Strategic Issues in Not-for-Profit Organizations

Prentice Hall, 2004

Chapter 13 Wheelen/Hunger

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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Chapter 13 Wheelen/Hunger

Not-for-Profit Organizations

Not-for-Profits Importance:
Public or collective goods
Paved roads, police protection, museums, schools

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Chapter 13 Wheelen/Hunger

Aspects of Life Best Managed by Not-For-Profit Organizations

Religion Education Charities Clubs, interest groups, unions Health care Government
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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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Chapter 13 Wheelen/Hunger

The Effects of Sources of Revenue on Patterns of ClientOrganization Influence

Prentice Hall, 2004

Chapter 13 Wheelen/Hunger

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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Chapter 13 Wheelen/Hunger

Not-for-Profit Organizations

Strategic Management Concepts:

Institutional advantage
NFP performs its tasks more effectively than other comparable organizations

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Chapter 13 Wheelen/Hunger

Not-for-Profit Organizations

Strategic Concepts for NFP:

SWOT Mission statements Stakeholder analysis Corporate governance Portfolio analysis
Strategic piggybacking
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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

Constraints on Strategic Management:

Resource Contributors
Intrusion on internal management Fund contributors and government

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Not-for-Profit Organizations
Constraints & Strategy Formulation:
Goal conflicts
Interfere with rational planning

Integrated planning focus

Shift from results to resources

Ambiguous operating objectives

Internal politics Goal displacement

Professionalization
Simplifies detailed planning Adds rigidity
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Not-for-Profit Organizations

Complications to Implementation:
Decentralization is complicated
Defensive centralization

Linking Pins
External-internal integration

Job enlargement and development

Restrained by professionalism
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Not-for-Profit Organizations

Complications to Evaluation and Control:

Rewards and penalties
No relation to performance

Inputs vs. outputs

Heavily controlled

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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

NFP Strategies
Mergers
Focus on reducing costs

Strategic alliances
Developing cooperative ties with other organizations

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Not-for-Profit Organizations
Something to Sell

Management Talent

Piggybacking

Resources

Trustee Support

Entrepreneurial

Venture Capital
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