introduction to NOP

1. M.Alaa Edin Abdin
Non Profit
Management

2. Definition & characteristics
2
1
Nonprofits and profits
NPO Functions
Types of Nonprofit Organizations
2
3
4
Significant changes and Challenges
that facing NPO
5
NPO Financial sustainability6
Index

3. On a typical day, our lives are touched
repeatedly by the world of nonprofit
organizations.
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4. Definition
A corporation or an association that
conducts business for the benefit of the
general public without shareholders and
without a profit motive and as a result of
that they enjoy tax exempt status.
(Connolly and York, 2002; Renz et al., 2010)
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5. NPO characteristics
 Tax & regulatory characteristics : an organization that
 Enjoys special tax status.
 Faces a non-distribution constraint (profit=0).
Functional characteristics : an organization that forms to
- Perform “public tasks”
environmental protection, social service provision.
- Perform tasks for which there is demand but no supply from
for-profits or governments
religious activity, art museum.
- Influence the direction of public policy
political party, issue organization.
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6. Nonprofit and for-profit
The most basic difference is that nonprofit corporations cannot
operate for profit:
It has committed legally not to distribute any net earnings (profits)
to individuals with control over it members, officers, directors…..
Surplus must be used to further the mission of the organization:
,salaries, expenses, and the activities of the corporation……
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7. NPO Functions
The nonprofit sector exists to serve four critical functions
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8. NPO Functions
Service Provision:
They provide programs and services meet community need and
not being covered enough by the government.
Nonprofits also tend to have the ability to act faster then government
in response to an issue.
Social Capital:
The nonprofit sector can be seen as a bridge between capitalism
and democracy.
NPO develop a sense of community among the citizens by
providing a means to engage in social welfare.
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9. NPO Functions
Value Guardian:
NPO provide a mechanism for promoting individual initiatives for the public
good in way that allow members of a community to take action in an
attempt to change the community they live in.
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10. NPO Functions
Advocacy and Problem Identification
NPO provide a means for :
Drawing public attention to societal issues and
Give voice to under-represented people and points of view,
Integrate these perspectives into social and political life’.
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11. Types of NPO
The IRS recognizes 29 different types of nonprofits. Below are five of the
most common.
 Public Charities:
Public charities are by far the most common type of nonprofit they
receive funding through multiple channels and Their sizes and missions
vary widely.
 Environmental Charities
 International NGOs
 Health Charities
 Education Charities
 Arts & Culture Charties
 Animal Charities
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12. Types of NOP
 Foundations:
The primary purpose of foundations is to provide sponsorship to
other nonprofit organizations.They generally do not engage in direct
work.
Foundations can be established through a variety of means, including
family or community groups, or through
businesses.
 Social Advocacy Groups:
The mission of social advocacy groups is to further social or political
causes..
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13. Types of NOP
 Professional Trade Organizations:
Have the mission of providing programs and services to members of
the same profession.
Members pay dues and often receive discounted or free classes and
career training in their field.
 Fraternal Societies:
Fraternal societies are organizations with the mission of furthering the
development of their members. These can include service clubs,
lineage clubs or even secret society.
the Knights of Columbus
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14. changes and Challenges
 Increasing privatization of
government services
(education, health care,
social services, the arts).
 Increasing financial pressur
on nonprofits.
 Increasing concerns about the
efficacy of nonprofits.
 Increasing corporate social
responsibility initiatives and
funds.
Source: Social Enterprise: Private Initiatives for the Co
mmon Good (Harvard Business School)
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15. changes and Challenges
For most nonprofits, a core challenge is balancing
the need to maintain financial sustainability
the pursuit of organizational mission and maintenance of
consistent and quality programming over time.
Nonprofits face the challenge of balancing the need for profitability
over the long term (as a means to support their programs and
services) with the need to promote and prioritize their social mission.
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16. NPO Financial sustainability
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17. NPO Financial sustainability
Terms and concepts:
Financial capacity: consists of resources that give an organization
the ability to seize opportunities and react to unexpected threats
while maintaining general operations of the organization (Bowman, 2011).
Financial sustainability: refers to the ability to maintain financial
capacity over time (Bowman, 2011).
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18. NPO Financial sustainability
Terms and concepts:
the goal of financial sustainability for nonprofits is to maintain or
expand services within the organization while developing resilience
to occasional economic shocks in the short term (e.g., short-term
loss of program funds, monthly variability in donations). (Bowman, 2011).
Profitability: reflects maintenance of working capital to
support or continue operations of programs and services.
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19. NPO Financial sustainability
Financial Sustainability Challenges
challenges related to establishing financial sustainability and, in turn,
supporting programmatic or organizational success:
Reliance on external funding.
The nonprofit “brand”.
External expectations of partnerships.
Expectations of value and accountability.
Community engagement and leadership.
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20. NPO Financial sustainability
Financial Sustainability Challenges
Reliance on external funding:
with most nonprofits
receiving funding from at least four different sources:
The federal government and state and local government agencies.
Fnancial institutions.
Foundations.
philanthropic organizations (Besel, Williams, and Klak, 2011; Carman, 2001).
Streams of funding for nonprofits are delivered in a variety of ways
and typically include grants/contracts, fee for service, donations, and
foundation grants within and outside of an agency’s service area.
(Besel,Williams, and Klak, 2011).
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21. NPO Financial sustainability
Financial Sustainability Challenges
Creating a nonprofit “brand”:
Much like for-profit organizations, nonprofit organizations depend on
marketing and branding efforts to help promote and sustain their
programs and services. However, branding considerations are often
overlooked in the nonprofit sector.
Establishing a nonprofit “brand” that clearly and consistently
communicates the mission of the organization and the services
provided in a way that differentiates it from alternative nonprofit or
for-profit organizations (Kirk and Nolan, 2010; Renz et al., 2010).
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22. NPO Financial sustainability
Financial Sustainability Challenges
External expectations of partnerships:
Due to changes in the funding climate and the financial challenges
faced by many nonprofit organizations during these turbulent
economic times, nonprofits have begun to consider formalized
collaborations as a way to respond to the changing resource
environment and minimize competition for funding
(Connolly and York, 2002; Renz et al., 2010).
Demonstrating value and accountability to funders:
Foundations and other donors increasingly want access to up-to-date
information about an organization’s operations and finances as a way
of ensuring return on their investment (Bray, 2010).
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23. NPO Financial sustainability
Financial Sustainability Challenges
Promoting community engagement and leadership:
Establishing and engaging community board leadership and a system
of community volunteers provides nonprofits a resource of varied
experiences and expertise while bringing a sense of ownership to the
communities that they serve.
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24. References
-Bell, Jeanne, Jan Masoka, and Steve Zimmerman, Nonprofit Sustainability: Making Stra
tegic
Decisions for Financial Viability, San Francisco: Jossey-Bass, 2010.
-Blackwood, Amy S., Katie L. Roeger, and Sarah L. Pettijohn, The Nonprofit Sector
November 5, 2012:
http://www.urban.org/publications/412674.html
-Bowman, Woods, “Financial Capacity and Sustainability of Ordinary Nonprofits,” Nonp
rofit
Management and Leadership, Vol. 22, No. 1, Fall 2011, pp. 37–51.
-Connolly, Paul, and Peter York, Pulling Together: Strengthening the Nonprofit Sector T
hrough
Strategic Restructuring: Preliminary Evaluation Findings for the Strategic Solutions
Initiative, 1998–2001, 2002. As of November 16, 2012:
http://www.tccgrp.com/pdfs/index.php?pub=pers_rep_pulling.pdf
-RESEARCH REPORTFinancial Sustainability forNonprofit Organizations
A Review of the Literature
Lisa M. Sontag-Padilla • Lynette Staplefoote • Kristy Gonzalez Morganti bei RAND Cor
poration.
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