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Meeting #9

Meeting #9. Begin Wrap up of Material and Introduction of Final Project. Analysis of American Red Cross Post 9/11. Example of organization that temporarily lost its focus and road off the rails Can be attributed to management structure that allowed for too much autonomy at local level

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Meeting #9

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  1. Meeting #9 Begin Wrap up of Material and Introduction of Final Project

  2. Analysis of American Red Cross Post 9/11 • Example of organization that temporarily lost its focus and road off the rails • Can be attributed to management structure that allowed for too much autonomy at local level • Same problem that haunted United Way in its recurring scandals with local chapters

  3. Post 9/11 – Donations Pored In • Funds were in excess of what could ever be distributed to victims • $564 million by one count • Set up three temporary shelters • Became apparent fairly quickly that there were few, if any, survivors • What does an organization do with $564 million if relief not needed?

  4. Other Major Issue…… • Much of money given to local chapters • Proper controls not in place to make sure that money funneled to 9/11 causes – much of it wasn’t • Local organizations were “coding” funds so as to keep them for local causes • Donors (obviously) felt used

  5. A Structural Problem Created by Attempt to Cut Costs • Local chapters were largely independent • Management (national) poorly supervised locals • Was followed by a number of scandals at the local level • Particularly a problem with the Hudson County (NJ) chapter in 2001 • Excessive bonuses paid out of contributions • Red Cross has set out to address these issues, but issues remain

  6. A Structural Issue that we have not Looked at Yet… • Dispersed management structure in large nonprofits may lead to loss of control • Post-1992 scandal at United Way – many additional problems at local chapters

  7. Final Project – First Steps • Identify a cause within the charitable sector that you want to focus on • Use Charity Navigator as a guide – CN’s categories are very broad – you will have to narrow it down • Locate a small- to medium-sized charity within that sector (giving less than or equal to $5million/year) • The charity must be ranked ** or *** • i.e. it has some “issues”

  8. Nonprofits that are not Appropriate • Community Foundations • Mott Foundation, for example • Member-Serving Organizations • Hospitals, schools, social “clubs” (POE), Churches • Political and civic organizations (501(c)4s) • Chambers of Commerce (501(c)6s)

  9. Collect the Following Information: • Objective measures of the charity’s effectiveness (e.g. program expenses over total expenses) • Sources of funding • Details on all types of funding and their effectiveness • Grants, contributions, Fees, Fundraising events • How does this mix affect the perceived “effectiveness” of the nonprofit • Management structure • Examine Form 990 for the nonprofit • Details on how the nonprofit accomplishes its work • Complement to other programs? • Determine why it is ranked below four stars

  10. Should use both CN and website of nonprofit • There may be other web resources for some nonprofits • Economic impact studies • Determine what would make the organization more effective • Address why it is a ** or *** star organization, and what it would take to fix that

  11. Economic and social impact of organization • Determine – as best as possible – where the nonprofit’s impact is felt • e.g. housing, medical care • Poor communities, rural communities, or some other specific population • Investigate what programs the federal government has to address same issue(s) • Briefly consider how this charity complements what the government does (or doesn’t it?)

  12. Literature that Might Help • Hatry, H.P. ( 2006). Performance measurement: Getting results (2nd ed). Washington, DC: Urban Institute. • Schlesinger, M., Mitchell, S., & Gray, B. ( 2004). Measuring community benefits provided by nonprofit and for-profit HMOs. Inquiry, 40, 114-112. • http://www.nationalassembly.org/uploads/documents/webinars/nonprofitorganizationaleffectiveness.pdf

  13. Measuring the Economic and other Impacts • http://www.calnonprofits.org/images/downloads/causes-count-719.pdf

  14. Final Project – Further Details • Create a nonprofit that addresses the same need that is addressed by the charity you examined • Describe its structure • Management, stakeholder roles, oversight • Detail how your nonprofit will have the maximum impact • Sources and uses of funds • Leveraging of donations

  15. Final Case Study

  16. Final Project • Economically impactful donations

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