Financial and Strategic Management for Nonprofit Organizations, Fourth Edition

ISBN-13: 9781501514708 / Angielski / Miękka / 2017 / 790 str.

Herrington J. Bryce

Recenzje

"All in all, the fourth edition of Bryce's volume helps practitioners and students of nonprofit management alike to work out the best answers to these tricky questions."
Annette Zimmer in: Voluntas 29 (2018), 1130-1131

Spis treści

Acknowledgements | vii

About the Author | ix

Introduction: Teasing Your Managerial Imagination, Creativity and Resolve | 1

Part I: Why Us

Chapter 1: The Foundations of Nonprofit Management as Asset Management | 9

The Hierarchy | 10

The Need for a Nonprofit Perspective | 11

The Core Tasks of Managing Nonprofit Organizations | 12

Secular Growth of the Nonprofit Sector | 13

A Varied Sector | 14

The Nonprofit as an Asset | 16

Isomorphic Forces and Organizational Identity | 19

The Mission as Contract, Source of Expectation, Confidence and Style | 20

The Public Policy Process as the Principal Action Space | 22

Organization-Specific Opportunities in the Action Space | 23

The Link: Ethics, Effectiveness and Efficiency in Performance | 24

Stewardship | 25

Keeping Track for Evaluation and Direction | 27

Cost as a Driver and as Object of Efficiency | 30

Insufficiency of Contributions | 31

Collaboration | 38

Social Entrepreneurship | 39

Disclosures as Functional Tools | 42

Disclosure as a Management Philosophy or Attitude | 43

The Role of the State | 44

Conflict of Interest and Transactions with Related Parties | 45

Nonprofits as Tax Payers and the Value of Exemption | 45

Summary and Preview | 47

Postscript to Perspectives | 48

Footnotes | 49

Chapter 2: Managing the Corporation, Its Powers, and Exemption | 51

The Nonprofit Corporation: Its Creation, Powers and Prohibitions on

Management | 53

Specific Powers of the Nonprofit Corporation | 54

Specific Prohibitions | 56

How Does the Nonprofit Corporation Differ from a For-Profit Corporation | 58

Financial Advantages and Disadvantages of Exemption | 60

The Tax-Exempt Status: Its Privileges, Prohibitions, Responsibilities | 62

How is the Tax-Exempt Status Acquired First at the Federal Level | 64

How is Tax-Exempt Status Acquired on the State and Local Levels | 69

Factors That Threaten the Loss of Tax-Exempt Status Under 501(C)(3) | 74

Carrying Out a Dissolution | 81

Summary and Preview | 83

Footnotes | 83

Chapter 3: Managing the Nonprofit as a Public Corporation | 85

Forming the Publicly Supported Organization | 85

The Basic Requirements of 501(c)(3)s | 86

Privileges of Public Organizations | 86

The Public Charities: Section 509(a)(1) Organizations | 87

Proof of Public Support: 509(a)(1) | 88

Calculation of Public Financial Support: 509(a)(1) | 90

The Effect of Large Contributions on Public Support | 91

Unusually Large Gifts and Grants | 91

IRS Certification of Organization's Tax-Exempt Status | 92

Fee-For-Service Organizations: 509(A)(2) Organizations | 93

Diversification and Preservation of Tax-Exempt Status | 94

Comparison if 509(A)(1) and (A)(2) Organizations | 96

Category One: Subordinate Corporations | 97

Category Two: Closely Cooperating Affiliates | 99

Summary and Preview | 102

Chapter 4: Managing the Nonprofit as a Private Corporation | 103

The Private Foundation-What It Is | 103

The 501(C)(3) That Is Not Private | 104

The Performance-Based Group | 105

The Formula-Based Group | 106

Private Nonoperating Foundations | 106

Restrictions on Expenditures, Economic Transactions, and Investment | 107

Disqualified Persons | 107

Private Operating Foundations | 113

The Income Test | 113

Asset, Endowment, and Support Tests | 114

Soliciting Private and Community Foundations | 114

Private Foundations | 115

Community Foundations | 116

The Affiliated or Supporting Organizations | 117

The Donor Advised Fund | 117

Private Foundations, Public Foundations, and Charitable Organizations In

Canada | 118

Summary and Preview | 119

Chapter 5: Managing the Nonprofit as Instrument of Groups, Business, and

Politics | 121

Powers of Associations | 122

Associations of Individuals | 122

Civic Leagues and Welfare Organizations | 124

Agricultural Associations | 125

Business Associations | 126

Common Interest of Business Associations | 126

Non-deductibility of Business Lobbying Expenses | 127

Examples of Missions of Business Associations | 127

PACs, SUPERPACs, and Political Organizations including Parties and

Committees | 129

Federal Disclosures by Section 527 Organizations | 131

Social Clubs | 132

Fraternal Associations | 132

Cooperatives | 133

Religion | 134

Veterans | 134

Associations of Organizations | 135

Federations | 135

Affiliations | 136

Groups | 137

The Lodge System | 138

Holding Companies | 138

Common Trusts or Charitable Risk Pools | 139

Membership Powers, Duties, and Liabilities | 139

Stocks as Evidence of Membership | 140

Termination of Membership | 141

Political Involvement of Nonprofit Organizations | 141

Advantage of 501(c)(4) as a Political Vehicle | 142

State Example of Trying to Reign-in the 501(c)(4) | 142

The Feds and 501(c)(4) | 143

Citizens United v. Federal Election Commission as Decided

January 21, 2010 | 144

Non-partisan civic related actions of 501(c)(3) | 147

Summary and Preview | 149

Footnotes | 149

Chapter 6: The Governing Body: Trustees and Directors | 151

Public Interest in the Boards of Nonprofits | 152

A Functioning Board I | 154

A Functioning Board II | 155

Size and Composition of the Board | 156

Independent Members of the Board | 157

Public Officials as Trustees | 158

Organization of The Board into Committees | 158

Interlocking Directorates | 160

Term of Service on The Board | 161

Qualification and Removal of Trustees | 161

Transactions and Trustees | 163

Prohibition by Trustee Classification | 164

Dealing with Possibilities of Conflicts of Interests | 165

States and Trustee Conflict of Interest | 165

A Five-Part Conflict of Interest Policy | 166

Three General Standards of Action of Trustees | 169

Emergency and Appointive Powers of Trustees | 172

Instituting Procedures for Complaints and Corruption | 173

Duty of Organizations to Trustees and Their Rights | 174

Economic Transactions and The Trustees | 175

Bankruptcy and The Trustees | 177

Limitations on Trustee Indemnification | 184

Annual Disclosures of Involvement of Current and Past Trustees and Senior

Management | 185

Summary and Preview | 188

Footnotes | 188

Part II: We Need to Raise Money

Chapter 7: Stimulating Gifts and Contributions: Crafting The Appeal | 191

Individual and Corporate Motives for Giving | 192

Why People Give: New Findings | 194

Why Corporations Give | 198

Why Corporations May Say No | 199

Dangers in Receiving Gifts | 202

Type of Gift and Precaution | 202

Government Promotion of Giving | 204

Payroll Deduction | 204

Tax Deduction and Credit | 204

The Importance of Tax Deductibility of Contributions | 205

Tax Deductibility: Three Cases | 206

Required Characteristics of a Tax-Deductible Gift | 207

Borrowing to Make A Donation | 216

Problems of Accepting Gifts Subject to Debt | 216

Value of Gifts of Present Interests | 218

Gifts of Stocks: Perspectives of Donor And Donee | 222

Reporting Requirements and IRS Vigilance | 225

Limits On Giving | 225

Problems and Strategies of Large Gifts | 228

Mix Strategies | 231

Soliciting Disclosure: Charitable Fundraising 501(C)(3) | 232

Summary and Preview | 233

Footnotes | 233

Chapter 8: Deferred Giving: The Risk/Reward and Virtue of Patience | 237

The Uses of Trusts: Deferred, Extended Benefits, and Cash Flow | 238

Trusts as Charitable Organizations | 239

The Law and The Management of Trust Funds | 240

The Performance of Charitable Remainder Annuity Trusts | 243

Types of Charitable Remainder Trusts | 244

Charitable Lead Trusts | 247

Examples of The Application of Trust Concepts | 249

An Advanced Application of A Remainder Unitrust | 252

An Advanced Application of a Charitable Lead Trust | 252

The Uses of Wills: Gifts Deferred Until Death | 253

Life Insurance: Magnifying The Value of Small Gifts | 257

Death and the Collection of Gift | 258

Ownership | 258

Form of Gift | 259

Types of Policies | 261

Comparing Characteristics of Contracts | 263

Role of Insurance In Fund-Raising Strategy | 264

Annuities: Providing Income Flows | 267

Steps for Determining Deferred Giving Instruments | 269

Endowments: Perpetuating a Gift | 269

The Law and The Investment of Endowment and Other Institutional

Funds | 273

Four Essential Steps For An Endowment | 275

Valuation of Future Gifts | 276

Summary and Preview | 281

Footnotes | 282

Chapter 9: Entrepreneurial Revenues Generated by Mission | 283

What Is Business Income | 283

Sources of Business Income Opportunities | 284

Compatibility of Charity and Profits | 285

Now That You Know the Organization Can, Should It and How? | 294

How Will the Investment Affect the Tax-Exempt Status? | 294

How Suitable Is the Level of Entrepreneurship for This Organization? | 296

How to Acquire a Business | 298

Should the Business Be Related or Unrelated? | 299

Should the Business Be Separately Incorporated? | 299

Where Does the Money Come From To Acquire The Business? | 300

Is the Business Profitable? | 300

Is Profitability Enough? | 301

Can the Business Be Made Profitable? | 302

What Will the Investment Cost? | 304

From A Financial Perspective, Is the Investment Worth It? | 304

Do the Benefits Exceed the Costs? | 305

When Will The Organization Recapture Its Investment? | 307

What Are the Risks? | 307

What Will It Take to Break Even? | 308

What Can Be Done with The Earnings of The Business? | 309

How Will Entry into the Business Be Made? | 309

Is the Business Understood and Reflected in A Viable Plan Including When to

Exit, Shift Gears, and How to Operate? | 310

Is A Collaboration Appropriate for This Venture or Organization? | 311

Is There Competition? Is It Fair? | 311

What Do the Trustees Think of the Plan? | 312

Ethical Dilemma of Business Competition | 313

Summary and Preview | 314

Footnotes | 315

Chapter 10: Entrepreneurial Revenues Unrelated to Mission | 317

Definition of Related and Unrelated Nonprofit Businesses | 319

Excess Profits: A Distinction Between Related and Unrelated Income | 322

Integration of Business Operations into A Conglomerate Structure | 322

The Organization of an Unrelated Business | 325

Benefits, Consequences, and Opportunities of Unrelated Businesses | 326

Consequences of Unrelated Businesses | 327

Benign Origins of Unrelated Businesses | 328

Unrelated Business for Cost-Sharing Purposes | 329

Tax Treatment of Different Types of Business Income | 329

Sources of Unrelated Business Income: A Simplified View | 343

Ten Questions to Judge Whether Business Will Be Unrelated | 344

The Federal Tax | 344

Other Costs of Unrelated Business Income | 347

Key Points on Entrepreneurial Income in Nonprofits | 347

Summary and Preview | 348

Part III: Marketing the Good and Bad News: Convincing

Chapter 11: Marketing and Solicitation Guidance | 351

Solicitation | 351

The Solicitors for Charitable Purposes (Fundraisers) | 352

Federal Solicitation Rules for Charitable Purposes | 355

The Choice of Fundraising Contractor | 355

Non-Charitable Solicitation | 358

Commercial Marketing | 360

Choosing an Object of Marketing | 365

Choosing A Target | 366

Targeting by Income Levels | 367

Specific Risk Exposures of Nonprofits In Commercial Marketing | 369

The Importance of A Trustee Policy | 370

Charitable Solicitation: Massachusetts And Others | 371

Summary and Preview | 374

Footnotes | 375

Chapter 12: Restoring Trust: A Use of Relationship Marketing | 377

First, What Is Trust? | 377

Contracting | 378

The Distinction between Unrestricted and Restricted Donations as Trust

Transactions | 380

A Conundrum and Constraints On Restoring The Public Trust | 385

A Guide to Managing The Public Trust | 388

Summary | 390

Footnotes | 390

Part IV: The Inescapable Risks and Costs

Chapter 13: Corruption | 395

Types and Effects of Corruption in Nonprofit Organizations | 395

Sources and Opportunities for Corruption | 398

Managing the Risks of Corruption and Fraud | 399

Controls: A Transaction Approach | 400

Intelligence: Information and The Protection of Sources and Records | 403

The Internal Audit and Required Disclosures | 404

Summary and Review | 406

Footnotes | 406

Chapter 14: Negligence, Discrimination, Harassment and Abuse | 409

The Basics of Risk Management | 409

A Simplified Approach to Risk Identification and Intervention | 410

Types of Risks | 412

Protecting Against Liability of Independent Contractors | 414

Coverage: Shields Can Be Penetrated | 420

Discrimination Against the Disabled | 430

Summary and Preview | 433

Chapter 15: Compensation and Employee Benefits | 435

Excess Executive Compensation | 435

Key Employees and Reasonable Compensation | 437

Accidental Death and Dismemberment | 446

The Affordable Care Act and Nonprofits | 447

The Traditional Medical and Hospitalization Insurance Plans | 448

Health Maintenance Organizations | 451

COBRA | 453

Pensions | 453

Rabbi Trust | 460

SIMPLE Ira or 401(K) | 460

Cafeteria Plans | 464

Profit-Sharing Plan | 464

Fringe Benefits | 465

Discrimination in Medical Benefits | 470

To Discriminate or Not | 471

Ten Steps to Setting Up the Benefit Package | 472

Independent Contractors and Social Security | 472

Summary and Preview | 474

Chapter 16: Budgets: Controlling Costs and Sending a Message | 475

The Budget as A Management Tool | 475

The Budget as A Sum Of Parts | 476

The Budget as Contemporary History | 477

Capital and Operating Budgets | 478

Budgets as Baseline | 478

Budgets as Fiction | 478

Principles Underlying Budgets | 479

Zero-Based Budgeting and PPBS | 479

Efficiency: Costs and Support | 480

The Importance of Distinguishing Between Cash (Expenditures) and Costs In

Budgeting | 480

Classification and Treatment of Costs in Budgeting | 481

Unallowable Indirect Costs | 486

Capital, Operating, and Replacement Costs and Expenses | 491

Costs and Responsibility Centers | 493

Ten Steps to Cost Budgeting | 495

How to Estimate Costs Simply | 499

Key to Controlling Costs | 499

Leasing as A Fixed-Cost Strategy | 500

Outsourcing as A Cost Strategy | 501

Support and Revenues | 502

Allocating Dollars Across Programs | 503

Permanent Revenues and Fixed Costs | 505

Forecasting | 506

Illustration: Costs and Revenues and Their Relationship to the Budget | 507

Budgeting by Scenario | 510

Discretionary Forecasting and Budgeting | 512

Budget Formats: Form Follows Function | 512

Combinations of Program and Item Budgets | 512

Variances | 515

A Recommended Format for Using the Budget As a Control Tool | 518

A Budget Format for The Board | 521

Summary and Preview | 523

Part V: Financial Performance Future and Prolog

Chapter 17: The Financial Performance and the Strength to Continue | 527

Financial Statements as An Aid to Management | 527

The Balance Sheet or Statement of Financial Position | 528

Accounting for Financial Assets and Liabilities on the Balance Sheet | 534

Statement of Support, Revenues, and Expenses or Statement of

Activities | 535

Comparative Statement of Activities | 538

Statement of Changes In Financial Position | 539

Statement of Cash Flow | 543

Funds: A Managerial Accounting Perspective | 545

Illustration of Managerial Use of Financial Statements | 553

How Much Do Financial Statements Tell? | 566

Summary and Preview | 567

Chapter 18: Evaluating Old Targets and Setting New Ones | 569

Questions for Evaluating Old Targets | 570

Risks Inherent in Target Setting and in Target Achievement | 572

The Treasurer's Report as A Source of Intelligence for Setting Financial

Targets | 574

Cash Management and Investment Strategies: Increasing Cash | 576

Borrowing as A Source of Cash | 578

Short-Term Borrowing | 579

Uses of Cash | 584

Summary and Preview | 612

Part VI: Steady Growth

Chapter 19: Growth: The Search for Opportunities and Alliances | 615

Issues to Guide Growth Considerations | 615

Collaboration | 622

Summary and Preview | 638

Footnotes | 638

Chapter 20: Organic Growth by Program Expansion | 639

Strategic Stations for Program Choice | 639

Strategic Options: Profits Versus Mission | 644

Summary And Review | 668

Chapter 21: Growth by Accretive Action and Dissolution | 669

The Importance of Structure | 669

A Holding Company and Its System | 670

Principles behind Corporate Organizations | 671

Pitfalls of Reorganizing a Nonprofit in any Way | 673

Antitrust | 673

States in Reorganizations | 674

Types of Reorganization | 680

Summary and Conclusion | 692

Appendix A | 695

Appendix B: National Taxonomy of Tax-Exempt Entities -Core Codes | 697

Appendix C: Mathematics of Lobbying Expenditures | 707

Lobbying expenditures limits | 707

Appendix D: Sample Conflicts of Interest Policy (Revised 5/22/97) | 709

Article I: Purpose | 709

Article II: Definitions | 709

Article III: Procedures | 710

Article IV: Records Of Proceedings | 711

Article V: Compensation Committees | 711

Article VI: Annual Statements | 711

Article VII: Periodic Reviews | 712

Article VIII: Use of Outside Experts | 712

Appendix E: New York State | 713

Conflict of Interest Policy: Minimum Statutory Requirements | 714

Appendix F: Breakeven Point | 719

Appendix G: Key Concepts in Federal Contracting and Glossary of Common

Financial Terms Found in Such Contracts | 721

Key Concepts in Federal Contract Management | 721

Appendix H: Risks of Cost Denial | 729

Index | 732

O autorze

Herrington J. Bryce was a senior economist at the Urban Institute, a Brookings Economic Policy Fellow, a Fellow at the Institute of Politics at Harvard and a visiting professor in regional economics and planning at the Massachusetts Institute of Technology. He taught micro economic theory and public finance at Clark University in Worcester, Massachusetts, and was director of the program in legal and budget studies at the University College at the University of Maryland. He currently teaches courses at the College of William & Mary in nonprofits but mostly in corporate financial strategy and cost management. He has published extensively and has served on many state, local and federal government advisory committees. He has a PhD in economics from the Maxwell School at Syracuse University, and a Clu and ChFc from the American College.