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Nonprofit MANAGEMENT
Principles and Practice
Fourth Edition
2
SAGE was founded in 1965 by Sara Miller McCune to support the dissemination of usable
knowledge by publishing innovative and high-quality research and teaching content.
Today, we publish more than 850 journals, including those of more than 300 learned
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remains majority-owned by our founder, and after Sara’s lifetime will become owned by a
charitable trust that secures our continued independence.
3
Nonprofit MANAGEMENT
Principles and Practice
Fourth Edition
Michael J. Worth
The George Washington University
Los Angeles
London
New Delhi
Singapore
Washington DC
4
Copyright © 2017 by SAGE Publications, Inc.
All rights reserved. No part of this book may be reproduced or utilized in any form or by
any means, electronic or mechanical, including photocopying, recording, or by any
information storage and retrieval system, without permission in writing from the publisher.
FOR INFORMATION:
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Proofreader: Dennis W. Webb
Description: Fourth edition. | Los Angeles : SAGE, [2017] | Includes bibliographical references and index.
16 17 18 19 20 10 9 8 7 6 5 4 3 2 1
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Brief Contents
1. Acknowledgments
2. Preface
3. PART I. Understanding Nonprofit Management, the Nonprofit Sector, and
Nonprofit Organizations
4. 1. Nonprofit Management as a Profession and a Field of Study
5. 2. Overview of the Nonprofit Sector
6. 3. Theories of the Nonprofit Sector and Nonprofit Organizations
7. PART II. Governing and Leading Nonprofit Organizations
8. 4. Nonprofit Governing Boards
9. 5. Executive Leadership
10. PART III. Managing the Nonprofit Organization
11. 6. Ensuring Accountability and Measuring Performance
12. 7. Developing Strategy and Building Capacity
13. 8. Collaborations, Partnerships, and Mergers
14. 9. Managing Staff and Service Volunteers
15. 10. Marketing and Communications
16. 11. Advocacy and Lobbying
17. PART IV. Obtaining and Managing Resources
18. 12. Financial Management
19. 13. Philanthropic Fundraising
20. 14. Earned-Income Strategies
21. 15. Government Grants and Contracts
22. PART V. Special Topics
23. 16. Social Entrepreneurship and Innovation
24. 17. Governing and Managing International and Global Organizations
1. Conclusion
2. Appendix: Cases for Discussion
1. 1. New York City Opera
2. 2. Share Our Strength
3. 3. The Y
3. References
4. Index
5. About the Author
7
Detailed Contents
Acknowledgments
Preface
PART I. Understanding Nonprofit Management, the Nonprofit Sector, and
Nonprofit Organizations
1 Nonprofit Management as a Profession and a Field of Study
A Revolution in Management
A Distinct Profession
Nonprofit Management as a Field of Study
Toward a Balanced Approach
Proceeding With Realism and Pride
Chapter Summary
Key Terms and Concepts
Questions for Discussion
Suggestions for Further Reading
Books/Journals
Articles
Websites
2 Overview of the Nonprofit Sector
America’s Nonprofit Sector: A Historical Overview
Searching for a Common Vocabulary
Alternatives to Nonprofit
Size of the U.S. Nonprofit Sector
Differentiating the Nonprofit Sector
National Taxonomy of Exempt Entities
IRS Classifications
Salamon’s Anatomy
The Spectrum of Organizations
Emerging New Models
Commercialization and Tax Exemption
Implications for Nonprofit Managers
Chapter Summary
Notes
Key Terms and Concepts
◼ Case 2.1. A Hybrid Organization: The GlobalGiving
Foundation and ManyFutures Inc.
◼ Case 2.2. A Double Bottom Line: Ben & Jerry’s
Questions for Discussion
Suggestions for Further Reading
Books
8
Articles
Websites
3 Theories of the Nonprofit Sector and Nonprofit Organizations
Explaining the Nonprofit Sector
Nonprofit Theory Across the Disciplines
The Failure Theories
Market and Government Failure
Nonprofits as Gap Fillers
Supply-Side Theories
Theories of Altruism and Giving
Theory of the Commons: An Interdisciplinary Approach
Changing Definitions of Private, Public, and Common
Explaining Nonprofit Organizations
Characteristics of Nonprofit Organizations
Nonprofits as Open Systems
Resource Dependency
Isomorphism
Explaining Nonprofit Organizational Structures
Organizational Culture
Chapter Summary
Note
Key Terms and Concepts
◼ Case 3.1 The Smithsonian Institution and the Catherine B.
Reynolds Foundation
◼ Case 3.2 The National Trust for Historic Preservation
Questions for Discussion
Suggestions for Further Reading
Books
Articles
PART II. Governing and Leading Nonprofit Organizations
4 Nonprofit Governing Boards
Types of Governing Boards
Elected Boards
Self-Perpetuating Boards
Appointed and Hybrid Boards
Advisory Boards and Councils
The Governing Board’s Responsibilities
The Governing Board’s Legal Responsibilities
The Governing Board’s Functional Responsibilities
The Board and the CEO
Carver’s Policy Governance Model
Chait, Ryan, and Taylor: Governance as Leadership
9
Herman and Heimovics: Psychological Centrality and Board-
Centered Leadership
Explaining Board Behavior
Managing Nonprofit Boards
Role of the Chair
Governance Committee
Board Professionals
Nonprofit Board Effectiveness
Critics of Board Performance
The Search for Best Practices
The Challenge of Nonprofit Governance
Chapter Summary
Note
Key Terms and Concepts
◼ Case 4.1 The American University
◼ Case 4.2 The Hershey Trust
Questions for Discussion
Suggestions for Further Reading
Books
Websites
5 Executive Leadership
The CEO’s Job
Management and Leadership
Overview of Leadership Theories
Transformational Leadership
Charismatic Leadership
The Effective Nonprofit CEO
Focus on Mission
Focus on the Board
Focus on External Relationships
Share Leadership and Empower Others
Focus on Key Roles and Priorities
Use the “Political Frame”
Right Person, Right Place, Right Time
Founder Syndrome
Executive Transitions
Leading Change
Chapter Summary
Note
Key Terms and Concepts
◼ Case 5.1 A Change in Leadership at Habitat for Humanity
◼ Case 5.2 Challenge and Change at United Way
10
Questions for Discussion
Suggestions for Further Reading
Books
Article
Websites
PART III. Managing the Nonprofit Organization
6 Ensuring Accountability and Measuring Performance
Defining and Ensuring Accountability
Mechanisms for Accountability
Requirements of Law
Self-Regulation: Standards and Accreditation
Transparency
Measuring Performance
Financial Ratios
Benchmarking
Outcomes
Common Indicators
Balanced Scorecard
Social Return on Investment
Blended Value
Performance Measurement: The Continuing Debate
Chapter Summary
Key Terms and Concepts
◼ Case 6.1 Greg Mortenson and the Central Asia Institute
◼ Case 6.2 Youth Villages
Questions for Discussion
Suggestions for Further Reading
Books
Articles/Report
Websites
7 Developing Strategy and Building Capacity
Understanding Strategy
Strategic Planning and Strategic Management
The Strategic Planning Process
Planning to Plan
Defining Mission, Values, and Vision
Assessing the Situation
Identifying Strategic Issues
Setting Goals
Developing Strategies
Setting Objectives
Writing the Strategic Plan
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Developing an Operational Plan
Benefits and Limitations of Strategic Planning
Building Organizational Capacity
Defining and Understanding Capacity
Capacity Building in Action
A Model for Capacity Building
Capacity and Organizational Life Cycles
Capacity Building Evaluated
Chapter Summary
Key Terms and Concepts
◼ Case 7.1 New Hope Housing Strategic Plan 2011–2016
Questions for Discussion
Suggestions for Further Reading
Books/Brochure
Websites
8 Collaborations, Partnerships, and Mergers
Growing Interest in Collaboration
A Continuum of Relationships
Exploring Collaborations and Mergers
Drivers of Collaborations and Mergers
Obstacles to Collaboration and Merger
Motivations
Culture
Egos
Brand Identity
Community or Political Objections
Costs
Conditions for Success
Driven by Mission
Commitment From Top Leadership
Trust
Relatedness
Process
Collaborations and Mergers Within National Nonprofits
Cross-Sector Collaboration
A Continuum of Cross-Sector Collaboration
Advantages and Disadvantages of CSCs
Obstacles and Conditions for Success
Achieving Collective Impact
Chapter Summary
Key Terms and Concepts
◼ Case 8.1 N Street Village and Miriam’s House
12
Questions for Discussion
Suggestions for Further Reading
Books
Articles/Report
Websites
Notes
9 Managing Staff and Service Volunteers
Human Resources Management
An Overview of Management Theories
Understanding Human Motivations
Maslow’s Hierarchy of Needs
McGregor: Theory X and Theory Y
McClelland: Three Needs Theory
Myers and Briggs: Personality Types
Herzberg: Motivators and Dissatisifers
Motivations of Nonprofit Staff
Life Cycles and Generations
Applying Theories to Managing the Nonprofit Workforce
Managing Volunteers
Types of Volunteers
Motivations of Volunteers
Volunteer Program Practices
Volunteer Management as a Career Field
The Future of Volunteerism
Chapter Summary
Key Terms and Concepts
◼ Case 9.1 Getta Grant
◼ Case 9.2 Rita Writer
◼ Case 9.3 Bob the Builder
◼ Case 9.4 Myra the Volunteer Manager
Questions for Discussion
Suggestions for Further Reading
Books
Websites
10 Marketing and Communications
Defining and Understanding Marketing
Marketing Serves the Mission
Marketing Means Action
Marketing as a Process
The Marketing Mix
Product
Place
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Promotion
Market Segmentation
Price
Defining the Exchange
Building the Brand
Integrated Marketing Communication (IMC)
Crafting an Effective Message
Crisis Communications
Online Media
Evaluating Marketing and Communication
Chapter Summary
Note
Key Terms and Concepts
◼ Case 10.1 AARP
◼ Case 10.2 Susan G. Komen Foundation
Questions for Discussion
Suggestions for Further Reading
Books/Journals
Websites
11 Advocacy and Lobbying
Basic Distinctions
Overview of Lobbying Law
Option I: Substantial Part Test
Option II: 501(h) Expenditure Test
Political Campaign Activity
Implementing an Advocacy Program
Continuing Issues and Debate
Chapter Summary
Note
Key Terms and Concepts
◼ Case 11.1 Mothers Against Drunk Driving (MADD)
◼ Case 11.2 CASA
Questions for Discussion
Suggestions for Further Reading
Books
Articles
Websites
PART IV. Obtaining and Managing Resources
12 Financial Management
Definitions of Key Concepts
Overview of Nonprofit and Personal Finances
Nonprofit Financial Statements
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Statement of Financial Position
Statement of Activities
Statement of Cash Flows
Statement of Functional Expenses
Using Financial Ratios
Managing Endowment Funds
Developing and Managing the Budget
Risk Management, Financial Policies, and Controls
Chapter Summary
Notes
Key Terms and Concepts
◼ Case 12.1 Hull House
◼ Case 12.2 Corcoran Gallery of Art and Corcoran School of the
Arts and Design
Questions for Discussion
Suggestions for Further Reading
Books
Websites
13 Philanthropic Fundraising
Definitions and Distinctions
Motivations for Giving
Understanding Corporate Philanthropy
Foundation Giving
Motivations of Individual Donors
The Fundraising Process
Identifying Priorities and Developing the Case
Identifying and Qualifying Prospects
Cultivating Prospects
Soliciting the Gift
Acknowledging and Recognizing Donors
Stewarding the Gift and the Relationship
Individual Donor Life Cycles
Planned Giving
Campaigns
Managing Fundraising Programs
Advancement Services
Prospect Management
Fundraising Efficiency and Effectiveness
Staff Performance and Accountability
Ethics and Professional Standards
Chapter Summary
Note
15
Key Terms and Concepts
◼ Cases 13.1a–g Fundraising Ethics
Questions for Discussion
Suggestions for Further Reading
Books
Articles
Websites
14 Earned-Income Strategies
Why Earned Income?
Partnerships With Business
Licensing
Sponsorships
Cause Marketing
Operational Relationships
Putting Partnerships Together
Nonprofit Business Ventures
Identifying Business Opportunities
Feasibility Analysis and Business Planning
Earned-Income Strategies: Issues and Decisions
Sorting Out the Issues
Evaluating Opportunities Against Mission
A Continuing Debate
Chapter Summary
Key Terms and Concepts
◼ Case 14.1 Minnesota Public Radio
◼ Case 14.2 Aspire CoffeeWorks
Questions for Discussion
Suggestions for Further Reading
Books
Websites
15 Government Grants and Contracts
Changes in Sources and Patterns of Support
Grants, Contracts, and Fees
Government Support: Opportunities and Challenges
Seeking Government Support
Identifying Grant Opportunities
Evaluating Grant Opportunities
Preparing and Submitting an Application or Proposal
Nonprofits in the Policy Arena
Chapter Summary
Key Terms and Concepts
◼ Case 15.1 SEED Foundation
16
Questions for Discussion
Suggestions for Further Reading
Books/Reports
Websites
PART V. Special Topics
16 Social Entrepreneurship and Innovation
Defining and Understanding Social Entrepreneurship
Social Enterprise School
Social Innovation School
History of Social Entrepreneurship as a Field
Theories of Social Entrepreneurship
Social Entrepreneurship Across Fields and Around the World
Building High-Impact Nonprofits
Sustaining Innovation
The Future of Social Entrepreneurship
Chapter Summary
Key Terms and Concepts
◼ Case 16.1 KaBOOM!
◼ Case 16.2 Harlem Children’s Zone
Questions for Discussion
Suggestions for Further Reading
Books/Articles
Websites
17 Governing and Managing International and Global Organizations
Definitions and Scope of International Organizations
International Philanthropy and Fundraising
International Giving
Global Fundraising
International Nonprofit Governance and Management
Managing Across Cultures
Governing International and Global Organizations
Structuring International NGOs
Chapter Summary
Key Terms and Concepts
◼ Case 17.1 Médecins Sans Frontières/Doctors Without Borders
◼ Case 17.2 Haitian Earthquake Relief and Recovery
Questions for Discussion
Suggestions for Further Reading
Books
Websites
Conclusion
Appendix: Cases for Discussion
17
Ancillaries
Ancillary materials further support and enhance the learning goals of the fourth edition of
Nonprofit Management. These ancillary materials include:
Instructor Resources
Test banks with multiple choice, true/false and essay questions for each chapter
Editable chapter-specific PowerPoint slides
Sample course syllabi
Chapter outlines
Case activities
Discussion questions for each chapter
Student Resources
Video and multimedia links
EXCLUSIVE! Access to certain full-text SAGE journal articles that have been
carefully selected for each chapter
29
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