Overall Program Objectives

Prof. Stephen Block

Overall Program ObjectivesThis series of four courses will focus on management

principles and practices as applied to: Consumer Behavior Corporate Governance Economic Systems and Transformation Essential competencies required to effectively

manage and govern Nonprofit Organizations [that can lead to collaborative partnerships with private and public sector organizations]

Course ObjectivesFor Monday

26 September 2005

Learning Objectives1) Culture as a management issue

2) The relevance of studying Nonprofit Management

3) The Scope of America’s Nonprofit Sector

4) A contextual framework provided by history and tradition

A Challenge of Terms

What do we mean by the word “Culture?”

cultural competencycultural attachéculture-shockcultured-personcultural revolutioncultural exchangecounter-culturearts & culturecultural herocultured pearlcultural centeramong others

Culture & Management

In the context of discussing and learning about the practice of management, the term Culture takes on two different complex forms and applications.

Cultural Impact

Values, Beliefs, Assumptions, Artifacts, Language, Mores, Styles of Learning

Internal Organizational Perspective

Com

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Soci

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Culture & ManagementTwo Forms:

1. Culture from an external or comparative Social/Societal Perspective

2. Culture from an internal, micro- perspective of an organizational entity.

Societal DifferencesAs Managers, we need to be aware that there are,

in fact, differences of style, customs, ways of working and thinking as reflected in how a person has been “acculturated” in his/her upbringing.

Cross-Cultural Differences

Differences based on:

Nationality:

Country of origin

Regional differences

Local Community

Questions Or comments

Context & Scope of the American

Nonprofit Sector

Scope of the Nonprofit Sector There are approx. 1.6 million identifiable

organizations in the nonprofit sector

Nonprofits represent about 6% of all types of organizations among the three sectors of government, nonprofit,and for-profit.

Scope of the Nonprofit Sector Revenues of $670 billion, equivalent to 9% of

the US gross domestic product (GDP)

Exceeds the GDP of Australia, Canada, India, Netherlands, Spain and most of the countries in the world

Scope of the Nonprofit Sector

Nonprofits control cash, investments and property that exceed $1 trillion.

Scope of the Nonprofit Sector

Approximately 134 million people work in full and part-time positions in all types of nonprofits. (11 million people work as employees of 501 C 3 & 4 nonprofit organizations.

Scope of the Nonprofit Sector

In addition to paid employees, nonprofits employed the equivalent of 9.4 million fulltime volunteers who contributed 12.7 billion hours of volunteer time, estimated at $250 billion of free labor.

56% of the adult population volunteer an average of 3.5 hours per week.

Scope of the Nonprofit Sector

11% of all employees in the US economy (combining paid employees and volunteers) work for nonprofit organizations.

The Context of the Sector Five cogent explanations for the origin of the

nonprofit sector: Historical Market Failure Government Failure Pluralism Solidarity

Historical Context Society preceded the establishment of the

state. In the absence of government organizations,

individuals had to deal with common concerns and problems on their own.

It was advantageous to join with other people in associations, organizations, and voluntary groups.

Historical Context A provision of a range of services (charity,

housing, health, adoption, legal, vocational, etc) were developed without government support or regulations.

Market Failure Economists point to the marketplace for the

production of goods and services that are consumed individually.

For goods and services that are consumed collectively by groups of people, problems can arise in the marketplace. Individuals have incentives to be “free riders”

Market Failure Since all economically rationale individuals

will make the same calculation, the result will be inadequate production of collective goods, such as : security/community safety clean streets parks and nature preserves Etc.

Market Failure There are two solutions to market failure:

Government - through the levy of taxes compels all citizens to assume the cost of providing collective goods.

Market Failure

Nonprofits - groups of individuals can pool their resources to produce goods and services they mutually want but cannot convince a majority of citizens to support.

Groups linked by common social, economical, and/or cultural goals can provide the collective goods desired in the absence of majority endorsement or government involvement.

Government Failure

Democratic governments encounter difficulties in providing collective goods: mobilizing for a majority of citizen support

necessary for public action is a long and arduous process.

When government has won a majority of citizen support, citizens often find fault with the size, cost, and unresponsive nature of government systems.

Government Failure

Regardless of the validity of the complaints, citizens may prefer that a non-governmental organization deliver the services.

These preferences have fueled “privatization,” a complex pattern of cooperation and interdependence between the public and nonprofit sectors.

Pluralism Expressive aspects leading to the existence of

nonprofits. Gives a voice to the great diversity of viewpoints

held by citizens.

The most significant social reforms known in this nation are attributed to a voluntary sector

Solidarity Preserves a capacity for joint action among

citizens. Coming together to pursue common purposes

through associations, voluntary groups, and organizations.

Alex de Tocqueville observed that in democratic societies, equality of conditions can render individuals relatively powerless.

Blurring Boundaries Nonprofit organizations do many things that

are also done by for-profit businesses and government entities. While the boundaries are not clear-cut, there are some distinctive activities (such as religious worship).

The Theory of the Third SectorA Context for Understanding Today’s Nonprofit Sector & Civil Society Activities

Unlike the study of political science which can more easily be traced to Plato and Aristotle, or the field of medicine capable of being traced to Hippocrates of Cos, the lineage of nonprofit management is not clear-cut and precise.

-- Stephen R. Block

“A History of the Discipline”

The Origins of the Sector1. The Roots of Charity and Philanthropy

2. The Development of the Volunteer Role

3. The Evolution of Tax Exemption

4. The Adaptation of Management Techniques for Nonprofit Organizations

The Roots of Charity and Philanthropy

Sir Arthur Keith suggests

biological aspects to altruism.

Evolving from the role of welfare and

preservation among primitive societies.

Developing more complex societies

using rules and structure, such as

the Babylonians Code of Hammurabi.

Religious doctrines,

ideology and influences on giving.

The Egyptians notion of blessed giving,

2300 years before the Christian Era

The Greek philosophy of

charitable giving to fortify the community.

The Old Testament

The Book of Deuteronomy and the commandment of tithing.

Maimonides and the

Jewish concept of community giving.

The Scriptures of Matthew

Helping the poor and needy

The Reformation and the breakup of England’s feudal system.

The Poor Laws of 1601 codified:- Public responsibility

- Local responsibility - Relatives’ responsibility

Settlement House Movement

Charitable Organization Movement

Federated Fundraising

The Development of the Volunteer Role

The evolution of Volunteerism parallels the evolution of charity and philanthropy

The Observations of

Alexis de Tocqueville

What is Volunteerism?

Individualism versus Social Constructivism

The Influences of Participation

- Protestant Patrician Tradition

- Urban Ethnic Influence

- Organizational Tradition

- Impact of Philanthropy

The Evolution & Impact of Tax-Exempt Status

The relationship between

tax and charity is a symbiotic one.

Tax deductibility is an

inducement for charitable behavior.

In the United States:

Tax exemption follows from an historical, unwritten rationale for tax exemption to various statutes as Revenue Acts.

In the United States:

Internal Revenue Code 501 (c) (3)

is the benchmark for tax-exemption policy.

From Management Practice to the Emergence of Nonprofit Management

The advancement of management

practices can be traced from the Dark Ages

to the development of commerce in the Mediterranean.

Management Concepts from

Adam Smith’s Wealth of Nations.

Division of Labor

Management Thought

The influences of: Henry R. TowneJoseph WhartonFrederick Taylor

Henry GanttHarrington Emerson

Henry FayolHorace B. Drury

The Human Relations Movement

The Contingency Approach &

The Systems Approach

Management in the Modern Organization

Management tools are being widely used in the nonprofit sector and applications of those tools are being modified to achieve goals that are not addressed in the for-profit or government sectors.

Or, in some cases, nonprofits address goals as equal partners with government and the for-profit sector.

The End