1 Chapter 13 Strategic Issues in Not-for-Profit Organizations.
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Transcript of 1 Chapter 13 Strategic Issues in Not-for-Profit Organizations.
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Not-for-Profit Organizations
Not-for-Profits:– Account (on average) for 1 in every 20
jobs around the world– 1990 – 1995 jobs grew by 23%
• Whole economy grew by 6.2%
– Employ > 25% of U.S. workforce– Own about 15% of nation’s wealth
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Not-for-Profit Organizations
Not-for-Profits:– Private nonprofit corporations
• Hospitals, private colleges, charities
– Public governmental agencies• Prisons, welfare departments, universities
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Not-for-Profit Organizations
Not-for-Profits Importance:– Public or collective goods
• Paved roads, police protection, museums, schools
– Preferred tax status• 501(c) (3) U.S. Tax Code
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Not-for-Profit Organizations
Key Differentiator:– Source of revenue
• Profit-making firm– Sale of goods and services to customers
• Not-for-profit firm (NFP)– Dues, assessment, or donations from
membership of sponsoring agency
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Not-for-Profit Organizations
Constraints on Strategic Management:– Service is often intangible
• Difficult to measure
– Client influence may be weak• Client payments - small source of funds
– Strong employee commitments• To professions• To “causes”
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Not-for-Profit Organizations
Strategic Decision Making:– Pattern of influence
• Derives from source of revenue
– Key to understanding management of NFP• Who pays for the delivered services
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Not-for-Profit Organizations
• NFP Strategies– Strategic Piggybacking:
• Development of a new activity for the NFP that would generate the funds needed to make up the difference between revenues and expenses.
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Not-for-Profit Organizations
PiggybackingPiggybacking
Something to Sell
Management Talent
Trustee Support
Entrepreneurial
Venture Capital
Resources