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Strategic Issues in

Not-for-Profit Organizations

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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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Not-for-Profit Organizations

Not-for-Profits Importance: Public or collective goods

Paved roads, police protection, museums,

schools

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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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The Effects of Sources of Revenue on Patterns of Client-

Organization Influence

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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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Not-for-Profit Organizations

Strategic Management Concepts:

Institutional advantage

NFP performs its tasks more effect ively

than o ther com parable organizat ions

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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: 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 revenuesand expenses.

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Not-for-Profit Organizations

NFP Strategies

Mergers

Focus on reducing costs

Strategic alliances

Developing cooperative ties with otherorganizations

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Not-for-Profit Organizations

Piggybacking

Something to Sell

Management Talent

Trustee Support

Entrepreneurial

Venture Capital

Resources