The Jossey-Bass Handbook of Nonprofit Leadership and Management ebook

Table of Contents

Title Page

Copyright Page

List of Tables

Table of Figures

Table of Exhibits

PREFACE

INTENDED AUDIENCE

OVERVIEW OF THE CONTENTS

ACKNOWLEDGMENTS

THE EDITOR

THE CONTRIBUTORS

PART ONE - CONTEXT AND INSTITUTIONS

CHAPTER ONE - Historical Perspectives on Nonprofit Organizations in the United States

ASSOCIATIONS IN EARLY AMERICA

VOLUNTARY ASSOCIATIONS IN THE NEW REPUBLIC, 1780-1860

NATION BUILDING, 1860-1890

NEW CHARITABLE VEHICLES, 1890-1930

BIG GOVERNMENT, THE NONPROFIT SECTOR, AND THE TRANSFORMATION OF PUBLIC LIFE, 1930-1980

THE CONSERVATIVE REVOLUTION AND THE NONPROFIT SECTOR, 1980-2000

THE NONPROFIT SECTOR AND THE GLOBAL CHALLENGE

CONCLUSION

CHAPTER TWO - Nonprofit Organizations and Social Institutions

THE HUMAN SIDE OF NONPROFIT INSTITUTIONS

THE ENVIRONMENT OF NONPROFIT MANAGEMENT

GOVERNMENT, POLITICS, AND LAW

NONPROFITS AND THE ECONOMY

MAJOR PLAYERS ON THE NONPROFIT STAGE

CONCLUSION: A COUPLE OF BIG QUESTIONS

CHAPTER THREE - The Legal Framework of the Nonprofit Sector in the United States

PREFORMATION

FORMATION

OPERATION

COMPLIANCE

TERMINATION

CHAPTER FOUR - The Changing Context of American Nonprofit Management

CHALLENGES AND OPPORTUNITIES: THE CHANGING CONTEXT OF NONPROFIT ACTION

THE NONPROFIT RESPONSE: A STORY OF RESILIENCE

IMPLICATIONS FOR NONPROFIT MANAGERS

CONCLUSION

CHAPTER FIVE - The Internationalization of the Nonprofit Sector

BECOMING INTERNATIONAL, GOING GLOBAL

INTERNATIONALIZATION AND THE NONPROFIT SECTOR

FACTORS FAVORING INTERNATIONALIZATIONS

IMPLICATIONS FOR MANAGEMENT

CONCLUSION

PART TWO - KEY LEADERSHIP ISSUES

CHAPTER SIX - Board Leadership and Development

THE LIMITATIONS OF MODELS AND BEST PRACTICES

THE BOARD’S RESPONSIBILITIES

THREE WAYS TO ENHANCE BOARD EFFECTIVENESS

THE DISCIPLINE OF BOARD DEVELOPMENT

FOUR VEHICLES FOR BOARD DEVELOPMENT

ACTIVATING ACCOUNTABILITY MECHANISMS

SUMMARY

CHAPTER SEVEN - Executive Leadership

EXECUTIVE CENTRALITY

BOARD-CENTERED LEADERSHIP SKILLS OF EFFECTIVE EXECUTIVES

LEADERSHIP ACROSS THE BOUNDARIES: IMPACT IN THE EXTERNAL WORLD

USING THE POLITICAL FRAME

SUMMARY

CHAPTER EIGHT - The Strategy Change Cycle

A TEN-STEP STRATEGIC PLANNING PROCESS

TAILORING THE PROCESS TO SPECIFIC CIRCUMSTANCES

SUMMARY

CHAPTER NINE - Ethical Nonprofit Management

OVERVIEW

WHAT ARE “ETHICS”?

PROFESSIONAL ETHICS

MISUNDERSTANDING PROFESSIONAL ETHICS

CORE VALUES AND THEIR ORIGINS IN THE VOLUNTARY SECTOR

ETHICAL MANAGEMENT IN ETHICAL ORGANIZATIONS

FROM IDEALS TO OPERATIVE VALUES

CREATING AND MAINTAINING A CULTURE OF INTEGRITY

SUMMARY

CHAPTER TEN - Nonprofit Lobbying

LOBBYING AND ADVOCACY: SIMILARITIES AND DIFFERENCES

A FEW BASICS ABOUT HOW TO LOBBY: AN INDIVIDUAL PERSPECTIVE

ANYONE CAN LOBBY: AN ORGANIZATIONAL PERSPECTIVE

LOBBYING LAW

THE LEGISLATIVE PROCESS AND YOUR LOBBYIST

THE GOVERNMENT RELATIONS COMMITTEE AND THE LEGISLATIVE NETWORK

THE 1976 LOBBY LAW AND THE 1990 INTERNAL REVENUE SERVICE REGULATIONS: AN OVERVIEW

WHEN DOES LATER USE OF MATERIALS CAUSE THEIR COSTS TO BE COUNTED AS LOBBYING?

DOES ELECTING TO BE GOVERNED BY THE NEW REGULATIONS COMPLICATE RECEIVING GRANTS ...

WHEN WILL A PUBLIC CHARITY’S TRANSFERS TO A LOBBYING ORGANIZATION BE COUNTED AS ...

WHAT ACCOUNTING IS REQUIRED FOR LOBBYING EXPENDITURES?

HOW ARE EXPENDITURES THAT HAVE BOTH LOBBYING AND NONLOBBYING PURPOSES TREATED?

WHEN ARE SEVERAL NONPROFITS TREATED ON AN AGGREGATE BASIS?

FOR FURTHER INFORMATION

ELECTION PROCEDURE FOR NONPROFITS

SUMMARY

CHAPTER ELEVEN - Strategic Alliances

DRIVING FORCES OF STRATEGIC ALLIANCE FORMATION

STRATEGIC ALLIANCES DEFINED

TYPES OF STRATEGIC ALLIANCES

STAGES OF STRATEGIC ALLIANCE DEVELOPMENT

PARTNER SELECTION

CHALLENGES TO STRATEGIC ALLIANCE FORMATION AND IMPLEMENTATION

FACTORS CONTRIBUTING TO ALLIANCE SUCCESS

LESSONS FROM THE FIELD

CONCLUSION

PART THREE - MANAGING OPERATIONS

CHAPTER TWELVE - Marketing for Nonprofit Managers

WHAT IS MARKETING?

MARKETING STRATEGIES AND THE MARKETING MIX

THE ROLE OF MARKETING RESEARCH IN OUR UNDERSTANDING OF CONSUMER BEHAVIOR

SEGMENTATION AND TARGET MARKETING

COMPETITION, POSITIONING, AND BRANDING

MANAGING PRODUCTS AND PROGRAMS IN THE NONPROFIT SECTOR

PRICING, COSTS, AND VALUE

DESIGNING MARKETING CHANNELS

MANAGING COMMUNICATION PROGRAMS

CURRENT ISSUES

CHAPTER THIRTEEN - Designing and Managing Volunteer Programs

ESTABLISHING THE RATIONALE FOR VOLUNTEER INVOLVEMENT

INVOLVING PAID STAFF IN VOLUNTEER PROGRAM DESIGN

INTEGRATING THE VOLUNTEER PROGRAM INTO THE ORGANIZATION

CREATING POSITIONS OF PROGRAM LEADERSHIP

PREPARING JOB DESCRIPTIONS FOR VOLUNTEER POSITIONS

EMERGING JOBS FOR VOLUNTEERS: VIRTUAL VOLUNTEERING AND EPISODIC VOLUNTEERING

MEETING THE NEEDS OF VOLUNTEERS

MANAGING VOLUNTEERS

EVALUATING AND RECOGNIZING THE VOLUNTEER EFFORT

SUMMARY AND CONCLUSION

CHAPTER FOURTEEN - Evaluating the Effectiveness of Nonprofit Organizations

WHAT IS ORGANIZATIONAL EFFECTIVENESS EVALUATION?

WHY EVALUATE? THE CONTEXT OF OEE

THE IDEAL EVALUATION PROCESS AND ITS PROBLEMS

RECENT RESEARCH INTO REAL-LIFE EVALUATION EXPERIENCES

RECENT TOOLS FOR IMPROVING OEE

CONCLUSION

CHAPTER FIFTEEN - Managing the Challenges of Government Contracts

THE RISE OF GOVERNMENT CONTRACTING WITH NONPROFIT SERVICE AGENCIES

THE CONTRACTING REGIME AND ITS MANAGEMENT IMPLICATIONS

STRATEGIC MANAGEMENT IN THE AGE OF CONTRACTING

STRENGTHENING POLITICAL ADVOCACY AND ASSOCIATIONAL ACTIVITY

CONTRACTING REFORM AND NONPROFIT MANAGEMENT

SUMMARY

CHAPTER SIXTEEN - Outcome Assessment and Program Evaluation

PLANNING THE PROCESS FOR OUTCOME ASSESSMENT

DEFINING PROGRAM GOALS

MEASURING GOALS

DATA COLLECTION, ANALYSIS, AND REPORTING

TWO APPROACHES TO PROGRAM EVALUATION

WHO DOES THE EVALUATION?

DETERMINING THE PURPOSE OF THE EVALUATION

OUTCOME EVALUATION DESIGNS

PROCESS EVALUATION

DATA DEVELOPMENT, REPORT WRITING, AND FOLLOW-UP

SUMMARY

PART FOUR - DEVELOPING AND MANAGING FINANCIAL RESOURCES

CHAPTER SEVENTEEN - Designing and Managing the Fundraising Program

FUNDRAISING AS A MANAGEMENT CONCEPT

FUNDRAISING AS A MANAGEMENT PROCESS

ISSUES IN FUNDRAISING MANAGEMENT

SUMMARY

CHAPTER EIGHTEEN - Enterprise Strategies for Generating Revenue

NEW DEVELOPMENTS IN THE FIELD

TYPES OF ENTERPRISE STRATEGIES

BUSINESS VENTURES

QUESTIONS NONPROFITS TYPICALLY ASK ABOUT BUSINESS VENTURING

QUESTIONS NONPROFITS SHOULD ASK ABOUT BUSINESS VENTURING

HOW NONPROFITS CAN FIND THE ANSWERS TO THEIR QUESTIONS

LESSONS LEARNED FROM SUCCESS AND FAILURE

SUMMARY

CHAPTER NINETEEN - Financial Accounting and Financial Management

FINANCIAL ACCOUNTING

FINANCIAL MANAGEMENT

SUMMARY

CHAPTER TWENTY - Management Accounting

FULL COST ACCOUNTING

DIFFERENTIAL COST ACCOUNTING

RESPONSIBILITY ACCOUNTING

CONCLUSIONS

CHAPTER TWENTY-ONE - Risk Management

BENEFITS OF RISK MANAGEMENT

STARTING A RISK MANAGEMENT PROGRAM

THE RISK MANAGEMENT PROCESS

APPLYING THE RISK MANAGEMENT FRAMEWORK

VOLUNTEER LIABILITY AND RISK MANAGEMENT

THE ROLE OF INSURANCE IN A RISK MANAGEMENT PROGRAM

SUMMARY

PART FIVE - MANAGING PEOPLE

CHAPTER TWENTY-TWO - Keeping the Community Involved

NEEDS ASSESSMENT AND PROGRAM PLANNING

POSITION DEVELOPMENT AND DESIGN

RECRUITMENT

INTERVIEWING AND MATCHING

ORIENTATION AND TRAINING

VOLUNTEER MOTIVATION

SUPERVISION OF VOLUNTEERS

EVALUATION

INNOVATION IN VOLUNTEER MANAGEMENT

CONCLUSION

CHAPTER TWENTY-THREE - Finding the Ones You Want, Keeping the Ones You Find

WHY PUT PEOPLE FIRST?

FIRST THINGS FIRST: MAKE IT LEGAL

PUTTING IT ALL TOGETHER: THE PROCESSES OF HUMAN RESOURCES

RETENTION THROUGH MOTIVATION

DISCHARGE, LAYOFFS, AND VOLUNTARY TURNOVER

MAKE OR BUY: THE OPPORTUNITIES AND PERILS OF OUTSOURCING HUMAN RESOURCES

SUMMARY: ALONG THE ROAD OF PEOPLE FIRST

CHAPTER TWENTY-FOUR - Total Rewards Programs in Nonprofit Organizations

TOTAL REWARDS: INTEGRAL TO ORGANIZATIONAL STRATEGY

TRADITIONAL BASE COMPENSATION PRINCIPLES

INCENTIVE PAY IN NONPROFITS

EXECUTIVE PAY IN NONPROFITS

BENEFITS

JUSTIFYING REWARDS COSTS TO DIRECTORS

SUMMARY

CHAPTER TWENTY-FIVE - Principles of Training for Volunteers and Employees

PRINCIPLES TO GUIDE ADULT LEARNING

The Brain

CONDUCTING A NEEDS ASSESSMENT

STAFF AND VOLUNTEER TRAINING

FORMAL AND INFORMAL TRAINING

ORGANIZING TRAINING ACTIVITIES FOR EFFECTIVENESS

THE COST OF TRAINING

COMPETENCIES OF THE TRAINER

SUMMARY

CONCLUSION: THE FUTURE OF NONPROFIT MANAGEMENT

NAME INDEX

SUBJECT INDEX

Table of Figures

Figure 5.1 . Growth in the Number of International Nongovernmental Organizations, 1970-2002.

Figure 5.2 . Aid from the OECD to Developing Countries and Share of NGOs as a Percentage of the Total, 1970-1999.

Figure 5.3 . Composition of NGO Aid to Developing Countries, 1970-1999.

Figure 5.4 . Growth in INGO Membership, 1990-2000, by Region.

Figure 5.5 . Growth in INGO Membership, 1990-2000, by Country Income Group.

Figure 5.6 . INGOs, 1990-2000, by Purpose.

Figure 8.1 . The Strategy Change Cycle.

Figure 8.2 . Strategic Planning System for Layered or Stacked Units of Management.

Figure 11.1 The Partnership Matrix.

Figure 11.2 Alliance Continua

Figure 11.3 . Stages of Strategic Alliance Development.

Figure 12.1 . Positioning Map for Hypothetical Immigrant-Serving Agencies.

Figure 14.1 . Generic Measurement-Based Logic Model.

Figure 14.2 . Generic Level-Based Logic Model.

Figure 19.1 . Business Risk Versus Financial Risk.

Figure 20.1 . Resource Usage: A Conceptual Framework.

Figure 20.2 . Types of Cost Behavior.

Figure 20.3 . Fixed and Variable Costs Versus Mission Center and Service Center Costs.

Figure 20.4 . Graphic Representation of Revenue, Fixed Costs, and Variable Costs.

Figure 20.5 . Phases of the Responsibility Accounting Process.

Figure 22.1 . The Volunteer Management Process.

Figure 24.1 . Regression Analysis Illustrating the Relationship of Current Salaries to Market Data.

Figure 24.2 . Broadbanding Superimposed on a Traditional Salary Structure.

Figure 25.1 . Praxis.

List of Tables

Table 4.1 . Growing For-Profit Competition in Selected Fields, 1982-1997.

Table 4.2 . Growth in Federal Entitlement Program Spending, 1980-1999.

Table 4.3 . Changing Structure of Nonprofit Revenue, 1977-1997.

Table 5.1 . Size of International Nonprofit Sector Activities in Five Countries, 1995.

Table 5.2 . Revenue Structure of International Nonprofit Sector Activities Versus Total Nonprofit Sector in Five Countries, by Revenue Source, 1995.

Table 5.3 . Income of INGOs Registered with USAID, 1982-2001 (in billions of U.S. dollars)

Table 5.4 . Phases of INGO Development.

Table 10.1 . Lobbying Ceilings Under the 1976 Lobby Law.

Table 13.1 . Motivation for Involvement in Volunteer Work, 1965-1991 (percentages).

Table 17.1 . Gift Range Chart Analyzing the Previous Year’s Giving.

Table 17.2 . Gift Range Chart for $500,000 Annual Fundraising Goal.

Table 17.3 . Suggested Guidelines for Fundraising Costs.

Table 22.1 . Reasons Why People Stop Volunteering.

Table 22.2 . Negative Perceptions Among Volunteers in the United Kingdom.

Table 24.1 . Assigning Points to Factor Levels.

Table 24.2 . Job Evaluation Spreadsheet.

Table of Exhibits

Exhibit 6.1 . Primary Governance Roles Ascribed to Boards.

Exhibit 6.2 . Board Development Practices Linked to Board Competencies.

Exhibit 6.3 . Sample Governance Committee Job Description.

Exhibit 6.4 . Ingredients of an Effective Formal Board Self-Assessment Process.

Exhibit 8.1 . Balanced Scorecard for the United Way of Southeastern New England.

Exhibit 16.1 . Impact Model for a Training Program for Executives of Local Branches of a National Nonprofit.

Exhibit 17.1 . Three Stages of Fundraising Development.

Exhibit 17.2 . Fundraising Management Grid.

Exhibit 19.1 . Sample Statement of Activities for Anderson College for the Year Ended June 30, 2003, with Comparative Figure for 2002 (in thousands).

Exhibit 19.2 . Sample Balance Sheet for Anderson College as of June 30, 2003 and 2002 (in thousands).

Exhibit 19.3 . Examples of Leverage.

Exhibit 19.4 . A System of Ratios.

Exhibit 19.5 . Cash Needs Associated with Growth.

Exhibit 19.6 . Summary of Ratio Computations.

Exhibit 20.1 . Contribution Income Statement for Clearwater Transportation Service.

Exhibit 20.2 . Types of Responsibility Centers.

Exhibit 20.3 . Examples of Cost Drivers in a Hospital.

Exhibit 20.4 . Nonprofit Management Accounting: A Summary.

Exhibit 21.1 . Rating the Risks Identified by an After-School Tutorial Program.

Exhibit 21.2 . Sample Item on a Risk Management Action Plan.

Exhibit 23.1 . Sample Human Resource Audit Checklist.

Exhibit 23.2 . The Candidate Selection Process.

Exhibit 23.3 . Relevant Human Resource Questions as a Reflection of Organization Size and Life Cycle.

Exhibit 24.1 . Selected Sources of Salary Surveys.

Exhibit 25.1 . Training or Lesson Plan.

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Library of Congress Cataloging-in-Publication Data

The Jossey-Bass handbook of nonprofit leadership and management/ Robert D. Herman and associates.—2nd ed. p. cm. Includes bibliographical references and index.

ISBN 0-7879-6995-8 (hardcover)

1. Nonprofit organizations—Management. I. Herman, Robert D., 1946- HD62.6.J67 2004 658’.048—dc22 2004015799

PREFACE

All of us associated with The Jossey-Bass Handbook of Nonprofit Leadership and Management are pleased to have the opportunity to present this second edition. Of course, all the chapters have been revised and updated to reflect current research, theory, and practice. Most chapters are again written by the same authorities who wrote the first-edition chapters, though second authors have changed in a couple of instances.

Also, one chapter has been added in place of a chapter prepared for the first edition; Chapter Eleven, “Strategic Alliances,” considers one of the areas of rapid development since the publication of the first edition. Chapter Twenty-Three, on finding and keeping the right employees, has two new authors, Mary Watson and Rikki Abzug, both of whom have substantial expertise in researching and experience in working with nonprofit organizations. Their chapter deals with a perennial issue in nonprofit organizations, attracting and retaining excellent employees, usually without the ability to pay as much as private sector or often government employers.

Nonprofit organizations continue to be different, even as they change and evolve due to the changing funding and institutional environments they face. They are unlike both business and government in certain fundamental ways while similar in other ways. Nonprofit organizations, like businesses, rely on voluntary exchanges to obtain revenues and other resources. In business, customers supply the resources for the service they receive. Unlike business, nonprofit organizations (especially publicly supported charities, the sort of nonprofit organization on which this volume focuses) typically depend, at least to some extent, on one group, donors or government, for the resources necessary to provide a different group, the clients or beneficiaries, with services. Indeed, one reason nonprofit organizations exist is that the services they offer would not be provided otherwise. This is the justification for the tax and other public policy preferences nonprofit organizations receive—they provide public goods that would otherwise not be provided, either by business or by government.

A public good, in the economic sense, is one that has two special features: first, it costs no more to provide it to many than it does to a few, and second, there is no easy way to prevent those who have not contributed to its provision from consuming it once it has been produced (economists call this the “free rider” problem). The production of public goods—clean water, for example—is typically the responsibility of government. In The Nonprofit Economy (Harvard University Press, 1988), Burton Weisbrod argues that democratic governments are constrained to provide public goods at the level that satisfies the median voter, as preferences for and willingness to pay taxes in support of public goods varies. Thus there is unsatisfied demand for some public goods, and nonprofit organizations are often created to meet such demands.

Nonprofit organizations, like governments, generally supply services with public goods characteristics, but unlike governments, they cannot compel users to pay for those services. Moreover, nonprofit organizations, unlike governments, need not provide their services to all who meet eligibility requirements. Nonprofit organizations may serve particular interests and groups. The particularism of nonprofit organizations enhances the articulation and advocacy of a wide range of values and causes. In this way, nonprofit organizations contribute to pluralism and the strengthening of civil society.

To summarize, nonprofit organizations are in some ways similar to and are yet different from both businesses and governments. Some, of course, are more similar to businesses; those that depend almost entirely on government funding are more similar to government; and others, including all volunteer nonprofit organizations, are substantially different from both business and government.

This volume is based on the premise that the distinctive (and varied) character of nonprofit organizations affects the leadership and management of such organizations. Those at the helms of organizations working in the nonprofit sector have become increasingly aware of the significance of their work in North American societies. The following indicators all testify to the growing importance of nonprofit organizations in Canada and the United States over the past twenty to twenty-five years: the number and strength of sector-serving associations have increased; publications by and about nonprofit organizations continue to expand; and the number of university programs devoted to research and teaching about nonprofit management, philanthropy, and volunteerism has substantially grown.

As those working in North American nonprofit sectors have become more aware of being part of a sector, interest in the distinctive leadership and management challenges that nonprofit organizations face has also increased. While the swelling volume of publications relating to voluntarism, philanthropy, and nonprofit management has served the sector well in many ways, all too often advice on financial management, human resource management problems and solutions (for both employees and volunteers), and organizational strategies and leadership has only been available in fragmentary pieces published in farflung periodicals and sometimes not easily available sources. The need for a single volume that offers a comprehensive and thorough treatment of the functions, processes, and strategies of nonprofit organizational leadership and management remains. This second edition will continue to meet that need.

In that this handbook is designed to provide comprehensive and in-depth descriptions of effective leadership and management practices that apply throughout a nonprofit organization, we believe and intend the volume to be of utmost value to a wide range of practitioners. It will be especially useful to anyone who has come to a management or leadership position from a program service background, to anyone who has moved from a relatively specialized management niche into a position with extensive responsibilities, and to everyone who seeks a solid core of support for the wide range of knowledge and skills that nonprofit leadership requires. In addition to those in paid staff positions, this volume will benefit board members and other volunteer leaders who are interested in enlarging their understanding of the nature of nonprofit organizations. This handbook will also be useful to those, both in formal education programs and in selfdirected learning, who want to prepare for careers in nonprofit management. Finally, we believe this book will continue to be an important resource to those who work with nonprofit organizations as consultants, technical assistance providers, regulators, and funders.

The volume is organized into five parts. Part One is devoted to describing the context and institutions within which nonprofit organizations currently operate and the context in which they are likely to work in the near future. Nonprofit organizations have been shaped and will be continue to be shaped by the historical times and forces, by social institutions, laws and regulations, political and economic trends and events, and increasing globalization. The chapters in Part One consider how these large-scale phenomena have affected and are affecting nonprofit organizations and their leadership and management. In Chapter One, Peter Dobkin Hall deftly describes the complex history of philanthropy and non-profit organizations in the United States, showing how and why the nonprofit sector has been invented. Jon Van Til, in Chapter Two, describes how both social institutions and sector institutions affect nonprofit organizations. In Chapter Three, Thomas Silk uses an extended illustrative case to clarify the crucial legal and regulatory environment in which U.S. nonprofit organizations operate. The number, types, activities, and operations of nonprofit organizations are greatly influenced by political and economic events. In Chapter Four, Lester M. Salamon analyzes the impact of large-scale economic, political, and demographic forces on various segments of the nonprofit sector. Helmut K. Anheier and Nuno Themudo, in Chapter Five, describe the increasing internationalization of nonprofit and nongovernmental organizations and consider questions of the role of such organizations in creating a global civil society.

Part Two covers key leadership issues in nonprofit organizations. Boards of directors of nonprofit organizations hold the prime leadership position and are expected to provide, in large part, leadership in defining their organization’s mission and values. In Chapter Six, Nancy R. Axelrod analyzes the continuing challenge of developing board leadership and describes some promising approaches for helping boards meet their leadership obligations. In Chapter Seven, Dick Heimovics and I examine the crucial role of chief executives in nonprofit organizations and describe the board-centered, external, and political leadership skills of especially effective chief executives. One of the key leadership tasks facing boards and executives is that of strategically designing programs to most effectively achieve an organization’s mission. John M. Bryson provides guidelines for the effective use of strategic planning and management by non-profit organizations in Chapter Eight. In an era in which many businesses, as well as government and nonprofit organizations, have been revealed as lacking all ethical sense, nonprofit leaders must meet the challenge of creating and sustaining organizational cultures that uphold the highest ethical standards. Thomas H. Jeavons offers important advice about how this can be achieved in Chapter Nine. Nonprofit leaders continually face questions of whether, when, and how to affect legislation relevant to their organizations’ missions. Bob Smucker answers those questions in Chapter Ten. Nearly all nonprofit organizations now face questions about whether and with whom to form strategic alliances of various types so as better to accomplish their missions. John A. Yankey and Carol K. Willen, in a welcome addition to this second edition, address these issues in Chapter Eleven.

The contributions in Part Three get at the heart of nonprofit organizational operations. Increasing numbers of nonprofit organizations have recognized the need to explicitly manage their exchanges with a wide range of constituents. Brenda Gainer and Mel S. Moyer, in Chapter Twelve, provide nonprofit leaders with a thorough analysis of the uses of marketing, highlighting the important ways that marketing efforts can help improve mission accomplishment. Most nonprofit organizations rely on volunteers, many to a substantial extent. In Chapter Thirteen, Jeffrey L. Brudney describes the issues and choices to be considered in designing and running effective volunteer programs. In Chapter Fourteen, Vic Murray considers the difficulties of evaluating nonprofit organizational effectiveness and suggests some useful ways of practically dealing with the considerable challenges. As Steven Rathgeb Smith observes in Chapter Fifteen, contracting with government is a fact of life for many nonprofit organizations, though contracting brings predictable (as well as unpredictable) problems. Smith provides concrete advice about effectively dealing with problems. Governments and other funders have become more demanding about evidence of program effectiveness. John Clayton Thomas, in Chapter Sixteen, reviews how nonprofit organizations can successfully undertake both outcome assessment and more thorough program evaluations.

Part Four takes up topics crucial to developing and managing financial resources. While an ever-increasing number of publications offer advice on specific fundraising techniques, few of those publications deal with issues of how fundraising should be integrated with the mission and culture of a nonprofit organization. In Chapter Seventeen, Robert E. Fogal not only tells how to design and manage the fundraising program but also provides perspective on integrating mission and fundraising. The past decade has seen increasing interest on the part of some traditional funders for nonprofit organizations to become more self-supporting, and many nonprofit organizations have made efforts to become more commercial (also sometimes described as social entrepreneurship). Cynthia W. Massarsky, in Chapter Eighteen, describes the full range of commercial income options nonprofit organizations might consider, giving special attention to issues of thorough planning and analysis before deciding on an earned income strategy. Robert N. Anthony and David W. Young, in Chapter Nineteen, cover the principles and management uses of financial accounting, while Young, in Chapter Twenty, explains how nonprofit managers can use management accounting information to manage operations more efficiently. One important way that nonprofit organizations can control both costs and exposure to losses is through better risk management. Melanie L. Herman, in Chapter Twenty-One, provides thorough and readable guidelines for making decisions about a comprehensive risk management program.

Part Five contains four chapters on any nonprofit’s most important assets—the people who, whether as employees or volunteers, make the organization what it is. In Chapter Twenty-Two, Stephen McCurley specifies how an organization can find, engage, and keep volunteers who are suited to it and its work. Mary R. Watson and Rikki Abzug, in Chapter Twenty-Three, describe not only the steps and appropriate practices for selecting employees but also the many (nonfinancial) ways in which nonprofit organizations can retain the committed and excellent employees that often make nonprofit organizations great places to work. In Chapter Twenty-Four, Nancy E. Day focuses specifically on establishing and operating compensation and benefit programs that suit a nonprofit organization and the needs and expectations of its employees. Nancy Macduff, in Chapter Twenty-Five, considers how nonprofit organizations can assess their training needs and then design and carry out appropriate programs for both paid and volunteer staff.

In the Conclusion, I offer a personal assessment of the current environment and the forces pushing many nonprofit organizations to become “more businesslike,” arguing that there are risks to doing so and suggesting some steps that nonprofit organizations and associations serving the sector can take to maintain the distinctiveness and legitimacy of the sector.

Like the first edition, this second edition of the handbook presents the best and most applicable practical leadership and management information currently available on a wide range of topics. That the information is the best and most applicable is a result, I believe, of deriving practical implications not solely from current practice but even more from the latest research and the most current theory. I believe and hope that this second edition, like the first, will be a widely used reference, serving to inform leaders, leaders-to-be, managers, and managersto-be for many years to come.

I especially want to acknowledge and thank all of the chapter authors. I was pleased that nearly all of the authors of chapters in the first edition were willing take part by revising and updating their chapters for this second edition. Most authors, over the intervening decade, had become even busier, and I know that meeting the deadlines and doing a thorough job was often difficult. I also greatly appreciate the efforts of the new authors who have prepared wholly new chapters. They too faced short deadlines, but without a foundation to start with. I also want to thank the readers Jossey-Bass asked to review the first edition and make suggestions for the second edition. Though we did not always follow your suggestions, the contributors and I appreciate the value of those suggestions and the serious thinking that went into them. Thanks are also due to many people who responded to my solicitation to provide suggestions about revisions; those suggestions were often very helpful.

I thank Allison M. Brunner, editorial assistant at Jossey-Bass, who has responded to my frequent questions and importunings with helpful good humor. I also appreciate the support and guidance of Dorothy Hearst, senior editor at Jossey-Bass, who has calmly dealt with the problems and concerns I presented to her.

Finally, my thanks to my wife, Charlotte, for all her support over the years and during the months when I was using much of our time on this volume.

Kansas City, MissouriAugust 2004

Robert D. Herman Editor

THE EDITOR

Robert D. Herman is a professor in the Cookingham Institute of Public Affairs, H. W. Bloch School of Business and Public Administration, University of Missouri, Kansas City. He teaches in the institute’s M.P.A. specialization in non-profit management, which he helped create. He is also a senior fellow with the university’s Midwest Center for Nonprofit Leadership. He received his B.A. degree (1968) in economics from Kansas State University and his M.S. (1971) and Ph.D. (1976) degrees, both in organizational behavior, from Cornell University.

Herman’s previous research has concentrated on the effective leadership of nonprofit charitable organizations, including chief executive-board relations. His current research focuses on investigating nonprofit organizational effectiveness.

He is past president of the Association of Voluntary Action Scholars (now known as the Association for Research on Nonprofit Organizations and Voluntary Action). He has also served on several boards of nonprofit organizations and works with nonprofit organizations, in the United States and internationally, in consulting and advisory capacities.

He is coauthor of Executive Leadership in Nonprofit Organizations (with Dick Heimovics, 1991), coeditor of Nonprofit Boards of Directors (with Jon Van Til, 1989), and author of many articles on nonprofit leadership and governance.

THE CONTRIBUTORS

Rikki Abzug is on the faculty of the Nonprofit Management Program at the Robert J. Milano Graduate School of Management and Urban Policy, New School University. Previously, she was the associate director of Yale University’s Program on Nonprofit Organizations. She has been a public, nonprofit, and for-profit management and market research consultant for over fifteen years, providing consulting services to management groups in the United States, Poland, and Ukraine. Abzug sat on the board of the Association for Research on Nonprofit Organizations and Voluntary Action (ARNOVA) and was a founding board member of the Alliance for Nonprofit Governance. She has published dozens of articles on governance and sectoral and institutional theory and serves on the editorial board of Nonprofit and Voluntary Sector Quarterly. She holds a Ph.D. degree in organizational sociology from Yale University and lives in New Jersey with her husband, the surrealist painter Patrick Brady, and two daughters.

Helmut K. Anheier is a professor and director of the Center for Civil Society at UCLA’s School of Public Policy and Social Research and Centennial Professor of Social Policy at the London School of Economics, where he founded in 1998 and directed the Centre for Civil Society. Prior to this he was a senior research associate and project codirector at the Johns Hopkins University Institute for Policy Studies and associate professor of sociology at Rutgers University. Before embarking on an academic career, Anheier served as social affairs officer to the United Nations. He obtained his Ph.D. degree from Yale University in 1986.

Robert N. Anthony is Ross Graham Walker Professor of Management Control, Emeritus, at the Harvard Business School. He received his D.B.A. degree (1952) from Harvard University. He is the author or coauthor of numerous books and journal articles on management control generally and management control specifically in nonprofit organizations. He is coauthor, with David W. Young, of Management Control in Nonprofit Organizations, currently in its seventh edition. His books have been translated into fifteen languages.