to these and only these nonprofits are tax deductible. Finally, we note that the choice by the founder of any organization to seek nonprofit status is a voluntary one, and it need not be coincident with having a mission that dif-fers from profit maximization. There may be cases in which profit-maximizing firms find it advantageous to choose the nonprofit form, due to tax exemptions, for example. Con-versely, some mission-driven entrepreneurs may find that the nondistribution constraint is too restrictive and their mis-sion can be better pursued while organized as a for-profit firm. Although we link mission-driven firms with the Non-Profit form and profit-maximization with the profit-taking form, we acknowledge that this is a simplifying assumption. We turn our attention first to the markets in which Non-Profits acquire the resources necessary for production. We focus in turn on labor, land and physical capital, and dona-tions.

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  The Nonprofit Organizational Culture Guide

  Revealing the Hidden Truths That Impact Performance

  • Paige Hull Teegarden, Denice Rothman Hinden, Paul Sturm(Authors)
  • 2010(Publication Date)
  • Jossey-Bass

    (Publisher)

  nondistribution constraint: nonprofit organizations can only retain and distribute revenue and assets for specified organizational purposes. Nonprofit organizations (like all corporations) must be governed by boards of directors; the directors’ legal duties vary by state, but usually include a duty of obedience to the organization’s mission. The duty of obedience to mission is somewhat different from the duties of directors of for-profit businesses. An additional difference is that traditionally board members of nonprofits are volunteers. There are many IRS categories for nonprofit organizations. For 501 (c)(3) organizations, their purpose must be charitable. In some ways, legal and procedural requirements are expressions of the political and economic theories about why nonprofits exist, and further distinguish nonprofits from business and government (Oleck, 1988).

  The echoes of economic theories about the existence of nonprofits are seen in the nondistribution constraint. A nonprofit organization’s net proceeds cannot be distributed among members or owners. An underlying idea here is that a nonprofit organization is not driven by the goal of maximizing the financial bottom line and, instead, focuses on quality or on serving more people. (A similar concept was expressed in the contract failure theory; nonprofits are trustworthy because they are not profit driven.) In many organizations, this emphasis on quality and quantity has led to the placing of heightened value on the professional opinion of the staff providing services or running programs. In such nonprofits, conversations and behavior focus on how to improve the quality or quantity of services. On the level of organizational culture, this means many nonprofits will have chosen early in their lives to focus on quality and quantity, and the behaviors based on this decision are likely to be deeply ingrained. A corollary is that such organizations will focus energy on the mission or cause rather than on profit (or surplus revenue). Therefore, successes for the organization are likely to be related to its causes, and the beliefs and behaviors that led to these successes are likely to be deeply embedded in the organization.

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  Nonprofit Nation

  A New Look at the Third America

  • Michael O'Neill(Author)
  • 2002(Publication Date)
  • Jossey-Bass

    (Publisher)

  Business is a sig- nificant contributor to nonprofits, but nonprofits are a far more significant purchaser of business goods and services. There is an increasing number of business-nonprofit and sometimes business- nonprofit-government partnerships around such issues as the de- velopment of low-income housing, job training, community and regional planning, and the like. The connection between nonprofit and business management training is steadily growing. The enlight- ened self-interest of both business and nonprofits makes it likely that there will be a steady increase of interaction between these two sectors in the next quarter century. Another possibly growing relationship between nonprofits and business lies in the fundamental conceptualization of the nonprofit sector. Because of the work that it does and the government funding that it receives, the nonprofit sector has traditionally been viewed as a quasi-governmental arena. But much more attention needs to be paid to the fact that fees for services constitute the largest revenue source for nonprofits. Many nonprofits devote the bulk of their rev- enue-seeking efforts to product quality control, pricing, marketing, and sales. Nonprofits compete with other nonprofits, and sometimes with business and government agencies, for scarce financial, person- nel, and other resources, and above all for customers—patients, clients, students, audiences, subscribers, members, donors, and the like. In short, there are many similarities between nonprofits and business firms. Many nonprofits are probably more like businesses than they are like government. Also, nonprofits lack some of the most important features of government, including the power to tax, the power to punish, and the ability to serve everyone. More explo- ration of the business-nonprofit relationship could lead to some fun- damentally different conceptualizations of the nonprofit sector during the next quarter century.

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  Building Strong Nonprofits

  New Strategies for Growth and Sustainability

  • John Olberding, Lisa Barnwell Williams(Authors)
  • 2010(Publication Date)
  • Wiley

    (Publisher)

  Lastly, it is still the case that some organizations never seem to change and still do well. Those organizations may appear antiquated, but they survive over time because they successfully establish and keep revitalizing a following of supporters who remain loyal and pass that same commitment on to other family members and friends. The organization’s brand usually has evolved to be synonymous with qualities like trust, steadfastness, and the fulfillment of mission. There are not many such groups.

  What Is Changing?

  To begin, the age of doing good at any cost is coming to a close. Donors are no longer willing or able year after year to support the number of organizations that are appealing for funds at the levels required to provide the services needed to address community issues at the scale at which they now exist. Appeals for support to keep the organizations themselves from collapsing in times of trouble are increasingly less effective. Nonprofit organizations are the means, not the mission.

  If you think change is difficult you’re going to like irrelevance even less.

  —General Eric Shinseki, U.S. Army Chief of Staff

  Nonprofits are expected to think more like businesses.

  For many, that concept is and will be hard to understand, accept, and implement. But of all the changes taking place, this is the most universal and influential. In his monograph, Good to Great in the Social Sectors, Jim Collins points out that differences do, in fact, exist between the sectors, and these differences must be accounted for in management and planning. However, there is little dispute that the increased use of business skills, information, and methods is now important for the success of most nonprofit organizations. Ethics and the problems that arise in their absence are common to every sector.

  Nonprofits are beginning to use for-profit business methods.

  As a result, more nonprofit board members and executives are working on effectively applying business models to improve the performance of nonprofit organizations. Among the results they are producing are an increase in the social benefits they are creating for each donated dollar and the more effective use of resources, including staff and volunteer time. Tom Ralser effectively covers this concept in his book, ROI for Non-Profits

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  Handbook of Strategic Planning for Nonprofit Organizations

  • Siri N. Espy(Author)
  • 1986(Publication Date)
  • Praeger

    (Publisher)

  5 Marketing Your Organization If a tree falls in the forest and there's no one there to hear, does it make a noise? George Berkeley If your organization is terrific, wonderful and stupendous, and nobody knows about you or utilizes what you have to offer, how effective are you at doing what you do? This fundamental question forms the basis for the necessity of nonprofit marketing. Marketing is sometimes still thought of as a dirty word in nonprofit circles. It can conjure up images of snake oil salesmen and medicine men making extravagant claims about the value of their product to hu- manity, while their true motivation was simply to make a buck. While no one will argue with the merits of making a buck, the pursuit of profit is not the reason nonprofit organizations exist. Marketing can take on a new meaning when applied to nonprofit organizations. FOR-PROFIT VERSUS NONPROFIT MARKETING There are both similarities and differences in marketing concepts and techniques in for-profit and nonprofit organizations. In each case, the role of marketing is determining the needs of the consuming public, providing input on filling that need, and then making the public aware of the product or service that will fill the identified need. Whether the need is toothpaste or education, the process of marketing planning is somewhat similar. 58 Strategic Planning for Nonprofit Organizations One important difference between for-profit and nonprofit marketing can be the role and philosophy of creating a demand. While a toy com- pany would love to see one of their dolls in every household in the country, a social service agency would hardly look forward to the day that every family would become consumers of their services for disabled children. Since much of the nonprofit world is devoted to dealing with the problems of humanity, it is not appropriate in many cases to think of creating a market for one's services.

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  Leadership in Nonprofit Organizations

  A Reference Handbook

  • Kathryn A. Agard(Author)
  • 2010(Publication Date)
  • SAGE Publications, Inc

    (Publisher)

  A social enterprise is a strategy to engage in social purpose activities that generate income (Dees & Economy, 2001). Nonprofits recognize that they have resources or expertise that has value in the marketplace. So, for example: As an extension of a job training program, a community development-focused nonprofit might open a business in an economically distressed neighborhood. The business fills a gap in services for the community and provides job opportunities for community members, including the hardest to employ. An organization might partner with a corporation in the latter’s marketing campaign to raise money and raise awareness of a cause. There are ample examples of museum gift shops or thrift stores established to raise money for the parent nonprofit organization. These strategies might be organized as a program of a nonprofit organization, as a subsidiary to the nonprofit (both of which are referred to as hybrids in the literature), or as completely separate legal entities formed with the sole purpose of providing financial support to a nonprofit. The social enterprise strategy enables the nonprofit to pursue its mission and opens up a new stream of revenue for the organization. A small but growing body of literature focuses on social entrepreneurship, of which social enterprise is a part. Reflecting the nascence of the knowledge and the influence of scholars who represent various disciplines, social entrepreneurship reflects a broad, path-breaking strategy to significantly and innovatively solve social problems. Social enterprise 2 is not solely the province of nonprofit organizations: The strategy can and does form the basis of private-sector ventures by entrepreneurs who combine social responsibility and an economically viable idea. Within the context of nonprofit organizations, social enterprise is an entrepreneurial strategy because it also combines social value creation and revenue generation, which is innovatively achieved through market transactions

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