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Strategies of Non Profit

Organisations

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NPO?

NPO may be classified, as

• Private non profit organisations such as privatehospitals, private educational institutions andcharities

• Public governmental agencies such as

universities, libraries and museums.

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Nature :

• Depends heavily on the donations from members andfunds sponsoring agency 

• The beneficiaries doesn’t pay the full price for theservices they get.

• The more funds an NPO receive, the more marketoriented they becomes.

•  And the main objective is service maximization

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NFP Revenue

taxes dues

DonationsGrants

Product(good or service)

sales

Permits, userfees, andcharges

Revenue sources for not for profit organisations 

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Not for profitorganisation

foundations

Socialservice

cultural

PublicsectorHealth

services

Types of non profit organisations 

Professionalmembership

associates

charitable

educational

Causerelated religious

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Mission:

• Formulation of well defined mission is important to

NPOs to have a clear direction.

• According to Peter F. Drucker, “the best NPOs devote

a great deal of thought to defining their

organisation’s mission.” 

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Things to be considered:

•  What is our business?

•  What are our activities?

•  Who is the customer? Or who are our clients?

•  What does the customer expect?

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Vision •  A happy, healthy and creative child whose rights

are protected and honoured in a society that is built on respect for dignity, justice and equity for

all.

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Mission 

• To enable people to take responsibility for thesituation of the deprived Indian child and somotivate them to seek resolution through individualand collective action thereby enabling children torealise their full potential. And people to discovertheir potential for action and change. To enablepeoples' collectives and movements encompassing

diverse segments, to pledge their particularstrengths, working in partnership to secure, protectand honour the rights of India's children.

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Objectives and Goals:

• Many of the NPO’s fail in this matter, the reason behind that are:

• Many goals of the non profit organisations are valueladen

• Non profit goals often involve important trade offs

• Goals are often vague, broad and general like, “Protect

our environment” or “Provide high quality education.” 

Goals are often vague because leadership is subject to

frequent changes and it leads to change in direction.

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Things to be considered:

• Community services like health, educationaland environmental protection.

•  A centre for prevention of ill health, community problems.

• Education for the community regarding health,

sanitation, cleanliness, consumerism etc.• Training and education of volunteers who will

carry out the mission of the organisation.

• Providing facilities for physicians, teachers etc.

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Strategy formulation and implementation

• More or less same as compared to FPO

• some times the strategies of NPOs vary fromdifferent organisations

• The major reason for the difference is thepresence of greater political constraints upon

their strategic choices.

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2. Impact of Constraints on Strategy Formulation • Goal conflicts interferes with rational planning

•  An integrated planning focus tends to shift from results to resources

• Ambiguous operating objectives create opportunities for internal politics

and goal displacement

• Professionalism simplifies planning but adds rigidity 

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3. Impact of Constraints on Strategy Implementation • Decentralization is Complicated

• Linking pins for External-Internal integration become Important

•  Job Enrichment and Executive Development

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• Founded by Richard P. Nielsen an Associate Professor at the School of 

Management, Boston College, U.S.A.

• It refers to the development of a new activity for the non-profit

organizations for the purpose of generating funds needed to make up the

deficits in the budget.

• Example: Educational institutes running commercial complexes, hospitals

running a meditation class and fitness program.

1. STRATEGIC PIGGYBACKING

STRATEGIES OF NON-PROFIT ORGANIZATIONS 

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Edward Skloot, suggests that a non-profit organization have five resourcesbefore adopting a piggy backing strategy.

• Something to sell: The organizations should see whether it can find a market

for its goods or services.

Example: Exhibitions and outlets. 

• Critical mass of management talent: there must be enough people available

to nurture and sustain an income venture over the long haul. Example: IFAD (Funding Agency) and MRDS (NGO)

• Trustee support:

Example: Ramakrishna Mission Charitable Trust

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•Entrepreneurial attitude: management must be able to combine an interest in

innovative ideas with business . Converting innovative ideas to reality. 

Example: Taking up a Training to start a micro enterprise like

livestock rearing (poultry rearing). 

• Venture capital: engaging a joint venture with a business organization can

provide necessary funds to initiate the activities as well as marketing and

management support. 

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Merging with an organization with a similar mission can help to reduce

administration costs.

Examples: Non-profit hospitals .

2. mergers

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• It solves the problems of storage of funds, marketing of services and

management of non-profit organizations.

• This strategy is more popular in educational institutions in India.

• Example: Business schools.

They get funds, manpower like guest lectures, and employment for

their graduates (placement)

3. Linkage with a Profit – making Organizations: 

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4. Strategic Alliance:

• Is pursued by non- profit organisations toincrease their capacity and to get more

resources and to serve the clients better. Instrategic alliance, cooperative ties areestablished between organizations without

undermining their identity.• For example: ties between universities to evolve

common programs

• between universities and business organizations t

pursue research projects.

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Strategic Evaluation And ControlStrategic evaluation and control is rather very difficult as the

objectives and goals are unclear. For example, the efficiency

of hospital can be measured in a number of ways.

Number of patients treated,

Number of patients cured,

Number of medical doctors,

Number of total staff,

Number of beds etc.

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Impact of the Constraints on Evaluation and Control 

Rewards and Penalties have little or no relation to performance

Control the inputs heavily rather than output

STRATEGY EVALUAT ION AND CONTROL

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Measures to control the constraints:• Select a dynamic and forceful leader

• Develop a mystique:

• Generate rules and regulations

• Appointment of a strong board

• Establishment of performance based budgets.

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