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Chapter 13

Chapter 13. Strategic Issues in Not-for-Profit Organizations. 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

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Chapter 13

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  1. Chapter 13 Strategic Issues in Not-for-Profit Organizations

  2. 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

  3. Not-for-Profit Organizations Not-for-Profits: • Private nonprofit corporations • Hospitals, private colleges, charities • Public governmental agencies • Prisons, welfare departments, universities

  4. 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

  5. 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

  6. The Effects of Sources of Revenue on Patterns of Client-Organization Influence

  7. 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”

  8. 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

  9. 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.

  10. Resources Not-for-Profit Organizations Something to Sell Management Talent Piggybacking Trustee Support Entrepreneurial Venture Capital

  11. Not-for-Profit Organizations • NFP Strategies • Mergers • Focus on reducing costs • Strategic alliances • Developing cooperative ties with other organizations

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