PubPol 671 - Policy and Management in the Nonprofit Sector

The nonprofit sector has emerged as one of the cornerstones of American society, and yet remains very much a work in progress. The “third sector” faces unique and evolving pressures in areas such as social enterprise, philanthropy, mission focus, performance measurement, sector blur, and more. These challenges are magnified by the complex interdependencies among the nonprofit, for-profit, and public sectors.

In our class we will examine how some of these broad issues intersect with the day-to-day operation of domestic nonprofit organizations. By considering sector tensions from a management perspective, ultimately we will each develop our own informed view on the appropriate role and function of the nonprofit sector within society. Future policy makers and nonprofit managers alike will enhance their ability to formulate positions on policy issues that impact the sector.

Assignments

Four Short Assignments: A short paper (600 word maximum) will be due periodically throughout the semester. Students will often be able to choose among multiple topics.

Final Paper: A final paper (3,000 word maximum) will be due during the examination period. The topic for the final paper will be announced later in the semester.

Grading

40% short papers
30% participation
30% final paper

PART ONE: BASIC FRAMEWORK

Class 1: Introduction

A brief overview of the nonprofit sector, and discussion of our mutual learning goals for the class. We also explore our own perceptions of what a nonprofit is supposed to be, and what a nonprofit is supposed to do.

Background Reading (optional):
The Nonprofit Sector in Brief (2008), The Urban Institute’s Center on Nonprofits and Philanthropy

Class 2: Why Is There a Nonprofit Sector Anyway?

We examine the implications of the idea of “charity” (i.e., serving the underprivileged) as the basis for the nonprofit sector.

Readings for Class (25 total pages):
• Lester Salamon, “What Is the Nonprofit Sector and Why Do We Have It?” in J. Steven Ott (ed.), The Nature of the Nonprofit Sector
• William Diaz, For Whom and For What? The Contributions of the Nonprofit Sector, in Salamon (Ed.), The State of Nonprofit America

Additional Background (optional):
• Stephanie Strom, “What is Charity?,” New York Times, November 14, 2005
• John Carryrou and Barbara Martinez, "Grassley Targets Nonprofit Hospitals on Charity Care," The Wall Street Journal, December 18, 2008

Class 3: Why Is There a Nonprofit Sector Anyway?

We expand on our discussions from the previous class by examining numerous economic and political rationales for the nonprofit sector.

Readings for Class (22 total pages):
• Henry Hansmann, “Economic Theories of Nonprofit Organization,” (pp. 27-35) in Walter Powell (ed.), The Nonprofit Sector (2006 edition)
• James Douglas, “Political Theories of Nonprofit Organization”, in J. Steven Ott (ed.), The Nature of the Nonprofit Sector
• Knight Foundation Press Release: "Knight Foundation to Support The Huffington Post Investigative Fund" (December 22, 2009)

Additional Background (optional):
• Richard Steinberg, "Economic Theories of Nonprofit Organizations," in Walter Powell (ed.), The Nonprofit Sector (2006 edition)

Class 4: Legal and Regulatory Overview

Before we starting thinking ‘outside the box,’ we review the box itself – in this case, the legal and regulatory factors that empower and constrain the domestic nonprofit sector.

Readings (20 total pages):
• Harvard Law Review, Developments in the Law – Nonprofit Corporations, in Ott (ed.), Understanding Nonprofit Organizations
• Associated Press, "Pittsburgh Shelves Tuition Tax After Donations Pledged," The Wall Street Journal, December 21, 2009

Additional Background (Optional):
• Evelyn Brody, "The Legal Framework for Nonprofit Organizations," in Walter Powell (ed.), The Nonprofit Sector (2006 edition)
• Reich, Dorn, and Sutton, "Anything Goes: Approval of Nonprofit Status by the IRS," October 2009

PART TWO: MANAGEMENT

Class 5: Mission and Management

There’s a “double bottom line” that distinguishes nonprofit management from the for-profit sector. We explore operational implications arising from this double bottom line, and extrapolate broader implications for the sector as a whole.

Readings for Class (24 total pages):
• Sharon Oster, Strategic Management for Nonprofit Organizations, Chapter 2 Silverman and Taliento, “What Business Execs Don’t Know – but Should – About Nonprofits,” Stanford Social Innovation Review, Summer 2006
• Jonker and Meehan, "Curbing Mission Creep," Stanford Social Innovation Review, Winter 2008

Additional Readings (optional):
• J. Gregory Dees, Jed Emerson and Peter Economy, Enterprising Nonprofits: A Toolkit for Social Entrepreneurs, Chapter 2 ("Defining Your Mission," by Rob Johnston)
• Fulton, “Simply Successful,” Stanford Social Innovation Review, Fall 2005

Class 6: Performance Measurement and Accountability
Measuring the effectiveness and impact of nonprofits is a deceptively complex undertaking. We weigh the advantages and disadvantages of various frameworks for measuring success. We also explore how our choice of framework might affect issues of public accountability.

Readings for Class (30 total pages):
• Jan Masaoka, “The Effectiveness Trap,” Stanford Social Innovation Review, Spring 2003
• Denise Caruso, "Can Foundations Take the Long View Again?", New York Times, January 6, 2008
• John Sawhill and David Williamson, “Measuring What Matters in Nonprofits,” McKinsey Quarterly, 2001
• Rosabeth Moss Kanter and David Summers, “Doing Well While Doing Good: Dilemmas of Performance Measurement in Nonprofit Organizations and the Need for a Multiple-Constituency Approach,” in Walter Powell (Ed.), The Nonprofit Sector: A Research Handbook
• Katie Cunningham & Marc Ricks, “Why Measure,” Stanford Social Innovation Review, Summer 2004
• Jed Emerson, “But Does It Work?,” Stanford Social Innovation Review, Winter 2009

Additional Background (optional):
• Judith Gueron, “Throwing Good Money After Bad,” Stanford Social Innovation Review, Fall 2005
• Lowell, Trelstad, and Meehan, “The Ratings Game,” Stanford Social Innovation Review, Summer 2005
• Case study: Jumpstart W.K. Kellogg Foundation Logic Model Development Guide Suzanne Perry, "A Quest for the Best", The Chronicle of Philanthropy, 2007
• Ian Wilhelm, "Study Says Few Foundations Use Data to Evaluate Themselves", The Chronicle of Philanthropy, December 9, 2009

Class 7: Performance Measurement & Accountability (cont.), plus Human Resources
We dissect the recent Good to Great monograph to understand its appeal among many nonprofits. We debate whether or not this approach to performance measurement is useful for gauging impact and enhancing public accountability. We also use this text to illuminate human resource issues that are common to the nonprofit sector.

Readings (31 total pages):
• Jim Collins, Good to Great and the Social Sectors: A Monograph to Accompany Good to Great

Optional Readings
• Heather Joslyn, "A Growing Leadership Gap," The Chronicle of Philanthropy, April 2009
• Kevin Begos, "Special Report: Charity Accountability," Contribute, January 2008
• Lester M. Salamon & Stephanie L. Geller, "What Workforce Crisis?," Stanford Social Innovation Review, Winter 2010

Class 8: Governance

Strong governance is a key to organizational success, and also critical to maintaining accountability between a nonprofit and the public. Yet nonprofit managers (and their trustees) commonly marginalize the governance function. We examine the benefits and challenges posed by current governance practices, and search for alternative policies and governance models that might encourage more robust governance of the sector.

Readings (18 total pages):

• Sharon Oster, Strategic Management for Nonprofit Organizations, Chapter 6
• Klausner and Small, ‘Failing to Govern?,” Stanford Social Innovation Review, Spring 2005

Optional Readings:
• Fisman, Khurana, & Martenson, "Mission-Driven Governance," Stanford Social Innovation Review, Summer 2009

Class 9: Policy Making

Policy-making is one of the few areas where the nonprofit sector frequently outperforms its for-profit counterparts. We examine the role of nonprofits in making policy, and brainstorm whether the competitive advantage in advocacy can be transferred to other areas.

Readings for Class (34 total pages):
• Elizabeth Boris and Jeff Krehely, “Civic Participation and Advocacy,” in Salamon (Ed.), The State of Nonprofit America
• Independent Sector, "Anyone Can Lobby"
• Independent Sector, "10 Reasons to Lobby for Your Cause"

Additional Background (optional):
• Andrew Rich, “War of Ideas,” Stanford Social Innovation Review, Spring 2005
• James Deitrick & Michael Granof, "Soup Kitchen Accounting," New York Times, February 18, 2009
• MNA Advocacy Handbook

Class 10: Scaling Up

We evaluate the challenges of expanding a nonprofit’s operations. We also examine how growth, even when achievable, isn’t always desirable.

Readings (19 total pages):
• J. Gregory Dees, Beth Battle Anderson, and Jane Wei-Skillen, “Scaling Social Impact,” Stanford Social Innovation Review, Spring 2004
• Kelly Campbell and Rita Louh, “Managing Growth,” Stanford Innovation Social Review, Summer 2005
• Dorothy Stoneman, "Full Scale Ahead," Stanford Innovation Social Review, Winter 2009

Additional Background (optional):
• Jeffrey Bradrach, “Going to Scale,” Stanford Social Innovation Review, Spring 2003
• Muoi Tran, “Red Bag It,” Stanford Social Innovation Review, Spring 2004

Class 11: Collaboration & Merger

Why are nonprofits expected to “play nice,” even with their competitors? Why is the public so quick to view mergers as the answer to nonprofit woes? We debate these questions and examine the continuum of collaborative options available to nonprofits.

Readings for Class (27 pages):

• La Piana Associates, “Types of Strategic Restructuring,” http://lapiana.org/Strategic-Restructuring/FAQs/
• Francie Ostrower, “The Reality Underneath the Buzz of Partnerships,” Stanford Social Innovation Review, Spring 2005
• Haider, “Common Bonds,” Stanford Social Innovation Review, Fall 2004
• Roseanne Siino, “The Incredible Shrinking Donor Base,” Stanford Social Innovation Review, Summer 2003
• Stephanie Strom, “Charities Trying Mergers to Improve Bottom Line,” New York Times, November 11, 2007
• Jeffrey Solomon, "In Merging, Charities Do a Disservice to Clients," Chronicle of Philanthropy, 2009

Class 12: Case Study - Examination of Nonprofit Enterprise at Work, Inc. (NEW)

We do a deep dive into NEW (Nonprofit Enterprise at Work) in order to illuminate the management issues we’ve discussed to date.

Readings for Class (14 total pages plus website):
• McKinsey & Company, Effective Capacity Building in Nonprofit Organizations, Introduction Section plus chart on page 36
• NEW, http://www.new.org/

Additional Background (optional):
• Heather McLeod and Leslie Crutchfield, “Creating High-Impact Nonprofits,” Stanford Social Innovation Review, Fall 2007
• Cynthia Gibson and Ruth McCambridge, “Why Every Funder Should Fund Infrastructure,” The Nonprofit Quarterly, Special Issue 2004

PART THREE: FUNDING

Class 13: Funding Overview and Individual Philanthropy

We survey philanthropy in America, and focus on the financial and philosophical importance of individual philanthropy.

Readings for Class (35 total pages):
• “The Business of Giving: A Survey of Wealth and Philanthropy,” The Economist, Feb 25, 2006
• Excerpt from Virginia Hodgkinson with Kathryn Nelson and Edward Sivak Jr., “Individual Giving and Volunteering,” in Salamon (Ed.), The State of Nonprofit America (pp.393-403)
• "Charitable Donations Fell in 2008, Report Finds," Washington Post, June 10, 2009
• Ann Goggins Gregory & Don Howard, "The Nonprofit Starvation Cycle," Stanford Innovation Social Review, Fall 2009

Additional Background (optional):
• "Obama’s Budget Would Cut Charitable Deduction," Nonprofit Times, February 27, 2009 Rob Reich, “A Failure of Philanthropy,” Stanford Social Innovation Review, Winter 2005 [8 pages – charity shortchanges the needy]
• Peter Singer, "What Should Billionaires Give - and What Should You?", The New York Times Magazine, December 16, 2006
• "Patterns of Household Charitable Giving by Income Group, 2005," The Center on Philanthropy for Indiana University, Summer, 2007
• David Billett, "The War on Philanthropy," Commentary, July/August 2009
• William Landes Foster, Peter Kim, & Barbara Christiansen, "Ten Nonprofit Funding Models," Stanford Social Innovation Review, Spring 2009

Class 14: Institutional Philanthropy - Foundations

Foundations are a strong and influential voice for the nonprofit community, and annually distribute billions of dollars to charitable organizations. Yet they suffer from a love-hate relationship with nonprofits and the public. We sort through various realities and perceptions, and debate the appropriate role for foundations within the sector and in society.

Readings for Class (26 total pages):
• Kenneth Prewitt, “The Importance of Foundations in an Open Society,” Bertelsmann Foundation (Ed.): The Future of Foundations in an Open Society
• Les Silverman, “Building Better Foundations,” The McKinsey Quarterly, 2004, Number 1
• Susan Golden and William Grimberg, “With Certain Unalienable Rights,” Contributions, Vol. 21, #3, 2007
• Susan J. Colby and Susan Wolf Ditkoff, "The Hard Truth: Philanthropists Need to 'Get Real' to Make Lasting Change," Chronicle of Philanthropy, October 29, 2009

Additional Background (optional):
• Jed Emerson, “Where Money Meets Mission,” Stanford Social Innovation Review, Summer 2003
• Alessandra Bianchi, “The Other 95 Percent: how a community foundation uses proxy voting to advance its mission,” Stanford Social Innovation Review, Winter 2005

Class 15: Institutional Philanthropy - Foundations (cont.)

We continue our examination of the foundation world.

Readings for Class (27 total pages):

• Paul Jansen and David Katz, “For Nonprofits, Time Is Money,” The McKinsey Quarterly, 2002, Number 1
• Michael Klausner, “When Time Isn’t Money: Foundation Payouts and the Time Value of Money,” Stanford Social Innovation Review, Spring 2003
• Robert Giloth and Susan Gewirtz, "Philanthropy and Mistakes: An Untapped Resource," Foundation Review, Winter 2009

Additional Background (optional):
• Abraham Nachbaur, “Going Overboard: Are Foundations Paying Trustees Too Much Money?”, Stanford Social Innovation Review, Winter 2003
• Stephanie Strom, “Fees and Trustees: Paying the Keepers of the Cash,” New York Times, July 10, 2003

Class 16: Institutional Philanthropy - Corporations

We analyze the risks and rewards of aligning a nonprofit’s activities with corporate interests.

Readings for Class (23 total pages):
• “Corporate Contributions in 2004,” The Conference Board Keith Epstein, “Philanthropy, Inc.,” Stanford Social Innovation Review, Summer 2005
• Bruch and Walter, “The Keys to Rethinking Corporate Philanthropy,” MIT Sloan Management Review, Fall 2005
• Burstyn, “Hidden Agenda,” Stanford Social Innovation Review, Spring 2005
• Joe Nocera, “Emerald City of Giving Does Exist,” New York Times, December 22, 2007

Additional Background

• Angela M. Eikenberry, "The Hidden Costs of Cause Marketing, Stanford Social Innovation Review, Summer 2009
• Independent Sector Mission Market Web Site, http://www.independentsector.org/mission_market/index.html

Class 17: Government Support

Government support fueled the nonprofit boom of the 60’s and 70’s. Furthermore, government activities continue to be outsourced in earnest, sometimes to the benefit of nonprofits, and sometimes to their detriment. We examine the evolving nature of government support and the challenges posed for the third sector.

Readings (25 total pages):
• Gronbjerg and Salamon, “Devolution, Marketization, and the Changing Shape of Government-Nonprofit Relations,” (pp. 447 – 461) in Salamon (Ed.), The State of Nonprofit America
• Young, “Third Party Government,” in Ott (ed.), The Nature of the Nonprofit Sector
• Ferris, “The Double-Edged Sword of Social Service Contracting: Public Accountability Versus Nonprofit Autonomy,” in Ott (ed.), The Nature of the Nonprofit Sector

Optional Readings:
• Suzanne Perry, "President Obama Seeks the 'Most-Promising Nonprofits in America," Chronicle of Philanthropy, June 30, 2009
• Ann Goggins Gregory and Daniel Stid "How Governments Can Spur High Charity Performance," Chronicle of Philanthropy, December 10, 2009

Class 18: Venture Philanthropy

High-engagement philanthropy is a new twist on individual and institutional funding. We evaluate the extent to which venture philanthropy is an appealing alternative to traditional fundraising relationships.

Readings for Class (28 total pages):
• Mario Morino and Bill Shore, “High-Engagement Philanthropy: A Bridge to a more Effective Social Sector,” 2004 (pp. 8-22)
• Bruce Sievers, “If Pigs Had Wings: The Appeals and Limits of Venture Philanthropy,” Nov 2001
• Steven LaFrance and Nancy Latham, "Taking Stock of Venture Philanthropy," Stanford Social Innovation Review, Summer 2008

Additional Background (optional):
• Strom, “New Fund to Help Charities Add Efficiency by Growth, The New York Times, December 21, 2007
• Paul Brest, Hal Harvey, & Kelvin Low, "Calculated Impact," Stanford Social Innovation Review, Winter 2009
• Sean Stannard-Stockton, "Providing the Capital Organizations Need to Run — and Grow," The Chronicle on Philanthropy, October 1, 2009
• Mario Morino, "Chairman's Corner: 'Social Outcomes': Missing the Forest for the Trees?," January 2010

Class 19: Social Enterprise and Social Entrepreneurship

Nonprofits increasingly view earned income as the path toward true financial independence. We examine the many complex aspects of this growing movement.

Readings for Class (45 total pages):
• Kim Alter, “Social Enterprise Typology,” (pp. 1-44)

Additional Background (optional):
• Jacques Defourney, “From Third Sector to Social Enterprise,” in Carlo Borzaga and Jacques Defourny (Ed.), The Emergence of Social Enterprise
• Chertok, Hamaoui, Jamison, "The Funding Gap," Stanford Social Innovation Review, Spring 2008

Class 20: Social Enterprise and Social Entrepreneurship (cont.)

We continue our examination of social enterprise through three case studies.

Readings for Class (24 total pages):
• CASE STUDY: Rubicon Programs, Inc. REDF, "New Social Entrepreneurs: The Success, Challenge, and Lessons of Non-Profit Enterprise Creation," Chapter 1 (pp. 23 - 37), 1996
• CASE STUDY: Aspire Paul Tracey & Owen Jarvis, “An Enterprising Failure,” Stanford Social Innovation Review, Spring 2006
• CASE STUDY: Kiva Bethany Coates & Garth Saloner, "The Profit in Nonprofit," Stanford Social Innovation Review, Summer 2009

Additional Background (optional):
• Jim Schorr, “Social Enterprise 2.0,” Stanford Social Innovation Review, Summer 2006
• Interview with Bill Drayton, Stanford Social Innovation Review, Spring 2004
• Interview with Robert Egger, Stanford Social Innovation Review, Summer 2004

Class 21: Social Enterprise and Social Entrepreneurship (cont.)

We conclude our examination of social enterprise.

Class Readings (31 total pages):
• Michael Shuman and Merrian Fuller, “Profits for Justice,” The Nation, Jan 24, 2005
• Burton Weisbrod, “Pitfalls for Profits,” Stanford Social Innovation Review, Winter 2004
• William Foster and Jeffrey Bradach, “Should Nonprofits Seek Profits?”, Harvard Business Review, Feb 2005
• Anna Conner Snibbe, “What Profits Do for Nonprofits,” Stanford Social Innovation Review, Summer 2006
• Nelson, “Donor Cannibalization,” Stanford Social Innovation Review, Spring 2004
• Lewis, "Microloan Sharks," Stanford Social Innovation Review, Summer 2008

Class 22: Social Enterprise and Corporate Social Responsibility

We examine how social value can be generated by the for-profit sector. The motivations for engaging in corporate social responsibility, and the implications of such activities for the nonprofit sector.

Readings for Class (22 total pages):
• Bonini, Koller, and Mirvis, "Valuing Social Responsibility Programs," McKinsey on Finance, Summer 2009
• Porter & Kramer, "The Link Between Competitive Advantage and Corporate Social Responsibility," Harvard Business Review, December 2006

Optional Readings for Class (22 total pages):
• Marquis and Kanter, "IBM: The Corporate Service Corps," Harvard Business School Case Study, March 27, 2009

PART FOUR: FUTURE

Class 23: Nonprofits and For-Profits

Nonprofits are acting more like businesses (social enterprise), and businesses are acting more like nonprofits (corporate social responsibility). We consider the implications of this “sector blur,” and debate whether form (e.g., nonprofit vs. for-profit) really matters if the desired function (e.g., public benefit) is preserved.

Readings for Class (27 total pages):
• Kramer & Kania, “Changing the Game,” Stanford Social Innovation Review, Summer 2006
• Doane, “The Myth of CSR,” Stanford Social Innovation Review, Fall 2005
• Dees and Anderson, "Sector Bending: Blurring the Lines Between Nonprofit and For-Profit," Society, May/June 2003

Additional Background (Optional):
• Kotler and Lee, “Best of Breed,” Stanford Social Innovation Review, Spring 2004
• James Austin, “Strategic Alliances - Managing the Collaboration Portfolio,” Stanford Social Innovation Review, Summer 2003
• Michael Fitzgerald, “Rolling Corporate Justice,” Stanford Social Innovation Review, Winter 2003
• Stephanie Strom, “What’s Wrong with Profit?” New York Times, November 13, 2006
• Austin, Gutierrez, Ogliastri & Reficco, “Capitalizing on Convergence,” Stanford Social Innovation Review, Winter 2007
• Low Profit Limited Liability Informational Website: http://americansforcommunitydevelopment.org/about.html

Class 24: Nonprofits and Government

The public and nonprofit sectors have developed a range of dependencies. We examine the nature of the relationship and discuss some potential dynamics going forward.

Readings for Class (29 total pages):
• Gronbjerg and Salamon, Devolution, Marketization, and the Changing Shape of Government-Nonprofit Relations, (review through p. 461) in Salamon (Ed.), The State of Nonprofit America
• Weisbrod, “The Future of the Nonprofit Sector: Its Entwining with Private Enterprise and Government”, in Ott (ed.), The Nature of the Nonprofit Sector
• Carreyrou and Martinez, "Nonprofit Hospitals, Once for the Poor, Strike It Rich," The Wall Street Journal, April 4, 2008
• Malkin, "After Success, Problems for Microfinancing in Mexico," New York Times, April 5, 2008

Additional Background (optional):
• Alexander, Nank, and Stivers, “Implications of Welfare Reform – Do Nonprofit Survival Strategies Threaten Civil Society?”, in Ott (ed.), Understanding Nonprofit Organizations
• Chris McGarry, “Growing Pains,” Stanford Social Innovation Review, Spring 2003
• Nonprofit and Government: Clarifying the Relationship, the Aspen Institute's Nonprofit Sector Strategy Group
• Gazley & Brudney, "The Purpose (and Perils) of Government-Nonprofit Partnership," Nonprofit and Voluntary Sector Quarterly, September 2007

Class 25: Nonprofits and Civil Society

We explore how the nonprofit sector from a civil society perspective.

Reading for Class:
• Light, "Four Futures," in The Nonprofit Quarterly, Winter 2008

Background (optional):
• Salamon, Sokolowski, and List, Global Civil Society - An Overview, 2003 (pp. 1-3 and 52 have some good intro/summary thoughts, the rest is quite interesting too!)
• The Aspen Institute, The Nonprofit Sector and Government: Clarifying the Relationship (2001) (good overview of policy-making principles regarding nonprofit-government interactions)
• Salamon, The Nonprofit Sector and Democracy: Prerequisite, Impediment, or Irrelevance? (2002) (nice overview of various perspectives on the nonprofit sector's role in democratic societies)
• Atul Dighe, “Demographic and Technological Imperatives,” in Salamon (Ed.), The State of Nonprofit America (an interesting 'futurist' look at societal trends and how those might impact or involve the nonprofit sector)
• Alana Conner Snibbe, “They Just Don’t Understand,” Stanford Social Innovation Review, Summer 2005 (U.S. population's general misconceptions about the nonprofit sector)
• Alana Conner Snibbe, “Bowling Alone?,” Stanford Social Innovation Review, Summer 2006 (brief piece on the health of Civil Society in the U.S.)

Class 26: Why the Nonprofit Sector Rocks

After spending a semester exploring the challenges and inter-sector tensions faced by the nonprofit community, let's discuss why the nonprofit sector rocks!

NO ASSIGNED READINGS