Non profit organizations

Question 2

How NPOs can develop distinctiveness and value

Non profit organization owes a lot to its stakeholders in terms of continuity of what it is respected for. Most of the NPOs have been established on very specific and socially accepted values that make them unique from other organizations and even from other NPOs. For instance, NPO working on health issues like cancer or based on religious beliefs have gained acceptance but only if it continues to distinguish itself from other organization as focused and committed to its cause.

To achieve and maintain the uniqueness and value to the stakeholders, NPOs need to focus on what they were established for. The value under which an NPO was established gives it the credibility if it continues to uphold such values throughout their activities. Values in society are highly regarded and the more an NPO makes such values their basis for all decision making, respect and appreciation will be accorded (Vijay & Manjulika 2005). This is also the same way it happens to being distinctive.

The NPO sector also needs to commit itself to specific stakeholders depending on their nature. The problem with most NPO is aligning themselves to multiple stakeholders and deviating from core partners thus making it a political organization which has to satisfy all stakeholders. The avoidance of multiple stakeholders gives the sector the distinction from other organizations that are more inclined to financial benefits. This form of distinctiveness help to add value to the community the NPO sector serves and even beyond.

Collaboration is one way for the sector to cooperate positively without losing its identity as a vision driven sector. Being distinctive in this case requires that you associate with other organizations that are mission driven. The NPO sector needs to seek collaborations and partnerships with other institutions which are built on values and driven by their missions and objectives and in this way the sector will have greater impact on the community and further establishing an identity that is respected and appreciated by the community.

Creating the value and distinctiveness also needs proper communication with the stakeholders in order to bring the people closer to the NPOs. This helps in reducing unwanted perception about NPO sector, for instance the notion that most NPOs are making money in the name of charity or through constant fundraising activities and doing less of what they are supposed to. The Triangle Community Foundation further offers a good case of distinctiveness. The foundation strongly pursues donor centred strategies and provides good case for developing distinctiveness by carefully selecting stakeholders.

Communicating unique value to government and communities

An NPO with the desired uniqueness can use several strategies to send the message to the stakeholders, especially to the government and the immediate community it is serving. Marketing is one way top get message home and before even marketing is done compliance has to be met. There are several laws that require disclosures to government institutions, like audits firms and government institutions governing NPO. The NPOs should always comply and in doing so, they are communicating their position with governments.

Similarly, communication of unique values can be done through marketing channels which are effective in sending the right message and information to the community. As part of marketing, branding can be undertaken to ensure that the community knows what the NPO stands for and why it is operating in the community. Branding can also involve printing materials which are distributed to people around or can be accessed from some strategic places. Branding also can be done by printing consumables like t-shirts, capes and other items which are commonly used.

Most importantly nowadays in marketing is the use of technology to pass information and consequently marketing messages. The use of internet further provides a lot of opportunities to reach more people with little ease than conventional means. Communicating the NPO’s unique values needs convincing strategies that integrates real activities and mobilizing the community to take part (Lanying, Jundong & Yupeng 2008). Internet thus provides the best avenue to bring as many people as possible to take part in activities, attend events, participate in discussions and many more. All this can be improved using the internet.

Marketing using websites and social marketing techniques to communicate unique values yield results to the NPOs by also allowing feedbacks to be sent by the community members. This is further very important in ensuring that stakeholders understand the core values of the NPO and from their responses NPO’s weaknesses can be dealt with on time. Communication can also be done through events and forums designed to suite various situations. Sporting activities, arts contests and community service can be carried out and effectively tag the NPO’s messages in the process. This further helps to communicate to the government and community about the NPO.

Sources of revenues that can stabilize NPO sector

Sources of funding have always been identified as one to the biggest challenge to NPOs. Dealing with the problem will therefore require a well informed approach that will help minimize the problem and also ensure long term stability regarding the sources of funds. Traditionally, sources of funds for NPOs have been governments, philanthropists and other smaller sources which may not be sustainable in the long run. Therefore, there is need for a sustainable strategy that ensures funds are available throughout the year for the NPOs.

 

Diversification of funding source is important in achieving a longer term sustaining sources and this also depends on the type of NPO. In the NPO sector, the mission and the nature of the NPO itself determine how revenues are generated. For instance, if an NPO is concerned about health issues, it can easily and sustainably get support from government because the government has greater interest on certain health matters. The sources therefore should be designed and well thought out depending on the products/service provided by the NPO (Light 2000).

This brings out the idea of revenue mix which is the combination of revenue sources that tend to ensure that all year round, the organization has enough money to run their activities smoothly. The common types of revenues including, membership fees, government support and contracts, individual/institutional philanthropists, investing and various types of volunteering are normally used but over-reliance on one or some of the sources may be a problem in waiting.

NPOs therefore need to develop a different approach of self sustainability especially since they are also competing for funds with other organizations like businesses. Thus the need for proper marketing and investment skills among the management of NPO arises. Commercial ventures and investments will certainly ensure the NPO has revenue streams over a longer period of time than just relying on one stop contributors like governments or business entities who at any point may not provide the funding.

The best revenue solution is through self sufficiency and innovative financing that does not primarily depend on other parties. For instance, sale of merchandise and organizing major events that will attract sponsorships from all quarters and adequately provide revenues than just relying on conventional sources will ensure that NPO industry becomes well funded through diverse ways without overreliance on one or few sources.

Question 4

How to generate revenues for NPOs

There exist a number of options that NPOs have that can help them raise the needed financial resources. However, it is important to decide where such revenues come from sand how they are generated. This is because traditional methods being unsustainable in the recent times as commercial activities of NPOs are considered to conflict with its core missions further affecting service delivery. Commercial activities by NPO ahs also bee criticized a lot by the public and sometimes even the government and thus making commercial avenues hard to use to raise money. It is however possible to get the revenues through other channels without directly participating in business that can attract criticism.

With a clear strategy to ensure the NPO is able to generate revenues through its own activities, the challenge of low financial support with unreliable consistency will be reduced significantly. This approach also helps to generate revenues withy greater ease since the NPO will not be borrowing directly but rather seeking partnership that yields extra revenues in the process. The strategy to use NPO activities to attract funding and also philanthropic activities from the community and corporate institutions also takes into account the needs of such entities (Light 2000). The activities also provide opportunities for the sponsors to enhance their value by using such activities to market themselves, meet the community members and also build a relationship withy other stakeholder.

The viable strategy here therefore is the use of social enterprises to generate revenues for the NPO by being part of the owners. Social enterprises provide goods and services while at the same time doing social good. For instance, a firm making toys using recycled plastics or enterprises that promotes the use of solar and wind energy products can be used by NPO to generate revenues by investing in them. Similarly, collaborating with such enterprises enables the firm to merge its activities like events and social activities aimed at creating awareness and raising money for a particular cause.

Social enterprises are often an accepted organization which allows business activities to solve community problems. This provides a good chance for NPO to commercialize some of their activities and surplus funds in order to get support from consumers. Most consumers nowadays prefer social companies from others like manufacturing who are responsible for global problems like pollution and employee rights among others. Setting up or investing in social enterprises will therefore help raise revenues through the business in an acceptable manner. Social enterprises like Divine Chocolate in UK can be collaborated with NPO activities through financing arrangements that enables the NPO gain access to other benefits and help from the social business that enables the NPO carry out its activities smoothly.

A combination of social enterprise and other institutions also help to diversify the sources of revenues. Corporate philanthropy should not only be sought but also be given a chance to take part in NPOs revenue generating activities. Involving corporate organizations in NPO activities is different from just seeking philanthropy from them. This involves further giving them a chance to be part of the NPO (Frank 2012). This can be done by aligning the NPO activities in line with corporate institutions’ corporate governance strategies. Corporate social responsibility is one of the major undertakings of business organizations today and this can be tapped to help generate more revenues for NPO.

Corporate governance within corporation has been an issue of focus and as companies try to show how they care about human health, environment or education, NPO can attract them to their activities that require money and the companies through their funding of the NPO also undertake their corporate citizenship activities effectively. This is one good way to generate revenues through a process that does not put the NPO entirely in a situation where it only relies on grants and donations from other parties.

Another way to generate revenues is looking for government contracts like providing services in line with the core activities of the NPO. If the NPO provides educational related services to specific group, they can seek government contracts to undertake certain edcuat5ional programme which are temporary. This enables the NPO to get more funding for their activities this strategy also works well since governments and other public/private institutions are no longer sufficiently philanthropic to pledge support for more than one year. Such arrangements with the government may serve to increase revenues to NPO without completely deviating from the core objectives and mission (Frank 2012).

Combining the three forms ways of funding reduces the inefficiencies that are associated with direct fundraising which is more obvious and may lack adequate support. Strategic alliances that lead to mutual benefits for NPO and government, business institutions and even the social business are much is the way to go. This is also because the rates of failure of such arrangements are low compared to just fundraising or depending on government grants.

As a leader in an NPO, combining available options strategically also reduces risk by spreading it to social enterprise, government partnerships and contracts and corporate philanthropy. It is however quite a risk to take up many financiers especially due to the problem of stakeholders’ competing interests. It is nevertheless important to balance the three options inn a way that all stakeholders understand the core mission of the NPO before closing any deal. Raising finances needs to be carefully crafted such that all parties are satisfied and the combined approach can work very well and increase revenues for NPO quickly than depending on one strategy.

Question 7

Relationship between NPOs and the community

There exists a unique relationship between the community and the non profit organization. First, there exists a relationship in the sense that the NPO is part of the community like any other person living in the place. Being situated within the community makes the NPO one of the community members as an entity. Secondly, as an entity, the relationship is based on what the entity does to the community. If an entity deals with things that the community dislikes, the relationship will be unfriendly such that the NPO would not be treated well.

However in most cases, the NPO organizations are founded on very important issues to the community and are normally positive thus provides a good reason for healthy relationship between the community and the organization. However, community may represent many stakeholders like local government, the business community, and the residents themselves. These stakeholders within the community may have varying attachments with NPOs depending on whether they are the target client of the NPO or not.

If certain stakeholders are the target group of NPO, then NPO will build a strong relationship with the stakeholders who will be taken as clients and treated so. Relationships are therefore built based on the importance such that potential sponsors have a business like relationship with the NPO and the community being assisted by NPO have a more informal close relationship with the NPO that enables the NPO to carry out its activities smoothly. The relationships also help to improve the efficiency of NPO in service delivery in the community who in turn help the NPO during fundraising activities and even support in cash and in kind. To NPO and community, their relationship is more of symbiotic and of mutual benefit.

NPO accountability

Accountability of NPO is one of the important things that stakeholders always wish to ascertain when engaging with any NPO. This is because the stakeholders, especially those who assist the NPOs with financial and non financial resources would not wish to direct their resources to an NPO which does not value their help. Similarly, the community being served would wish to see that the NPO actually does what they are supported to do. In this context therefore, accountability is holding NPO accountable for their actions. This leads to trust being earned or lost depending on how the NPO act on what they say or imply in their actions.

NPOs are accountable to the communities they serve in that they are answerable to they people they seek to help, their environment they claim to protect and so on. Accountability on the part of NPO can be viewed to be the obligation to explain their actions, report on their activities, communicate their mission and objectives to their stakeholders and be responsible for their actions at any time (Frank 2012). It is therefore the responsibility of the NPOs to respond to the needs of the people they serve. This indeed is the community which the NPO undertakes its activities.

NPOs are also accountable to the government and other regulatory authorities. This is very important since NPOs cannot be deemed untouchable and not under an authority. NPOs are also accountable to those who provide them with financial support or any other form of support through proper use of those funds and also telling the public how they acquire and use their resources. The need for accountability within the sector has been growing due to the level of wealth and influence these NPOs have on socio-political environment. This therefore calls for accountability of NPOs especially to the public who form the basis upon which they seek financial support from other entities and even the public.

Principles for accountability

The principles for accountability in NPO should also apply such that they are answerable to the people they serve. Among the important principles for accountability is the public accountability principle. The principles guide accountability in NPOs by ensuring they report to the public about their progress, actions and decisions that affect the community. Another principle for accountability is the principle for disclosure of performance. NPOs need to inform the public the extent of their achievements or failure to achieve. This is to show whether their actions have achieved their goals or not.

Similarly, the principles governing accountability in financial like ensuring decisive financial governance and ensuring financial data are transparent should apply mostly to NPO. This is important especially for donors and other supporters who would wish to know how efficient the NPO is in using money to meet human needs and in line with their objectives. The principle of answering by those in power or those directly responsible should also hold for NPO. Senior management should answer to accountability issues and not leave them to junior staff.

Nature Conservancy strived hard to be accountable to the community it is serving by putting in place mechanisms that ensured all activities and actions by the management team and junior staff adhere to standards and principle of sound governance. Nature Conservancy has also demonstrated their responsibility to those who support their cause. The competence of managers is also not taken lightly thus ensuring ethical practices are upheld. Harlem Children’s Zone on the other hand showed some failure in the accountability test as seen in the way financiers was concerned with how they spent their funds. Harlem also is seen not to agree on the way to measure performance and thus making it hard to also measure accountability.

Bibliography

Frank J. C. (2012) Performance management challenges in hybrid NPO/public sector settings: an Irish case: International Journal of Productivity and Performance Management, 61(3)

Lanying D., Jundong H. & Yupeng H. (2008) Mechanisms of power and action for cause- related marketing: Perspectives of enterprise and non-profit organizations; Baltic Journal of Management 3 (1)

Light, P. (2000) Making Nonprofits Work: A Report on the Tides of Nonprofit Management Reform. Washington D.C.: Brookings Institution Press

Vijay P. & Manjulika V. (2005) Management Development in Non-profit Organizations:  A Programme for Governing Boards; SAGE

 

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