© 2014 SAGE Publications, Inc.Chapter 3: Theories of theChapter 3: Theories of theNonprofit Sector and NonprofitNonprofit ...
© 2014 SAGE Publications, Inc.Nonprofit Functions vs.Nonprofit Functions vs.GovernmentGovernment1. Accommodate diversity –...
© 2014 SAGE Publications, Inc.Theories Explaining the NonprofitTheories Explaining the NonprofitSectorSector• Discipline-c...
© 2014 SAGE Publications, Inc.History The nonprofit sector reflects voluntary traditions of earlyAmerica, changing social ...
© 2014 SAGE Publications, Inc.Common Characteristics of NonprofitCommon Characteristics of NonprofitOrganizationsOrganizat...
© 2014 SAGE Publications, Inc.External EnvironmentExternal Environment• Open systems -- nonprofits are dependent onand int...
© 2014 SAGE Publications, Inc.External EnvironmentExternal Environment (cont’d.)(cont’d.)• Resource dependency -- nonprofi...
© 2014 SAGE Publications, Inc.External EnvironmentExternal Environment (cont’d.)(cont’d.)• Isomorphism -- nonprofits in th...
© 2014 SAGE Publications, Inc.Internal Structures and OrganizationalInternal Structures and OrganizationalCultureCulture• ...
© 2014 SAGE Publications, Inc.Internal Structures and OrganizationalInternal Structures and OrganizationalCultureCulture• ...
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Overview of Nonprofit Sector Theory

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Chapter 3 from "Nonprofit Management," Third Edition by Michael J. Worth, https://secure.sagepub.com/protected/worth3e/icfr/intro.htm

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Overview of Nonprofit Sector Theory

  1. 1. © 2014 SAGE Publications, Inc.Chapter 3: Theories of theChapter 3: Theories of theNonprofit Sector and NonprofitNonprofit Sector and NonprofitOrganizationsOrganizations
  2. 2. © 2014 SAGE Publications, Inc.Nonprofit Functions vs.Nonprofit Functions vs.GovernmentGovernment1. Accommodate diversity – Since government’sobligation is to treat all citizens equally, nonprofitsprovide a voice and services in areas that are notaddressed by government.2. Undertake experimentation – Nonprofits have greaterfreedom to begin new programs on a smaller scalethan government is allowed to using public funds.3. Provide freedom from bureaucracy – Governmentmoves slowly by virtue of its bureaucracy whilenonprofits can respond to social needs more quicklyand efficiently.4. Attention to minority needs – Government prioritiesmust match those of the majority of voters whilenonprofits fill the gaps.
  3. 3. © 2014 SAGE Publications, Inc.Theories Explaining the NonprofitTheories Explaining the NonprofitSectorSector• Discipline-centered explanations• Historical -- distrust of government, voluntaryassociations, religion, First Amendment rights,population diversity, income tax and tax deductions,shifts in public policy• Social -- socialization, reinforcing norms and values,social capital, nonprofits as mediating structures• Political -- accommodating diversity,experimentation, freedom from bureaucracy,attention to minority needs• Economic -- private versus public goods, externalities,market and government failures, nonprofits as gapfillers, supply-side theories• Motivation theories (altruism versus self-interest)• Theory of the Commons
  4. 4. © 2014 SAGE Publications, Inc.History The nonprofit sector reflects voluntary traditions of earlyAmerica, changing social needs arising from various historicalmovements, and the tax structure as it has evolvedthroughout U.S. history.Sociology Involvement in nonprofits helps socialize individuals,reinforce norms and values, and develop social capital.Nonprofits are mediating structures that help people interactwith large bureaucracies, such as government and business.Political science Nonprofits exist to accommodate diversity, undertake socialexperimentation, provide freedom from bureaucracy, andaddress minority needs.Economics Nonprofit organizations fill gaps left by market failure andgovernment failure. Some nonprofits arise because of actionon the supply side, that is, social entrepreneurs or donorswho are motivated to solve a problem or promote a cause.Interdisciplinary Lohmann’s Theory of the Commons defines common goods asa separate category, distinct from private and public goods. Atleast some nonprofits exist to provide common goods togroups of individuals who share an interest in them.
  5. 5. © 2014 SAGE Publications, Inc.Common Characteristics of NonprofitCommon Characteristics of NonprofitOrganizationsOrganizations• Organized Entities – chartered as formal organizations;most incorporated under state law• Private – not agencies of the government but may receivesome funding from the government• Non-Profit Distributing – excess revenues are reinvestedin the organization; no dividends to individuals or investors• Self-Governing – control lies with a board of directors orboard of trustees responsible for the overall welfare of thenonprofit• Voluntary – board of directors and some service providersare volunteers• Of Public Benefit – exists to serve a social purposedeemed to be of public benefit
  6. 6. © 2014 SAGE Publications, Inc.External EnvironmentExternal Environment• Open systems -- nonprofits are dependent onand interact frequently with their externalenvironments• Shift away from emphasizing the internalmechanics of an organization’s operation(e.g., bureaucracy)• Focus on the relationship between anorganization and its external environment(e.g., social context)
  7. 7. © 2014 SAGE Publications, Inc.External EnvironmentExternal Environment (cont’d.)(cont’d.)• Resource dependency -- nonprofits aredependent on external constituencies forrevenue, information, and other resources• Goal displacement, performancemeasurement, internal impact, adaptationand management
  8. 8. © 2014 SAGE Publications, Inc.External EnvironmentExternal Environment (cont’d.)(cont’d.)• Isomorphism -- nonprofits in the same field tendto become more like each other as a result offacing similar influences from their environments
  9. 9. © 2014 SAGE Publications, Inc.Internal Structures and OrganizationalInternal Structures and OrganizationalCultureCulture• Attempt to explain why some organizations arerelatively bureaucratic and centralized, while othersare more entrepreneurial and flexible• Task environment -- internal structure as areflection of the day-to-day transactions that makeup an nonprofit organization’s work• Organizational culture – the unwritten rules thatprescribe dress, manner of doing business, socialmores in the office• In Search of Excellence (Peters and Waterman,1982)• Built to Last: Successful Habits of VisionaryCompanies (Collins and Porras, 1994 )
  10. 10. © 2014 SAGE Publications, Inc.Internal Structures and OrganizationalInternal Structures and OrganizationalCultureCulture• Attempt to explain why some organizations arerelatively bureaucratic and centralized, while othersare more entrepreneurial and flexible• Task environment -- internal structure as areflection of the day-to-day transactions that makeup an nonprofit organization’s work• Organizational culture – the unwritten rules thatprescribe dress, manner of doing business, socialmores in the office• In Search of Excellence (Peters and Waterman,1982)• Built to Last: Successful Habits of VisionaryCompanies (Collins and Porras, 1994 )

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