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You will compare an international non-governmental organization (INGO) working in other countries, with the US nonprofit organization you chose

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You will compare an international non-governmental organization (INGO) working in other countries, with the US nonprofit organization you chose.

Consider how you will find the necessary information to complete each of the different elements of the paper, and briefly describe how you propose to (1) research and compare the two organizations and (2) incorporate course concepts to complete the final paper.

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Your proposal should be 500-750 words in length and cite at least 3 appropriate sources in APA style. Please submit it as a Word document, using your last name as the first word in the document name.

The Center for International Environmental Law Yishu Gu MPPA 413 Professor Ricca Slone April 18, 2021 2 The Center for International Environmental Law Date and Place of Founding The Center for International Environmental Law (CIEL) is a not-for-profit, nongovernmental organization (NGO) founded in 1989 in the United States to enhance international and comparative environmental policy and law worldwide (Lucia, 2015). Sinisa Franjic mentions that “Law, as a scientific discipline, plays a significant role in these endeavors” (Sinisa, 2013). CIEL offices are found in Washington DC, Geneva, and Switzerland. Global public interest promoted the CIEL foundation as countries wanted to establish a sustainable society. On the other hand, Environmental Defense Fund (EDF) is a not-for-profit, governmental organization founded in 1967 in the U.S. to eliminate toxic pesticides. EDF headquarters are found in New York City and have multiple offices across the U.S. The organization's staff consists of scientists and policymakers who operate worldwide. The Sphere of Action CIEL provides legal counsel and advocacy, and capacity building in biodiversity, climate change, chemicals, plastics, international financial institutions, human rights, and sustainable development. Moreover, CIEL supports communities, defends the environment from looming threats, and changes systems that contribute to these threats. Haas et al. (2017) argue that CIEL innovates legal drives for change to ensure a healthy environment. Like CIEL, EDF focuses on establishing a healthy environment by addressing global warming, human health, and ecosystem restoration. EDF has a similar purpose to CIEL as both find solutions to environmental problems, promoting human health. Countries Where It Works 3 CIEL operates worldwide. Examples of countries in which CIEL works include The U.S., Australia, Switzerland, India, and Canada. As a global organization, CIEL has trained over 400 interns from fifty-three countries, providing a vital education opportunity for lawyers (Nanda & Pring, 2020). Like CIEL, EDF works is a global organization, serving more than fifteen countries. Examples of countries in which EDF works include the U.S., China, New Orleans, AsianPacific, India, and Europe. In particular, EDF helps China manage carbon emissions. Nanda & Pring (2020) reveal that EDF works with the Chinese government to increase energy efficiency by promoting renewable energy. EDF also supports small farms in India by addressing drought and electricity. Background of the Organization CIEL's mission is to use the power of law to promote human rights, protect the environment, and ensure a sustainable society. CIEL focuses on improving the law to enhance the interconnection between the environment and humans (Lucia, 2015). The organization ensures all people's dignity and equality and encourages the earth's inhabitants to live in a balanced environment. On the other hand, EDF's mission is to preserve the natural system on which all lives depend. CIEL's and EDF's mission statements are related because they focus on improving the ecosystem. EDF provides evidence-based and long-term solutions to critical environmental problems. Major Developmental, Legal, and Financial Considerations CIEL addresses governance and accountability gaps regarding human rights and environmental health. According to Nanda & Pring (2020), CIEL's environmental health 4 programs improve the regulation of toxic chemicals worldwide and prevent actions that would abuse human rights. The program involves high experienced professionals who help reform U.S., E.U. and global laws regarding chemical management. The partnership is crucial for CIEL functions, as it provides financial resources and a legal framework to limit toxic exposure. Unlike CIEL that depends on partnerships for financial resources, EDF receives financial support from the government. However, Nanda & Pring (2020) reveals that EDF receives financial assistance from donors. Both CIEL and EDF work collaboratively with partners to ensure a legal work environment. For instance, EDF incorporates research, communication, legal advisory, lawyers, and scientists into its environmental protection programs. How the INGO Interact with Sovereign Nations CIEL uses Reaffirmation of the Human Rights Council Resolution to interact with sovereign nations. This body contains principles that align with sovereign equality and territorial integrity. This way, CIEL meets domestic and international affair standards for sovereign nations (Haas et al., 2017). Unlike CIEL, EDL supports the Conference of the Parties (COP) Durban Decisions to meet severing nations' standards. EDL believes that COP is key to ensuring domestic and international accountability, enhancing environmental health in sovereign nations. The U.N. Sustainable Developmental Goals CIEL supports Sustainable Development Goal (SDG) 10 and 13, which involve reducing inequality and climate action, respectively. CIEL supports SDG 3 by preventing human rights abuse, creating equal opportunities for every person. Moreover, CIEL supports SDG 13 by finding evidence-based and long-term solutions for critical environmental problems. 5 CIEL supports the same SDGs as EDL since they focus on creating a sustainable environment. Like CIEL, EDL addresses various environmental issues, such as toxic exposure, and improves laws and policies to support a healthy environment. From this perspective, both CIEL and EDL are relevant to the U.N. SDGs. The Organization's Budget CIEL’s budget is about $3,000,000. For instance, in 2019, the CIEL budget met total functional expenses of $2,765,096, including program expenses, administrative expenses, and fundraising expenses (Nanda & Pring, 2020). CIEL's revenue is about $3,500,000, which results from contributions, federated campaigns, membership dues, fundraising events, related organizations, and government grants. EDL has higher revenue and budget than CIEL, as its budget was $210,596,470 and about 3000 million revenues in 2020. Government contribution accounts for sixty-eight percent of the revenue, unlike CIEL, which receives a little or no contribution from the government. 6 References Haas, P. M., Keohane, R. O., & Levy, M. A. (Eds.). (2017). Institutions for the earth: CIEL sources of effective international environmental protection. Mit Press. Lucia, V. (2015). Competing narratives and complex genealogies: The ecosystem approach in international environmental law. Journal of Environmental Law, 27(1), 91-117. Nanda, V., & Pring, G. R. (2020). International environmental law and policy for the 21st century. Martinus Nijhoff Publishers. Sinisa Franjic. Importance of Environment Protection on the Global Level. Sci J Research & Rev. 1(2): 2018. SJRR.MS.ID.000506. Managing Nonprofit Organizations in a Policy World Managing Nonprofit Organizations in a Policy World Second Edition Shannon K. Vaughan Shelly Arsneault To Burton and Reagan S.V. To Dave and Maya, public servants who work to achieve social equity for all. S.A. Managing Nonprofit Organizations in a Policy World, 2nd Edition © 2021 by Shannon K. Vaughan and Shelly Arsneault All Rights Reserved. Published by Melvin & Leigh, Publishers 6 Curie Court Irvine, CA 92617 orders.melvinleigh@cox.net www.melvinleigh.com Cover design by Jesse Sanchez Production by Stacey Victor ISBN: 978-1-73393449-7 No part of this publication may be reproduced or transmitted in any form or by any means electronic or mechanical, including photocopy, recording or any information storage and retrieval system now known or to be invented, without permission in writing from the publisher, except by a reviewer who wishes to quote brief passages in connection with a review written for inclusion in a journal, magazine, newspaper, broadcast or website. Printed in the United States of America on mixed recycle paper Visit our home page at www.melvinleigh.com BRIEF TABLE OF CONTENTS Preface Part I Fundamentals and Environment of the Voluntary Sector 1. What Is the Nonprofit Sector? 2. Philanthropy and Foundations 3. Collaboration and Conflict between the Public, Nonprofit, and For-Profit Sectors 4. Theories of the Nonprofit Sector and Policy Change 5. Regulating Not-for-Profit Organizations Part II Strategies of Not-for-Profit Organizations 6. The Role of Mission and Strategic Planning 7. Lobbying and Advocacy: Politics, Policy, and Possibilities 8. Ethics and Accountability 9. Marketing and Branding the Nonprofit Organization 10. Resource Development: Capacity, Campaigns, Commercial Ventures, and Grants Part III Management Issues 11. Administration and Management 12. Nonprofit Governance and Leadership 13. Managing Human Resources: Volunteers and Staff 14. Evaluating Success 15. Looking Forward: Emerging Trends for Managing Nonprofits xvii 1 3 25 51 77 99 127 129 152 182 202 227 259 261 291 319 349 376 Index395 v DETAILED TABLE OF CONTENTS Preface xvii Part I Fundamentals and Environment of the Voluntary Sector 1 1. What Is the Nonprofit Sector? 3 What Is a Nonprofit 4 Nonprofits and Public Problems 4 Types of Nonprofits 6 Public Charities 6 Other 501(c) Nonprofits 8 Classification of Nonprofits 9 Scope and Function of the Nonprofit Sector 11 Growth of the Nonprofit Sector 12 Economic Impact of Nonprofits 13 Public Problems and the Policy Process 14 Stages of the Policy Process 16 Collaboration 17 Our Approach 17 Questions for Review 20 Assignment20 Suggested Readings 21 Web Resources 21 Endnotes21 2. Philanthropy and Foundations American Philanthropy Origins of Philanthropy in the United States 26 What Is a Philanthropic Foundation? Types of Foundations and Other Philanthropic Giving Philanthropy and Policy Solutions Philanthropy in the 21st Century 34 Challenges for Foundations and Philanthropy 40 25 26 27 28 32 vii viii Detailed Table of Contents Conclusion42 Questions for Review 42 Assignment43 Suggested Readings 43 Web Resources 43 Endnotes44 3. Collaboration and Conflict between the Public, Nonprofit, and For-Profit Sectors 51 The U.S. Federal System and Its Relationship with Nonprofit Organizations 52 Nonprofit Federalism 54 The Three Sectors 55 Characteristics of the Three Sectors 56 Intersectorality and Welfare Policy 57 Faith-Based Organizations 59 Not-for-Profit Organizations as Government Contractors 60 Cross-Sector Competition and Conflict 61 Cross-Sector Collaboration 63 Conclusion69 Questions for Review 70 Assignment71 Suggested Readings 71 Web Resources 71 Endnotes72 4. Theories of the Nonprofit Sector and Policy Change 77 Theories of the Nonprofit Sector 77 Demand-side Theories: Nonprofits Form to Respond to Unmet Needs 78 Supply-side Approach: Personal Interests and Resources Drive the Development of Nonprofits 80 Demand, Supply, and Theories of Resource Dependency 80 Compliance Costs of Resource Dependence 82 Nonprofit Impact on Democratic Theory 82 Nonprofits and Public Policy Change 84 Functional and Legislative Theories of Federalism 84 Punctuated Equilibrium Theory: Explaining Non-incremental Policy Change 85 Multiple Streams Theory: Coupling Problems, Policies, and Politics for Change 88 Stages of the Process as Venues for Policy Change 92 Policy Change in the States 93 Policy Diffusion between the States 93 Internal Determinants of State Policy Adoptions 94 Conclusion94 Questions for Review 94 Assignment95 ix Detailed Table of Contents Suggested Readings 95 Web Resources 95 Endnotes96 5. Regulating Not-for-Profit Organizations 99 Regulatory Policy Increasingly Affects Nonprofits 100 Nonprofits Subject to Federal Government Regulation 101 Rules and Regulations of the Internal Revenue Service 101 Lobbying: IRS and Supreme Court Action Regarding Nonprofits’ Political Activity 105 Congressional Oversight and Legislation Directly Affect Nonprofit Action 106 State Regulation: Offices of the Secretary of State and Attorney General 110 Board Members and the Duty of Care 111 Donor-imposed Restrictions on Gifts 111 Regulation of Charitable Solicitations by the States 114 Indirect Regulation: Courts and Contracts 114 Government Grants and Contract Compliance 115 Direct Regulation through the Courts 115 Self-Regulation in the Voluntary Sector 116 Watchdog Groups as Sector Regulators 116 Using Accreditation to Enforce Standards and Best Practices 118 Conclusion119 Questions for Review 119 Assignment120 Suggested Readings 120 Web Resources 120 Endnotes121 Part II Strategies of Not-for-Profit Organizations 127 6. The Role of Mission and Strategic Planning 129 The Mission: Critical for Nonprofit Success Organizational Values and the Role of Stakeholders The Role of Leadership in Planning and Meeting Needs Managing the Mission The Nonprofit Mission and Change 134 The Importance of the Mission Statement 138 Organizational Vision 140 Strategic Planning Organizational Goals 142 Organizational Accounting and Identification of Problems Systematic Planning and Implementation 145 Measuring and Evaluating Outcomes 145 Learning from Evaluation 146 129 130 131 133 142 143 x Detailed Table of Contents Conclusion147 Questions for Review 148 Assignment148 Suggested Readings 148 Web Resources 148 Endnotes149 7. Lobbying and Advocacy: Politics, Policy, and Possibilities 152 Articulating the Nonprofit Voice within Governmental Constraints 153 Who’s Afraid of Advocacy? 153 Nonprofit Advocacy Can Shape the Policy Environment 155 The Importance of Advocacy in Pursuit of Mission 156 Lobbying within the Limits 164 Myths about Nonprofits and Lobbying 165 Lobbying Allowable under the Law 166 Limits on Lobbying: The “Substantial Part Test” and 501(h) 167 Other Options: 501(c)(4) Affiliation and Professional Lobbying 169 Public Policy Advocacy and Foundations 171 Shaping Policy, Strengthening Community 172 Conclusion173 Questions for Review 174 Assignment174 Suggested Readings 174 Web Resources 175 Endnotes174 8. Ethics and Accountability 182 Importance of Ethics in Nonprofit and Policy Interactions 183 Developing Organizational Commitment to Ethics and Accountability 184 Transparency Combats Corruption, Inhibits Compromise, and Affects Policy 184 The Importance of Accountability 187 Fostering a Strong Ethical Culture 189 System of Accountability: Influences on Nonprofit Behavior 190 External Constraints on Nonprofits 190 Internal Measures Exercised by Nonprofits 194 Conclusion197 Questions for Review 197 Assignment198 Suggested Readings 198 Web Resources 198 Endnotes199 Detailed Table of Contents 9. Marketing and Branding the Nonprofit Organization xi 202 Marketing Basics 203 General Marketing Principles and Techniques 203 Marketing in a Nonprofit Environment 204 The Importance of a Marketing Plan 204 Identifying the Nonprofit’s Target Audience 205 Differentiating the Nonprofit through Positioning 212 Developing the Nonprofit’s Brand Identity 214 Corporate Social Responsibility as a Source of Nonprofit Support 216 Nonprofit Fundraising Events and Corporate Sponsorship 217 Benefits and Risks of Product Endorsements and Licensing Agreements 218 Cause-Related Marketing 219 Conclusion220 Questions for Review 221 Assignment221 Suggested Readings 222 Web Resources 222 Endnotes223 10. Resource Development: Capacity, Campaigns, Commercial Ventures, and Grants The Sector’s Fiscal Health and Capacity Nonprofit Sustainability 229 Resource Dependence and Revenue Diversification Sources of Revenue and Their Relation to Mission 230 The Role of Grants in the Nonprofit Sector Types of Grants Project or Program Grants 231 Operating Grants 232 Seed Money 232 Challenge or Matching Grants 233 Government Grants and Fee-for-Service Contracts 233 Distribution of Government Grants Block Grants 234 Formula Grants 234 Project Grants 234 Line-item Appropriations 235 Public Goods and Services via Government Contracts Delivery of Services 235 Government Monitoring 236 Contract Termination or Renewal 236 Government Influence and the Risk to Nonprofits 236 227 228 229 231 231 234 235 xii Detailed Table of Contents Earned Income as a Stable Source of Revenue 237 Commercial Ventures: Bake Sales to Thrift Shops 237 Social Enterprises: Social Aims with Market Principles 238 The Role of Corporate Giving and Sponsorship 238 Why Corporations Give 239 The Influence of Corporate Philanthropy 239 Individual Contributions and Fundraising 240 Using Electronic Media to Solicit Contributions 241 The Gift of Giving 242 Special Events Fundraising 242 Endowments Promote Long-Term Viability 243 Legal Restrictions on Endowments 243 The Policy Implications of Charitable Giving 245 Public Policy Consequences of Grants and Contracts 248 Government Funding of Policy Priorities 248 Conclusion249 Questions for Review 250 Assignment250 Suggested Readings 251 Web Resources 251 Endnotes252 Part III Management Issues 11. Administration and Management Managing Nonprofit Organizations Organizational Structures and Behavior 262 Systems Theory and the Impact of Internal and External Pressures 262 Differing Management Needs across Sectors Good Management in the Nonprofit Sector Communication and Relationships 267 A Hands-on Approach 268 Performance Standards 269 Nonprofit Effectiveness and Efficiency A Nonprofit Business Plan Managing for Social Impact 272 Organizational Reforms and the Quest for Improvement Capacity Building and Successful Nonprofits Organizational Reform Efforts and Management Challenges Unique to Nonprofits 276 Financial Management and Budgeting Financial Issues Unique to Nonprofit Organizations 277 Revenue Diversification 277 Investment Strategies 278 Nonprofit Budgeting: Roles and Responsibilities 279 Nonprofit Budgeting: Types of Budgets and Financial Statements 283 259 261 261 266 267 270 271 273 273 276 Detailed Table of Contents xiii Conclusion284 Questions for Review 285 Assignment285 Suggested Readings 285 Web Resources 285 Endnotes286 12. Nonprofit Governance and Leadership 291 The Shared Responsibility of Nonprofit Governance and Leadership 292 Governance and Achieving the Mission of Nonprofit Organizations 292 Theories of Organizational Leadership 293 Boards and Executives as Leaders 294 Making Strategic Choices for Mission Achievement 295 The Relationship between Boards and Executives 295 Executive Transitions 296 The Difference that Leadership Makes 300 Boards of Directors 301 Theories of Nonprofit Board Behavior 302 The Legal Environment of Nonprofit Boards 303 What We Know about Nonprofit Boards 305 Roles and Responsibilities of Board Members 306 Board Life Cycle and Engagement 308 Board Structure and Development 308 Best Practices for Boards 310 Conclusion312 Questions for Review 313 Assignment313 Suggested Readings 314 Web Resources 314 Endnotes314 13. Managing Human Resources: Volunteers and Staff 319 Management of Nonprofit Human Resources Strategic Human Resource Management Recruitment and Assessment 321 Motivating Nonprofit Employees 323 Performance 326 The Growth of Professionalism in Nonprofit Organizations Volunteers and the Coproduction of Work Volunteer Management Who Volunteers? 329 Volunteer Recruitment 330 Volunteer Retention 331 320 320 326 327 328 xiv Detailed Table of Contents Personnel Conflict and Dispute Resolution 334 Employment Law and Nonprofit Organizations 335 Other Relevant Employment Policies 337 Conclusion340 Questions for Review 341 Assignment341 Suggested Readings 341 Web Resources 341 Endnotes342 14. Evaluating Success 349 Nonprofit Evaluation 349 Why Do We Evaluate? 350 Measuring Outcomes to Ensure Accountability 351 Using Evaluation for Mission Advancement 351 Evaluation and the Nonprofit-Policy Framework 352 What Do We Evaluate? Organizational Performance 352 Financial Ratios 352 Social Accounting 353 Process Evaluation 353 Nonprofit Dashboards 354 The Role of Third-Party Watchdogs 355 What Do We Evaluate? Program Performance 355 Who Is Involved in the Evaluation Process? 357 Professional Evaluation Services 357 Self-Evaluation 357 Program Theories and Logic Models 358 How Do We Evaluate? 359 Determining Measures and Selecting Indicators 359 Collecting Data 363 Characteristics for Evaluation Indicators 364 Analyzing the Data 365 Reporting, Presenting, and Using the Findings 366 Practical Concerns 368 Evaluation Fears and Limitations 368 Political Concerns 369 The Consequences of Neglecting Evaluation 369 Conclusion370 Questions for Review 371 Assignment371 Suggested Readings 371 Web Resources 371 Endnotes372 Detailed Table of Contents 15. Looking Forward: Emerging Trends for Managing Nonprofits xv 376 The Past and Future for Nonprofits in a Policy World 377 Important Trends Affecting the Sector 378 The Role of Technology 379 The Political Climate 380 Democratic Tensions 383 Implications of Current Trends for the Nonprofit Sector 387 Conclusion388 Questions for Review 388 Assignment388 Suggested Readings 388 Web Resources 389 Endnotes389 Index About the Authors 395 411 PREFACE The idea for Managing Nonprofit Organizations in a Policy World was born from our agreement that we cannot understand nonprofit organizations without understanding public policy, and that we cannot fully understand policy change without considering nonprofits. Through our work teaching nonprofit management and public policy to MPA students, serving on nonprofit boards and as an executive director, writing grant proposals and teaching workshops on how to write them as well as reading countless books, articles, and web posts, we developed an even stronger appreciation for the connections between nonprofits and public policy. We view this relationship—in which nonprofits make policy, are affected by policy, influence policy, and are subject to policy—as interconnected as the pieces of a puzzle. These four facets, which we call the Nonprofit-Policy Framework, structure our approach to Managing Nonprofit Organizations in a Policy World; we assert throughout this book that all aspects of nonprofit management encompass one or more of these ways in which nonprofits interact with public policy. Our continued scholarship along with trends in the public administration, political science, policy, and nonprofit literature, as well as conversations with colleagues, and teaching on the subject make us even more firmly committed to this perspective than when we published the first edition. This book was written primarily with students in Master of Public Administration (MPA) or Master of Public Policy (MPP) programs in mind because these are the students and programs we know best. However, because we strongly believe that the interconnected relationship between nonprofits and public policy is crucial to understanding the nonprofit sector and its management, this text is valuable for all graduate students and upper-division undergraduate students studying the nonprofit sector in fields such as business administration, social work, political science, and public health. It is designed as a foundational text for courses specifically on the nonprofit sector, but is also appropriate as a supplemental text for public policy courses. Organization of This Book In this thoroughly revised and updated second edition, we enhance our focus on the Nonprofit-Policy Framework to emphasize how this text goes beyond standard nonprofit management concepts to explore the integral role that nonprofits play in the public policy process. Scholars of public policy and the nonprofit sector increasingly recognize that policy shapes and is shaped by nonprofit organizations. The second edition of Managing Nonprofits in a Policy World includes more extensive focus on situating these interactions within the Nonprofit-Policy Framework to facilitate student understanding of these complex relationships. The book is organized into three parts. Part I, “Fundamentals and Environment of the Voluntary Sector,” is an overview of the nonprofit sector as a whole as well as the policy environment in which nonprofits xvii xviii Preface operate. Chapters in this section have been revised with updated statistics and incorporate changes in the size and scope of the sector. In Part I, we identify and define the different types of not-for-profit organizations, including discussion of the growing cadre of hybrid organizations—for-profits that also embody a social purpose. We introduce a recurring element to the second edition in which we encourage students to engage in the conversation about the implications for democracy posed by nonprofits and philanthropy. A new chapter on philanthropy and foundations is particularly relevant in this regard. Because the lines between public, nonprofit, and for-profit sectors are increasingly blurred and because the American system of government offers many points of interaction for nonprofits in the policy process, Part I also includes discussion of federalism and the intersectoral nature of public service provision. The theoretical basis for the existence of the nonprofit sector is established and the multiple aspects of the relationship between not-for-profit organizations and public policy are examined. Finally, because not-for-profit organizations operate within the ever-changing constraints of federal, state, and local regulation, the impact of regulatory policies on the management and operation of organizations in the nonprofit sector has been revised and updated. Part II, “Strategies of Not-for-Profit Organizations,” addresses the major skills and strategies necessary for nonprofits to advance themselves and their causes, focusing primarily on the role of nonprofits as actors within the policy process—that is, how their operations influence public policy and the alleviation of public problems. The chapters throughout Part II address the major strategic planning topics for nonprofits, including developing and adhering to mission, vision, and organizational goals; lobbying and policy advocacy; and issues of organizational ethics and accountability. In addition, the relevance of marketing for nonprofits and the growing trend to brand one’s organization and “product” are discussed. Revisions in the second edition include more explicit focus on how these skills and strategies are represented in the Nonprofit-Policy Framework. It is important for those working in and funding nonprofit organizations to understand and be able to articulate the organization’s mission because a strong sense of mission is critical for nonprofits. Tools such as strategic planning enhance commitment to a well-defined mission, enabling nonprofits to better operate under existing public policies as well as influence future ones. Lobbying and advocacy are viewed as distinctly different activities in the nonprofit sector; thus, we explain the importance of these differences and explore the explicit means of encouraging government officials to change public policy. We also address the issues of ethics and accountability, with particular emphasis on the self-policing strategies used by nonprofits as well as state and federal policy actions to strengthen accountability. Finally, because not-for-profit organizations with solid brand recognition are more likely to be chosen as implementation partners, we discuss the overall importance of marketing in the voluntary sector. The growing importance of social media is addressed in greater detail in this revised and updated edition. Part III, “Management Issues,” emphasizes the nuts and bolts issues of operating a not-for-profit organization. Nonprofits exist to pursue the public good, often with public funds; therefore, it is in the public interest for these organizations to be managed effectively. Situating good management practices within the Nonprofit-Policy Framework helps students to understand the vital role that the nonprofit sector plays in contemporary society. Throughout the chapters in this section, public policy is highlighted with regard to how local, state, and federal legislation affect the day-to-day activities and management of nonprofits—that is, ways in which nonprofits are acted upon by public policies. It is also important for nonprofit organizations to address capacity and long-term viability; thus, general issues of administration such as budgeting, human resources, funding, and evaluation are the foci of this section. Aspects of nonprofit management, such as budgeting and human resource management, affect public policy indirectly through their impact on the general operations of nonprofits as they pursue their missions. Other issues, such as resource development and evaluation, have more direct public policy implications. We discuss issues of resource development, particularly grants, high- xix Preface lighting the policy and mission implications of pursuing diverse sources of revenue. Issues of good governance by the board and executive director, as well as effective human resources management, are crucial to successful pursuit of mission as well as implementation of public policy. Because nonprofits are increasingly asked by government and private funders to conduct program evaluations in order to maintain or acquire additional funding and contracts, we discuss both internal and external uses of evaluation for nonprofit organizations. Our concluding chapter once again takes a look forward at emerging trends in the nonprofit sector. Many of the emerging trends discussed in the first edition have now been incorporated throughout the second edition as established elements of the sector. In our new look forward, we focus on the growing impact of new technologies, the corrosive impact of the current political climate, and a discussion of the nonprofit sector’s positive and negative implications for democracy. We were preparing to go to press with the second edition when the effects of the COVID-19 pandemic were beginning to be felt in the United States. Our ability to incorporate the rapidly unfolding chain of events into our discussions were therefore constrained by several factors, not the least of which was the challenge of forecasting the impacts on the sector due to unprecedented demands for services, cuts to personnel, and policy activity. However, we have noted throughout the text several instances in which nonprofits are already linked to public policies designed to address the pandemic. Features of This Book We incorporate several pedagogical elements throughout each chapter. As in the first edition, we begin each chapter with a vignette—either a true or hypothetical story to set the stage for the chapter’s topic; we have retained our favorites but added new ones as well. Chapters conclude with questions for review and an assignment that requires additional research to complete. Suggested readings and a list of web resources are also included, so faculty and students can cover selected topics in greater detail at their discretion. While these lists are far from exhaustive, they retain those we see as classics and have been revised and updated to include new readings and resources that fit well with our goal of connecting nonprofit management and public policy. “Exhibit” boxes are featured in each chapter to complement the main narrative and emphasize how each topic relates to issues of public policy and good organizational management. “Case Studies” explore in-depth an aspect of the Nonprofit-Policy Framework, such as our new case study on the efforts by the National Rifle Association and gun safety organizations to influence policy. A new vignette to the second edition features actions taken by the Donald J. Trump Foundation and subsequent ways in which it was affected by regulatory policy. The second edition includes updated versions of cases from the first edition as well as several new ones. Each case study highlights the interconnected relationship nonprofits have with policy and includes questions that encourage critical thinking and discussion. Several case studies have an international focus and are designated as “Going Global” case studies. These and other international examples have been revised and updated, to look at how nonprofits operate on an international scale, from Médecins Sans Frontières putting volunteers and staff on the front lines in pursuit of the organization’s mission to assessing the accountability of nonprofit efforts overseas. We incorporated “For Example” exhibits to illustrate specific chapter themes through situations drawn from a variety of nonprofits, such as how the Blue Ridge Conservancy’s operations serve to mitigate competition between economic and environmental interests and how the Girl Scouts use program evaluation to assess and improve their operations. In addition, we use “For More Information” exhibits throughout to guide students and faculty to additional resources on specific topics, including advocacy and lobbying tips, and provisions of the Sarbanes-Oxley Act relevant to nonprofit organizations as well as provide additional information on specific nonprofit examples. xx Preface Acknowledgments We thank all of the faculty, students, and practitioners who have adopted and read the first edition; your support and comments provided the encouragement to pursue a second edition. Special thanks are offered to those who provided us with valuable feedback on the first edition, especially Chris Horne at the University of Tennessee at Chattanooga and Dana Hang, MPA student at California State University, Fullerton. This project is indebted to the nonprofit practitioners who helped us along the way by granting us interviews, offering advice, and providing contacts for more information. They include: Dr. Kevin Meehan, former Executive Director of Orange County Youth and Family Services; Lynelle Bilsey from Shelter Network (now LifeMoves); Cari Hart of Hart Community Homes/Monkey Business Café; Nancy Chandler and Benjamin Murray, formerly with National Children’s Alliance; Dolly Farrell and Robert Dziewulski, formerly with Watauga County Habitat for Humanity; Louis Wheatley and Gregory Rodriguez (formerly) of Zócalo Public Square; and Sandy Ostdiek, who introduced us to Old Bill’s Fun Run. We extend our thanks to CQ Press/SAGE for releasing the rights to the second edition of Managing Nonprofits in a Policy World. Special thanks go to our production editor Stacey Victor and copy editor Barbara Long for their hard work and attention to detail. Our heartfelt appreciation is given to Jessica Sowa of the University of Baltimore for her ongoing support of our work and especially for introducing us to Harry Briggs and our new publisher Melvin & Leigh. Words seem inadequate to express our gratitude to Harry Briggs for his enthusiastic support, encouragement, and guidance throughout the development of the second edition. We are thrilled to join the Melvin & Leigh family of authors. Our overwhelming gratitude goes to our family, friends, and colleagues, who provided the support and encouragement that sustained us on this journey. Shannon wants to especially thank her husband Burton for his unwavering love, confidence, and wise counsel, and for using his excellent Excel skills to help us update data. She also expresses her love and appreciation to their daughter Reagan for all the joy she adds to life and for understanding when Mom needed to write. Her deepest thanks go to Shelly Arsneault, dear friend and the best writing partner anyone could hope to have. We are well into our second decade of conducting research and writing together, and I am profoundly grateful for the many ways our collaborations have enriched my life, personally and professionally. Shelly wants to extend special thanks to friends Sarah Hill and Jarret Lovell, who have been rock solid amid the crazy of academia; to husband Dave, her North Star; and to Maya, whose passion, perseverance, and dedication to community is truly awe-inspiring. Finally, to Shannon Vaughan, I am indebted to your unwavering optimism and confidence in our work that has kept me moving forward and stepping out of my comfort zone on more occasions than I can remember over our two decades of friendship. PART I Fundamentals and Environment of the Voluntary Sector 1 WHAT IS THE NONPROFIT SECTOR? Our sacred promise to improve lives has been—and must continue to be—our ultimate purpose for existing. . . . Americans have high expectations for us: We are the primary outlet for their humanitarian impulses, their conduits of goodwill and generosity. . . . We are also a voice through which the people make clear their expectations of their political leaders. . . . We are the way individuals give back, so that we as a society can move forward. Diana Aviv, President and CEO, Independent Sector1 Imagine that it is 1980 and a second-grade teacher learns that one of her 7-year-old students has been abused by a trusted family member. Once the teacher completes her mandatory call to police, the child is taken from her home by uniformed officers and subjected to a thorough examination in a sterile room at the hospital. Following a series of tests and questions, she is then taken to the police station and asked even more confusing questions before being handed over to a child protective services employee, who sits on a cold bench with her as she waits to be retrieved by her grandparents. As frightening and bewildering as all of this must be for her, the ordeal is far from over for this young victim. In the months that follow, she is taken to the police station several more times, is assessed by various counselors, and questioned by prosecutors and other court staff; in essence, she continues to be traumatized. Throughout her ordeal, this young victim has interacted with professionals in government (the police officers, child protective services employee, and state prosecutors), the private for-profit sector (the physician), and the nonprofit sector (since the hospital in which she was examined is likely a notfor-profit entity). Various public policies affect the process she has endured, from the legal requirement that teachers notify law enforcement of possible abuse to the specific statutes that classify the type of abuse and the penalties associated with conviction. Aside from these legal requirements, however, in 1980, there were no public policies or programs designed to reduce the trauma of navigating the legal and healthcare systems imposed on victimized children. As is often the case, this problem took years to recognize and years more to address; as is also often the case, those involved pursued a nonprofit option 3 4 Fundamentals and Environment of the Voluntary Sector to solve this systemic problem. The nonprofit National Children’s Alliance and hundreds of children’s advocacy centers have been developed nationwide to provide that systemic solution through provision of child-centered services; most of these centers are nonprofits and are discussed in later sections. What Is a Nonprofit? It is probably not surprising to learn that most children’s advocacy centers are nonprofit organizations, those that provide goods or services, but are neither for-profit businesses nor government agencies. While the classic image of a nonprofit is a charitable organization that relies on volunteers for labor and donations to fund its operations, the reality is far more complicated than this common understanding. First, the term nonprofit, is a misnomer. Nonprofit organizations can and generally do have revenues that exceed expenditures—that is, they make a profit. The distinction between a nonprofit and a for-profit business is that nonprofits must retain excess revenues for the benefit of the organization; excess revenues in private business are distributed to owners/shareholders. Not-for-profit is, therefore, a more precise descriptor, although the two are used interchangeably. Further, while nonprofit is the dominant term throughout the general literature, other terms used to describe these organizations include charitable, voluntary, philanthropic or third sector. All refer to the same type of tax-exempt organizations, and exemption from taxes is the primary characteristic that affects the legal designation of nonprofits, the rules pertaining to them, and the regulations to which they are subject. Second, the array of organizations in the not-for-profit sector is vast, including charities, advocacy groups, and member-serving organizations. This group includes small, local soup kitchens and pet rescues as well as large, internationally renowned institutions such as Harvard University and the Mayo Clinic. The sector also includes organizations that you might not know are nonprofits, including the Chamber of Commerce, the AFL-CIO (American Federation of Labor-Congress of Industrial Organizations), Planned Parenthood, and the National Rifle Association (NRA). Many not-for-profit organizations are run solely through volunteers, while others are sophisticated operations with thousands of employees and well-compensated Chief Executive Officers. Third, as is discussed in greater detail in Chapter 5, organizations seeking nonprofit status are subject to many state and federal policies. The first step in becoming a nonprofit is registration and incorporation with the state; this grants the organization certain benefits with regard to exemption from state and local taxes. Exemption from federal income tax requires a second step, filing with the Internal Revenue Service (IRS) and compliance with additional requirements. This includes a determination letter from the IRS, which is the primary document needed for legal recognition as a 501(c) tax-exempt organization. As is discussed later, the IRS identifies 29 different categories of 501(c) nonprofit organizations. Exemptions from local, state, and federal income taxes are significant incentives for the development of not-for-profit organizations, but first and foremost, nonprofits exist to address a public problem or need that, for whatever reason, is not adequately served through government or the private market. Theories about the reasons that nonprofits are often more attractive options than governments and markets are the focus of Chapter 4. Nonprofits and Public Problems As is discussed throughout this book, nonprofit organizations in the United States address public problems and are imbued with public policy.2 It is impossible to understand the formation, operation, and management of nonprofits without a commensurate understanding of the public policy context they inhabit. Not-for-profit organizations both act and are acted upon with regard to public policy; What Is the Nonprofit Sector? 5 in order to pursue their missions, they often advocate for government support and must comply with government mandates. The nonprofit sector has a symbiotic relationship with public policy—each is influenced to varying degrees by the other. Nonprofits are inextricably linked to public policy, and understanding the relationship between the two is a significant factor in successful nonprofit management; this is the central theme of our book. For example, let us return to the issue of child abuse. Although there is now nearly universal recognition of child abuse as a public problem in the United States, that was not always the case. In fact, the first case of child abuse was prosecuted in 1874 under an animal cruelty statute because at the time there was no law aimed specifically at the protection of children. As a result of this case, the first child protective services agency, the nonprofit New York Society for the Prevention of Cruelty to Children (NYSPCC), was formed in 1875 by Henry Bergh and Elbridge Gerry.3 By 1908, similar societies were in existence in 44 states as well as Great Britain and most other European countries, plus India, South Africa, Australia, and South America.4 By the mid-1940s, city, county, and state government agencies had taken over most of the primary tasks of the nonprofit Societies for the Prevention of Cruelty to Children (SPCC), which from that time forward, have served in partnership with government in the protection of children.5 This is one of many examples in which nonprofit action helped define as well as address a public problem. SPCC agencies were on the leading edge of delivery of services to abused children—receiving complaints, conducting investigations, and taking cases to trial—prior to adoption of legislation stipulating specific protections for children; most subsequent child abuse legislation can be traced back to their advocacy efforts.6 These organizations were, in effect, making public policy by taking responsibility for a public problem in the 1870s. More than a century later, Bud Cramer, then district attorney for Madison County, Alabama, and his colleagues organized a new nonprofit response to child abuse—namely, the alleviation of the trauma of prosecution inflicted on child victims of sexual abuse, such as the little girl described in the opening vignette. Through Cramer’s leadership and the efforts of many volunteers, the National Children’s Advocacy Center (NCAC) was established in Huntsville, Alabama, in 1985. NCAC has become a model for centers throughout the United States and other countries,7 and led to the creation of National Children’s Alliance (NCA), which provides information “and technical assistance to promote the development and operation of children’s advocacy centers (CACs) across the United States.”8 Children’s advocacy centers provide an alternative and collaborative approach to standard criminal justice procedures in the handling of child abuse cases. A children’s advocacy center is a centralized, child-friendly facility in which law enforcement, social services, legal, medical, victims’ advocate, and counseling professionals come together as a team to interview, examine, and provide support services to child victims. Importantly, as noted earlier, most children’s advocacy centers are nonprofit organizations. While many think of nonprofits and their involvement in public policy as relatively new phenomena, not-for-profit organizations have taken on public roles and purposes for generations. Indeed, by 1835, Alexis de Tocqueville had observed that Americans were constantly forming civil associations: “If it is proposed to inculcate some truth or to foster some feeling by the encouragement of a great example, they form a society.”9 By the time of Tocqueville’s writing, public work was already being facilitated through the efforts of nonprofit organizations, including churches, museums, colleges, and universities. As Hammack explained, there was little government opposition to nonprofit organizations in the early decades of the 19th century. Most courts and legislatures by this time “had accepted the view that nongovernment, nonprofit organizations provided essential services, reinforced religious education in ways important to civil peace, reduced the need for tax-supported government action, permitted variety and flexibility in the provision of services.”10 Examples of the varied influence of the nonprofit sector in the realm of public policy, therefore, abound in American history. The American Red Cross delivered direct services to victims of forest 6 Fundamentals and Environment of the Voluntary Sector fires as early as 1881, and in 1958, the policy advocacy efforts of the Child Welfare League of America facilitated federal legislation requiring states to hire full-time child welfare caseworkers. An example of nonprofit influence on public policy through the court system comes from the National Police Foundation’s research on the use of deadly force. Its findings were extensively cited in the 1985 U.S. Supreme Court decision Tennessee v. Garner, which modernized police policy by reserving the use of deadly force by officers to cases in which a life is threatened. Each of these examples illustrates the ways in which public policy has been encouraged, informed, tested or delivered by nonprofit entities. Since all nonprofits operate within the public policy arena, it is critical for those working in notfor-profit organizations as well as in government entities to understand the very important role that nonprofits play.11 Similarly, it is important to recognize that public policy influences nonprofit organizations and their management. From their tax status to the federal policies that affect their personnel practices to the mandates required by government contracts, not-for-profit organizations are both guided and limited by public policies as they pursue their missions; they affect and are affected by public policy. It is the aim of this book to set the work of nonprofit organizations firmly within the milieu of public policy and to highlight the fact that effective nonprofit management requires a keen understanding of the complex relationship between the nonprofit sector and the policy world. In order to meet the broader needs of society, it is essential that not-for-profit organizations and the public agencies that work with them are able to successfully navigate this complex relationship. Types of Nonprofits Public Charities At this point, it is important to distinguish among the different types of nonprofits since it is their classification according to the Internal Revenue Code (IRC) that gives most nonprofits their legal status. Public charities are those organizations recognized under section 501(c)(3) of the IRC whose purposes generally fall into the categories of religious, charitable, scientific, literary, or educational endeavors. This category includes the types of organizations most often thought of as nonprofits such as homeless shelters, food pantries, the Red Cross, and the Salvation Army. The religious purposes identified in the IRC mean that churches, which encompass all places of worship, are automatically classified as 501(c) (3) public charities without the need to apply for exempt status.12 Importantly, in addition to their tax-exempt status, donors always receive a tax-deduction when they give to 501(c)(3) nonprofits; this benefit is very rarely afforded to other 501(c) tax-exempt organizations. Further, public charities are subject to greater restriction on political activity than are other nonprofits. At more than 70 percent of all tax-exempt organizations in 2018, public charities represent by far the largest category of not-for-profit organizations (see Figure 1.1). As such, most practitioners and researchers in the nonprofit sector focus their efforts on organizations classified as public charities. This is not surprising as charitable purposes are the foundation for the nonprofit sector dating back as early as 1601 when Queen Elizabeth I accepted the Statute of Charitable Uses: . . . some for relief of aged, impotent, and poor people, some for maintenance of sick and maimed soldiers and mariners, schools of learning, free schools, and scholars in universities, some for repair of bridges, ports, havens, causeways, churches, seabanks, and highways, some for education and preferment of orphans, some for or towards relief stock or maintenance for houses of correction, some for marriages of poor maids, some for support, aid and help of young tradesmen, handicraftsmen, and persons decayed, and others for relief 7 What Is the Nonprofit Sector? or redemption of prisoners or captives, and for aid or ease of any poor inhabitant concerning payment of Fifteens [a tax], setting out of soldiers and other taxes. . . .13 The statute was adopted in order to delineate the relationship between church and state since churches were the primary vehicle through which charitable endeavors were accomplished. Following English law, early American churches remained the dominant providers of charity in the colonies, and later, within independent states. Accordingly, the Statute of Charitable Uses was instrumental in establishing the boundaries of tax-exempt activity by enumerating what would generally be considered public purposes and benefits provided by charities, and it continues to affect the legal perspective of what is and is not acceptable activity by charitable organizations today.14 See Exhibit1.1 for further discussion of British and other international influences on the origins of the U.S. nonprofit sector. Exhibit 1.1 Going Global International Influences on Early U.S. Nonprofits While efforts of U.S. nonprofits overseas are highlighted throughout the text, it is useful initially to consider the influence of international policies on voluntary organizations in colonial and post-Revolutionary America. The Statute of Charitable Uses—while quaint in its language—was British policy adopted in the 17th century that continues to have a lasting influence on how nonprofit organizations are organized and viewed by government in the United States. The enumeration of what were considered “legitimate objects of charity” had a profound and lasting impact on what U.S. legislative and judicial authorities would consider to be tax-exempt activities. The power of the Catholic Church in areas of the New World controlled by Spain and France, coupled with the dominance of the Anglican Church throughout the British Empire, led to the formal policy, and commonly held public opinion throughout the British colonies that there should be one religion and that the church should be supported by taxes. This resulted in the church essentially operating as an arm of the government, providing education and human services in addition to religious services to citizens. With religious diversity already established in many parts of colonial America, by the early 18th century, even those who continued to believe that there should be a single religion established by government were unable to agree as to which should be the one official church. Subsequently, religious and political leaders such as Cotton Mather and Benjamin Franklin became effective advocates for voluntary societies. Mather’s Essays to Do Good—which is believed to be the inspiration for Franklin’s collection of Silence Dogood letters—is believed to be the first American tutorial on the benefits of establishing voluntary societies. Because Mather wanted the Puritan church to be the official religion, which was not possible given the British policy regarding the sole authority of the Anglican Church, he sought the only avenue he saw open for Puritan social influence by promoting collective action outside of government or religion. After gaining independence from Great Britain (and the Church of England), citizens of the new United States had galvanized their preference for limited government; the First Amendment to the Constitution reflects the correspondingly prevalent sentiment in opposition to an established religion. The voluntary associations promoted and established in the early to mid-1700s 8 Fundamentals and Environment of the Voluntary Sector were, thus, an attractive conduit through which to provide collective goods and services; this penchant for voluntary action has deep historical roots grown from international seeds. International seeds continued to take root, for example, in the case of the ASPCA (American Society for the Prevention of Cruelty to Animals). Established in 1824, England’s Royal Society for the Prevention of Cruelty to Animals (RSPCA) spawned the establishment of New York’s SPCA when Henry Bergh (also responsible for NYSPCC, discussed previously) met with the Earl of Harrowby—then president of the RSPCA—on a visit to London in the mid-1860s. Bergh’s mortification at witnessing bullfighting on a visit to Spain, the inhumane treatment of animals he saw while a diplomat to Russia, and the notes he gleaned from the success of England’s RSPCA all culminated in 1866 when the New York legislature passed a charter incorporating the nonprofit ASPCA on April 10; nine days later, it adopted the nation’s first anti-cruelty law. For more information on the history of the U.S. nonprofit sector, see Making the Nonprofit Sector in the United States, edited and annotated by David Hammack. Additional information on the history of RSPCA and ASPCA can be found at www.spcai.org and www.aspca.org. The terms charitable organization and public charity are applied to organizations that provide a large and diverse array of public goods and services. The terms are loosely applied and routinely thought to encompass all organizations exempt from tax under section 501(c)(3) of the Internal Revenue Code (IRC). However, the Internal Revenue Service (IRS), distinctly classifies organizations that are exempt from taxes under Section 501(c)(3) as either public charities or private foundations.15 The growth in the number of foundations is also reflected in Figure 1.1; they are discussed in detail in Chapter 2. As 501(c)(3) tax-exempt organizations, private foundations and public charities share the characteristic that donations to them are tax-deductible. However, as is discussed further in Chapter 5, they differ significantly in the way they are regulated as private foundations are subject to greater restrictions. Accordingly, the IRS considers each 501(c)(3) organization to be a private foundation unless it demonstrates that it meets the criteria necessary to be classified as a public charity. The categories excluded from the definition of private foundation—and, therefore, qualifying as public charities—include “institutions such as hospitals or universities and those that generally have broad public support or actively function in a supporting relationship to such organizations.”16 Types of organizations that qualify as public charities are linked to the Statute of Charitable Uses, as it specifies activities that constitute a contribution worthy of tax deductibility. Section 170 of the IRC (which creates the tax deduction) defines charitable contributions using the same language as in section 501(c)(3) to identify eligible organizations. Sections 509(a)(1) and (2) include the “public support tests” used to determine whether a 501(c)(3) organization can be classified as a public charity. Private foundations, in contrast to public charities, typically have a single source of funding, usually a major gift from a family or corporation. Public charities generally demonstrate the broad public support required (usually 33.3 percent or more of total funding) through multiple or public sources, such as contributions from multiple donors or government grants.17 Other 501(c) Nonprofits Adding to its complexity, the voluntary sector includes more than public charities and private foundations as it encompasses a broad spectrum of activities. Most of the other categories of 501(c) nonprofits are member-serving organizations. The second largest category of tax-exempt organizations are those incorporated under IRC section 501(c)(4)—civic leagues, social welfare organizations, and local associations of employees such as AARP, the NAACP, and Rotary Clubs. Unlike 501(c)(3) organiza- 9 What Is the Nonprofit Sector? tions, those organized under section 501(c)(4) are allowed greater latitude with regard to lobbying and political activity. However, only certain volunteer fire departments and veterans’ organizations described in section 501(c)(4) are eligible to receive tax-deductible contributions, whereas contributions to 501(c)(3) charities18 are tax-deductible.19 The other main categories of 501(c) nonprofits include: 501(c)(5) labor, agricultural, and horticultural organizations such as the United Auto Workers, 4-H Clubs, and California Cattlewomen, Inc.; 501(c) (6) business leagues, chambers of commerce, and real estate boards; and 501(c)(7) social and recreational clubs such as fraternities, sororities, and tennis clubs. All of these 501(c) organizations are tax-exempt; however, none are eligible to receive tax-deductible donations. A list of the major categories of tax-exempt organizations as well as those organized under section 501(c)(3) is included in Table 1.1. Table 1.1 Other 501(c) Nonprofit Organizations, 1999, 2008, and 201820 1999 2008 2018 IRC Section Number of Orgs % of All Orgs Number of Orgs % of All Orgs Number of Orgs % of All Orgs Civic leagues, social welfare orgs, etc. 501(c)(4) 124,774 10.4% 110,842 7.3% 77,920 5.2% Fraternal beneficiary societies 501(c)(8) 103,725 8.6% 58,345 3.9% 40,941 2.7% Business leagues, chambers of commerce, etc. 501(c)(6) 70,718 5.9% 71,798 4.7% 60,432 4.0% Labor, agricultural, horticultural orgs 501(c)(5) 60,530 5.0% 54,474 3.6% 44,913 3.0% Social and recreational clubs 501(c)(7) 56,429 4.7% 55,699 3.7% 46,637 3.1% Posts or organizations of war veterans 501(c)(19) 34,608 2.9% 32,057 2.1% 27,851 1.9% All other 501(c) nonprofits 41,909 3.5% 57,263 3.8% 43,819 2.9% Total Other 501(c) Nonprofits 492,693 41.0% 440,478 29.1% 342,513 22.9% Total 501(c)3 Public Charities 631,902 52.5% 959,564 63.4% 1,051,601 70.4% Total 501(c)3 Private Foundations 77,978 6.5% 113,219 7.5% 98,627 6.6% Sources: 1999 data from the National Center for Charitable Statistics (NCCS), retrieved on May 15, 2011, from http:// nccsdataweb.urban.org/PubApps/profile1.php?state=US; 2008 and 2018 data calculated using the IRS Business Master Files, retrieved on July 6, 2019, from the National Center for Charitable Statistics Data Archive at https://nccs-data.urban. org/data.php?ds=bmf. Classification of Nonprofits While the IRC includes almost 30 different sections of 501(c) tax-exemption, until the 1980s, nonprofit organizations were not uniformly classified by type. Because the not-for-profit sector is so diverse, a classification system was deemed necessary to yield meaningful information by grouping organizations by 10 Fundamentals and Environment of the Voluntary Sector purpose, type, or major function, regardless of their 501(c) designation. As such, the National Taxonomy of Exempt Entities (NTEE) was designed by the National Center for Charitable Statistics (NCCS) in cooperation with major nonprofit organizations. The value of the NTEE lies in its ability to: • facilitate the collection, tabulation, presentation, and analysis of data by the types of organizations and their activities; • promote uniformity and comparability in the presentation of statistical and other data collected by various public and private agencies; and • provide better quality information as the basis for public policy debate and decision-making for the nonprofit sector and for society at large.21 National Taxonomy of Exempt Entities—Core Codes (NTEE-CC) includes about 400 categories. Codes are organized with consistent hierarchical logic that affords ease of use. A discussion of the major groups and divisions, as well as the impact of NTEE on research and public policy, is included in Exhibit 1.2. While the data in Figure 1.1 (see page 12) and Table 1.1 are helpful in illustrating the size of the voluntary sector according to different types of tax-exempt status, the diversity of functions among these organizations makes understanding of the scope of the sector less clear. Examination by NTEE categories affords a more illuminating view of the sector because NTEE classification includes nonprofits in all sections of 501(c) tax-exemption. The diversity within the sector highlights the many and varied public policy ramifications of nonprofit efforts. Exhibit 1.2 For More Information National Taxonomy of Exempt Entities NTEE is comprised of 26 major groups (labeled A through Z) and seven common codes. Whereas the 26 major groups are organized under ten broad categories (listed in Table 1.2), the common codes are used within each major group to delineate activities of organizations. Common codes also allow use of a fourth digit to provide more detail about a kind of organization within a group. For example, National Children’s Alliance is an affiliate organization coded as I037, where the I indicates the major group Crime & Legal-Related, which falls under the broad category of Human Services, and 03, refers to the common code Professional Societies and Associations. The fourth digit was taken from the decile level of the NTEE-CC, which in this case is I70 Protection Against Abuse. Use of the 7 as the fourth digit indicates that NCA is not only a professional association within the field of criminal justice, but also that the organization specializes in protection against abuse. IRS determination specialists use the information from applications for tax-exempt status to classify organizations according to the NTEE-CC. This classification makes data collection and dissemination by the National Center for Charitable Statistics more useful, thus enhancing our understanding of the nonprofit sector. In addition, the Foundation Center by Candid also uses a slightly more detailed version of the system to classify grants and those who receive them. A complete list of the NTEE-CC and further discussion of the history of the NTEE are available at https://nccs.urban.org/project/national-taxonomy-exempt-entities-ntee-codes. 11 What Is the Nonprofit Sector? Table 1.2 Change in Registered Nonprofit Charitable Organizations by NTEE Category, 2008 and 2018 2008 NTEE Category # of Orgs 2018 % # of Orgs % Change Percent Change (4,933) -4.2% Arts, Culture, and Humanities 117,926 7.8 112,993 7.6 Education 201,880 13.3 201,364 13.5 (516) -0.3% 53,532 3.5 60,637 4.1 7,105 13.3% Environment22 Health23 Human Services24 95,293 6.3 91,588 6.1 (3,705) -3.9% 383,192 25.3 359,762 24.1 (23,430) -6.1% International, Foreign Affairs, and National Security 18,812 1.2 20,305 1.4 1,493 7.9% Public and Societal Benefit25 337,797 22.3 306,239 20.5 (31,588) -9.3% Religion Related, Spiritual Development 214,144 14.1 274,242 18.4 60,098 28.1% Mutual/Membership Benefit Organizations 76,412 5.0 61,642 4.1 (14,770) -19.3% Unknown26 15,916 1.1 3,964 0.3 (11,952) -75.1% 1,514,904 100.0 1,492,736 100.0 (22,168) -1.5% Total Source: Calculated using the December 2008 and December 2018 IRS Business Master Files, retrieved on July 6, 2019, from the National Center for Charitable Statistics Data Archive at https://nccs-data.urban.org/data.php?ds=bmf. Since the National Center for Charitable Statistics (NCCS) uses the NTEE-CC system to classify public charities by type, Table 1.2 reflects changes in the number of registered not-for-profit organizations by major purpose or activity between 2008 and 2018. As you can see, while the number of public charities grew during the decade, the proportion of certain types of nonprofits fluctuated. The categories of public and societal benefit nonprofits and those organized to provide mutual/membership benefit saw the most substantial declines. Numbers of environmental, international/national security, and religion-related nonprofits grew relative to others; with an increase of nearly 30 percent, religion-related nonprofits grew by more than 60,000 new organizations during the decade. It is clear to see that the NTEE enables a better understanding of the work being done by nonprofits, and specifically, how the voluntary sector is changing. Scope and Function of the Nonprofit Sector The nonprofit sector is also known as the voluntary sector, the independent sector, or the third sector in contrast to the public sector (government) and the for-profit (private business) sector. When nongovernmental organizations that are active in other countries are included in the discussion, reference is generally made to Nongovernmental Organizations or NGOs. Since this text focuses primarily on nonprofit activity in the United States, the terms nonprofit, not-for-profit, or voluntary sector are used interchangeably throughout. References to NGOs should be construed as denoting an international emphasis. 12 Fundamentals and Environment of the Voluntary Sector Growth of the Nonprofit Sector The number of tax-exempt organizations that comprise the nonprofit sector has begun to decline after many years of steady growth in the United States. According to data from the IRS and the Urban Institute’s National Center for Charitable Statistics (NCCS), the number of nonprofit organizations grew by 31.5 percent between 1999 and 2009,27 but decreased by approximately 1.5 percent between 2008 and 2018 (see Table 1.1). While data on the number of organizations that cease operations are limited, the Urban Institute has studied the survival rates of small public charities—specified as those that meet the filing threshold but have revenues, expenses, and assets of less than $100,000 per year. Of the original group of 63,493 small nonprofits that filed the Form 99028 in 1997, Boris and Roeger29 estimate that about 16.7 percent were inactive or defunct by 2007, and almost 21 percent saw their revenues decline to below the requirement for filing. Conversely, 28.5 percent of the small organizations saw their revenues, expenses, and assets increase to more than $100,000 per year over the decade studied. As shown in Figure 1.1, public charities continue to increase as a proportion of all registered nonprofits as well as in real numbers. In 2018, more than 70 percent of all organizations recognized as tax-exempt under section 501(c) of the Internal Revenue Code (IRC) were public charities, up from just over 63 percent ten years earlier. Figure 1.1 Number of U.S. Nonprofits Registered with the IRS, 2008 and 2018 Source: Calculated using the December 2008 and December 2018 IRS Business Master Files, retrieved on July 6, 2019, from the National Center for Charitable Statistics Data Archive at https://nccs-data.urban.org/data.php?ds=bmf. What Is the Nonprofit Sector? 13 The tremendous growth in the sector had its beginnings in the post-World War II era and has been attributed to several factors, including greater affluence among Americans and changing government policy priorities. Increasing American affluence has allowed people to simultaneously contribute more to the nonprofit sector and to purchase the services that nonprofits provide, especially education services.30 In addition, extreme wealth allows individuals to form philanthropic foundations; for example, in 2000, billionaire and Microsoft co-founder Bill Gates and his wife formed the nation’s largest grantmaking foundation, the Bill & Melinda Gates Foundation. Government policies have also facilitated the growth of the voluntary sector. During the 1960s, President Lyndon Johnson’s Great Society created social programs to address health needs, legal aid, urban renewal, and an expansion of social welfare services. The Johnson administration was the first to offer a major infusion of federal funding to nonprofit organizations to help government provide these services.31 More recently, the creation of AmeriCorps in 1993 and its subsequent expansion in 2009 through the Serve America Act have infused the nonprofit sector with a cadre of young and eager volunteers. Furthermore, the civil rights movement in the 1950s and 1960s added substantially to the growth of the nonprofit sector. The efforts of African American and women’s rights groups during those years paved the way for many of today’s nonprofit associations, including those representing both sides of the abortion issue, environmental conservation efforts, and LGBTQ (lesbian, gay, bisexual, transgender, questioning) rights. Finally, increased government use of privatization—hiring contractors from the nonprofit and private sectors—has also increased the number of not-for-profit organizations operating in the United States. Given the long history of not-for-profit involvement in public policy, the overall growth of the sector (despite recent declines in some subsectors) will undoubtedly offer nonprofits continued influence. Government trends, such as continued federal devolution of policy responsibility to the states, will afford additional opportunities for nonprofit involvement in addressing public problems. Taken together, these factors demonstrate the need for academics, policymakers, and the public to pay far more attention to the role of nonprofits in the policy process. Economic Impact of Nonprofits Growth in the number of organizations is only one factor in the scope of the nonprofit sector and its importance in both academic and practical terms. Data from the Bureau of Economic Analysis (BEA) reflect that in 2015 nonprofit institutions constituted 5.4 percent of the U.S. Gross Domestic Product (GDP), with an estimated contribution to the U.S. economy in excess of $980 billion.32 This represents an increase from 4.85 percent in 1999, but a decrease from the high of 5.73 percent in 2009.33 Between 2005 and 2015, U.S. GDP grew by approximately 40 percent;34 during this same time, revenues and assets of reporting nonprofits grew by 28.4 and 36.2 percent, respectively (adjusted for inflation). In 2015, nonprofits received $2.54 trillion in revenue and held $5.79 trillion in assets.35 These statistics illustrate that not-for-profit organizations produce a significant and increasing impact on the U.S. economy, and the sector is positioned to be an even larger force for public policy influence because of greater resources for service provision, research, and advocacy. According to the U.S. Bureau of Labor Statistics (BLS), the nonprofit sector accounted for 10.2 percent of jobs in the 2017 economy;36 this marks a dramatic increase from 5.9 percent in 2007.37 Studies indicate that workers in nonprofits are compensated at similar levels to their counterparts in other sectors—slightly more than for-profit employees, but somewhat less than workers in 14 Fundamentals and Environment of the Voluntary Sector state and local government.38 In 2016, the average hourly wage for nonprofit workers was $25.30 compared to $20.17 for employees at for-profits.39 Benefits were also higher among nonprofit than for-profit employees. It is important to note, however, that these data reflect wages for all workers in each sector; when examining total compensation for management and professionals, private sector average hourly earnings were higher at $53.76, while nonprofit sector earnings averaged $49.09 per hour. In addition to the economic impact of paid employees, volunteers make significant contributions via the nonprofit sector. In 2018, nearly 63 million Americans volunteered 8 billion hours of their time. The economic value of their contributions is estimated at $184 billion, further illustrating the importance of nonprofits on the U.S. economy and labor market.40 Public Problems and the Policy Process As previously discussed, there is a long history in the United States in which government entities and not-for-profit organizations have worked together to provide public goods and services to American citizens. Public goods, also called collective goods, are those that fulfill a need or demand where the benefit cannot be restricted to those with the ability to pay for them. For example, clean air is a collective good. All members of a community benefit from clean air, and access to the air cannot be restricted only to those who do not introduce pollution. Because access to collective goods cannot be restricted to those who pay for them, strong incentives exist for people to become “free riders”—that is, people consume collective goods and services without paying their share of the cost. Public goods, therefore, are typically not provided via the private market—which restricts provision of goods and services to activities that generate profits—but rather through the public sector. This often leads to what are known as collective action problems.41 Collective action problems involve those situations in which individual self-interests conflict with social interests—that is, private benefits result in social costs. The classic example is the tragedy of the commons, in which it is in each individual’s self-interest to use as much of a common resource as possible; however, if that happens, the resource will be depleted. Therefore, it is in the collective interest for each person to use less, thereby managing the resource together.42 Nonprofit organizations are often involved in developing and managing solutions to collective action dilemmas such as those between economic development and environmental protection.43 One example of a nonprofit mitigating the competition between economic and environmental interests comes from the Blue Ridge Conservancy, highlighted in Exhibit 1.3. Collective action dilemmas and other public problems are often addressed through the creation of public policy, which is traditionally considered to be government’s response to perceived problems. Indeed, government action is routinely viewed as a way to validate claims about public needs, those “that a community recognizes as legitimate and tries to satisfy as a community.”44 Of course, not all members of a community will agree on society’s problems nor will all agree on appropriate solutions. Thus, public policy requires that a political deal be struck offering an acceptable balance of benefits and costs across society.45 15 What Is the Nonprofit Sector? Exhibit 1.3 For Example The Blue Ridge Conservancy: Mitigating Competing Interests Founded in 1997, the nonprofit Blue Ridge Rural Land Trust (BRRLT) served a seven-county area of Western North Carolina with a mission of “neighbors helping neighbors work to preserve rural communities and culture in northwestern North Carolina through the protection of the land resource upon which they depend.” Begun with the support of the local Resource Conservation and Development Council—a nonprofit organization sponsored by the U.S. Department of Agriculture—the BRRLT had protected over 10,000 acres by 2006, through agreements with landowners—conservation easements—that permanently limit land use and ensure its conservation. BRRLT helped protect the commons by preserving the landscape—that is, the view everyone shares when looking out over a rural mountain vista. The land may be individually owned, but the view is maintained as a common resource. In 2010, BRRLT merged with another nonprofit, the High Country Conservancy, to form the Blue Ridge Conservancy (BRC). Today, BRC has protected over 20,000 acres in the northwestern region of North Carolina through continued partnerships with private landowners who have either signed conservation easements or simply donated their land to BRC. The organization’s strong tradition of private property rights is reflected in landowner retention of ownership and specific property use (e.g. for farming), but the development rights are conveyed to the land trust in perpetuity. While the land can be sold or transferred through inheritance, it must be conserved and protected from development by subsequent owners. Such reduction in development potential results in significant tax savings to property owners; North Carolina led the states in providing state income tax credits for land or easements donated for conservation purposes. However, since the lands remain private property, they continue to generate property tax revenue for local government. This is an important example in which nonprofit organizations collaborated to make policy and resolve the collective action problem of land preservation. Additional information is available at blueridgeconservancy.org. For example, Lowi’s classic policy typology addresses these conflicting perspectives on public problems and solutions by distinguishing between distributive policies, redistributive policies, and regulatory policies.46 Distributive policies tend to be noncontroversial because they offer targeted benefits but distribute costs so widely as to go unnoticed by most people. For example, federal university research grants may be of great benefit to a specific researcher or research team, but are such a small portion of the federal budget that they rarely gain public attention. Redistributive policies, on the other hand, are more controversial, as they offer benefits to one group, such as welfare recipients, via direct cost to another group, taxpayers. In this case, taxpayers may resent paying a tax from which they receive no perceived benefit. Finally, regulatory policies target individual or industry behavior, thus typically offering widespread benefits, such as cleaner air, with narrow costs to a certain industry or consumer group. These policies can frustrate groups whose costs have increased to provide the public good of improved air quality. The proliferation of the nonprofit sector has helped to expand the size, scope, and function of organizations prepared to meet public needs, mitigate policy conflict, and influence citizens’ lives beyond what government can or is able to do. In his discussion of public policy, B. Guy Peters rec- 16 Fundamentals and Environment of the Voluntary Sector ognized the important role that nongovernmental actors–government’s agents via contract—play in the policy process. Therefore, his definition of public policy is particularly useful when studying nonprofit organizations. Peters wrote that “public policy is the sum of government activities, whether pursued directly or through agents, as those activities have an influence on the lives of citizens.”47 Accordingly, we build on Peters to define public policy as the actions taken by governments, not limited to statutes and regulations, but including programs and direct service delivery by government agents, nonprofit organizations, and a growing cadre of for-profit entities that seek to address public needs.48 This definition both informs and guides the discussion of nonprofits and public policy throughout this book. Stages of the Policy Process Public policies and programs are typically the result of a long and complex process—sometimes decades in the making. As previously noted, the policy process typically begins with identifying a problem and deciding whether it is inherently a public problem necessitating a public solution. Although the classic model of the policy process is a simplification, it continues to offer a useful framework for studying public policy in the United States. This model includes several stages, generally proceeding in the following manner: problem recognition, agenda-setting, policy formulation, adoption of the policy, policy implementation, and finally, evaluation. First is the problem recognition phase, during which a failure in the social, economic, or political system is identified. A citizen or group of citizens, a politician, a bureaucrat, an interest group, or a nonprofit organization can identify the problem; much like the New York Society for the Prevention of Cruelty to Children identified the problem of child abuse in 1875. Often a coalition of these actors recognizes a problem and comes together to seek a government solution. Vital to attracting government attention and action is the problem’s policy image—the perception and framing of the issue. Policy image is formed, and can be manipulated, through a combination of the emotional appeal, symbolism, and factual evidence surrounding the problem.49 In the agenda-setting stage, the issue attracts a wider audience, including policymakers and politicians. Oftentimes a policy entrepreneur brings the problem to government’s attention, as in the case of Bud Cramer, who as a district attorney led the effort to establish the first children’s advocacy center (CAC). Later, as a U.S. Congressman, Cramer placed this new facet of the problem of child abuse on the federal agenda, advocating legislation and funding for the CAC model. With enough attention from those inside government, and with their agreement that the problem warrants public action, the issue can move to the policy formulation phase. During this third phase, a possible solution to the problem is sought; a variety of alternative solutions can and will be considered by policymakers.50 Often in the policy formulation phase, lawmakers solicit information and ideas from stakeholder groups, including nonprofits, as they pursue a policy solution.51 Policy advocacy by groups such as National Children’s Alliance, for instance, is often critical to policy formulation. Lawmakers agree on a final policy during the phase known as policy adoption. Fundamental to the process following policy adoption is the implementation stage, during which the mandate of the policy is carried out by those in government or their agents in the nonprofit or for-profit sector. An example of policy implementation is the actual delivery of services for abused and neglected children offered by children’s advocacy centers. Next, is the evaluation phase, in which the outcomes of programs and policies are measured and stakeholder feedback is processed by the agencies carrying out the policy. National Children’s Alliance monitors the performance of the children’s advocacy centers they accredit to ensure standards of operation; while not the only evaluation of center outcomes, this is another example of the role nonprofits play throughout the policy process. The evaluation and feedback What Is the Nonprofit Sector? 17 stage often leads to policy reform, as the limitations, unintended consequences, or failings of the policy as implemented become clear. Policy reform is a regular part of the policy process; as Charles Lindblom explained, “Policy is not made once and for all; it is made and re-made endlessly.”52 Collaboration Particularly useful for a discussion of nonprofits in the policy process is research on the scope and impact of collaboration by various actors. Scholars have varyingly referred to these collaborations as policy networks, subsystems, subgovernments, issue networks, policy communities, or advocacy coalitions. What all have in common is the understanding that policy problems, solutions, advocacy, and analysis are influenced by a variety of actors, often working in concert to advance specific goals.53 The basic concept of the issue network was introduced by Hugh Heclo in 1978 to explain how long-dominant iron triangles lost control over certain policy issues. An iron triangle is a closed policymaking group, traditionally consisting of three relevant parts: a government agency, congressional committees, and interest groups, who share interest in an issue and seek to control access to the policymaking process in order to facilitate a mutually beneficial policy outcome. Heclo’s concept of the issue network better illustrated the diversity of actors and complexity of the policymaking process in most policy areas, and later scholars expanded on this idea, further capturing the nature of the relationships among actors involved in the policy process. For example, the Advocacy Coalition Framework (ACF) describes in greater detail the system of actors “from a variety of public and private organizations who are actively concerned with a policy problem or issue.”54 ACF incorporates the idea of policy-oriented learning55 facilitated by coalition members such as policymakers and other public officials, university faculty, think tanks, and nonprofit organizations, including foundations and those delivering public services. Many of these actors work together on a specific policy area over long periods of time. For example, not-for-profit organizations like the Society for the Prevention of Cruelty to Children and National Children’s Alliance have been active members of coalitions that have influenced the policies surrounding child abuse in the United States for decades. The various collaborative models offer a useful way to examine the ongoing role that nonprofits play at each phase in the policy process. At this point, it should be clear that the nonprofit sector is integral to the policy process, is often limited by policy mandates, and is frequently responsible for public policy implementation. Accordingly, it is inadvisable to work in or study the nonprofit sector without a basic understanding of its relationship to public policy and the policymaking process. Likewise, we argue that given the frequency with which not-for-profit organizations deliver services that were once delivered by government, policymakers and public sector employees must also understand the workings of the nonprofit sector.56 Our Approach The book is comprised of three parts: Fundamentals and Environment of the Voluntary Sector, Strategies of Not-for-Profit Organizations, and Management Issues. Each section focuses on the important relationship between public policy and the nonprofit sector. In some instances, nonprofits are policy actors, and in others, nonprofits are affected by public policy decisions; in all cases, nonprofits are inextricably linked to the world of public policy. Throughout the text we argue that nonprofits and public policy interact in four primary ways: 1. nonprofits make policy, for example, by opening their doors and deciding on the services provided to the public as they implement solutions to public problems; 18 Fundamentals and Environment of the Voluntary Sector 2. nonprofits influence policy through efforts such as advocacy and legislative lobbying; 3. nonprofits are affected by public policy, such as laws that encourage use of nonprofit service providers, and encourage charitable donations; and 4. nonprofits are subject to public policy, such as state and federal regulations regarding the handling and reporting of donor funds. These four facets of our Nonprofit-Policy Framework (NPF) illustrate the interlocking relationship between nonprofits and public policy; thus, they are depicted in Figure 1.2 as pieces of a puzzle. We view the relationship between nonprofits and public policy as symbiotic, a union marked by reciprocity and overlap. Those in the nonprofit sector can act as policy entrepreneurs, identifying public problems and bringing them to the government’s agenda.57 Foundations and other nonprofit organizations are often vital in the policy formulation phase. During this process, nonprofits may be asked to participate in hearings, provide data, or submit position papers to assist policymakers in crafting a policy that will eventually win adoption.58 Once adopted, the complex process of policy implementation begins, often involving the division of responsibilities between governments at the local, state, and federal levels, and the use of outside service contractors. Increasingly, nonprofit organizations are engaged in direct implementation of public programs and policy as they deliver public services. The sector also has an important role to play in the policy evaluation and feedback process, particularly when the clientele of nonprofit organizations are affected, or when services have been delivered by a not-for-profit organization.59 Further, not-for-profit organizations exist independently of government institutions, engage in public activity, and make public policy decisions every day—for example, deciding the content and location of recreational programs for senior citizens; choosing how and where to feed the homeless; and determining which concert, play, or art exhibit is most appropriate for their communities. On the other hand, they also operate within the constraints of tax policy, employment law, and policies that prescribe accountability over their finances and governance. In the course of addressing collective action dilemmas, meeting public needs, and defining public problems, not-for-profit organizations continually affect and are affected by public policy. Understanding the nature and impact of this interrelatedness is the focus of this book. This, of course, has far-reaching implications for the management of organizations in the nonprofit sector. Society’s best interests are at risk if a not-for-profit organization is given tax-exempt status, receives federal or foundation grants, is tasked with direct service delivery, and also encouraged to participate in the policy formulation as well as implementation processes when that organization is ill-equipped for these responsibilities. While issues of nonprofit management are addressed more specifically in Chapters 11 to 14, it is important to keep in mind that due to the symbiotic nature of the nonprofit sector and public policy, good management techniques are important beyond their impact on any single organization. 19 What Is the Nonprofit Sector? Figure 1.2 Nonprofit-Policy Framework Part I, Fundamentals and Environment of the Voluntary Sector, is an overview of the nonprofit sector as a whole. Chapters in this section are designed to define and identify the different types of not-for-profit organizations and provide the theoretical basis for the existence of the nonprofit sector as well as its relationship to public policy and government at the federal, state and local levels. Part II, Strategies of Not-for-Profit Organizations, focuses primarily on the role of nonprofits as actors within the policy process—that is, how their operations influence public policy and the alleviation of public problems. The chapters throughout Part II address the major strategic planning topics for nonprofits, including developing and adhering to mission, vision, and organizational goals; lobbying and policy advocacy; and issues of organizational ethics and accountability. In addition, the relevance of marketing for nonprofits and the growing trend to brand one’s organization and product are discussed. 20 Fundamentals and Environment of the Voluntary Sector Finally, Part III, Management Issues, emphasizes the nuts and bolts issues of operating a notfor-profit organization. Throughout the chapters in this section, public policy is highlighted with regard to how local, state, and federal legislation affect the day-to-day activities and management of nonprofits—that is, ways in which nonprofits are acted upon by public policies. It is important for nonprofit organizations to address capacity and long-term viability; thus, general issues of administration such as budgeting, management, funding, and evaluation are the focus of this section. Finally, because some personnel issues are unique to the not-for-profit sector, this section delves into the role of volunteers and creating effective relationships between executive directors and boards of directors; their decisions and the work that they do have a significant impact on the lives of individual citizens and society at large. We believe that all not-for-profit organizations are affected by public policy and that many affect policy as well. Some nonprofits are founded specifically to pursue policy change, while others influence policy inadvertently. Regardless of intent, voluntary sector organizations have an important role to play in the arena of public policy; therefore, throughout this book nonprofit management is discussed with an emphasis on the public consequences of not-for-profit action. In the end, our goal is to equip managers in both the nonprofit and public sectors with the information they need to navigate the complexities of managing nonprofit organizations in a policy world. Questions for Review 1. The nonprofit sector has been an important part of U.S. society since its beginnings; why have we only recently begun to recognize its importance? 2. The nonprofit sector has grown dramatically in recent decades. What does this growth mean for the provision of public goods and services by the public (government) sector? 3. Identify examples of collective action problems other than those being addressed by the Blue Ridge Conservancy. Discuss how and why not-for-profit organizations address problems such as these. Assignment Because the Statute of Charitable Uses has had such a long-lasting impact on the legal framework and policy orientation of nonprofits, access the article “The Political Use of Private Benevolence: The Statute of Charitable Uses,” by James J. Fishman, at http://digitalcommons.pace.edu/lawfaculty/487. Read pp. 28–43 and pp. 49–61, and compose an essay that addresses the following questions: 1. Why was the Statute of Charitable Uses (1601) deemed necessary by both the public and the government? What public problems/needs was the law designed to address? 2. How does the history of the statute inform your understanding of the scope and function of the nonprofit sector in the United States? Consider which activities were deemed charitable and which were not, the role of local governments as well as the national government, and issues of accountability. 21 What Is the Nonprofit Sector? Suggested Readings Fishman, James J. (2008). “The Political Use of Private Benevolence: The Statute of Charitable Uses.” Pace Law Faculty Publications. Paper 487. http://digitalcommons.pace.edu/lawfaculty/487. Hammack, David C. (Ed.) (1998). Making the Nonprofit Sector in the United States. Bloomington: Indiana University Press. Hardin, Garrett. (1986). “The Tragedy of the Commons.” Science, 162 (December), pp. 1243–1248. Stone, Deborah. (2011). Policy Paradox: The Art of Political Decision Making (3rd ed.). New York: W.W. Norton & Company. Weible, Christopher M., and Sabatier, Paul A. (Eds.). (2017). Theories of the Policy Process (4th ed.). Boulder, CO: Westview Press. Web Resources Association for Research on Nonprofit Organizations and Voluntary Action, www.arnova.org The Foundation Center, www.foundationcenter.org Independent Sector, www.independentsector.org Internal Revenue Service, www.irs.gov/charities National Center for Charitable Statistics, www.nccsdataweb.urban.org Urban Institute, www.urban.org Endnotes 1. Diana Aviv, “Making a Difference Together,” remarks at the Independent Sector Annual Conference, Minneapolis/St. Paul, MN, October 23, 2006. 2. Michal Almong-Bar and Hillel Schmid, “Advocacy Activities of Nonprofit Human Service Organizations: A Critical Review,” Nonprofit and Voluntary Sector Quarterly, 43, 1, 2014, pp. 11–35; Nancy W. Basinger, “Charitable Nonprofits in the West and Their Implications for Public Policy,” California Journal of Politics & Policy, 6, 1, 2014, pp. 187–206. 3. “The New York Society for the Prevention of Cruelty to Children 125th Anniversary, 1875–2000,” New York Society for the Prevention of Cruelty to Children, http://www.nyspcc.org/nyspcc/history/attachment:en-us.pdf (accessed January 19, 2012). 4. E. Fellows Jenkins, “The New York Society for the Prevention of Cruelty to Children,” Annals of the American Academy of Political and Social Science, 31, 1908, pp. 192–194. 5. “The New York Society for the Prevention of Cruelty to Children 125th Anniversary, 1875–2000,” New York Society for the Prevention of Cruelty to Children, http://www.nyspcc.org/nyspcc/history/attachment:en-us.pdf (accessed January 19, 2012). 6. Ibid. 7. Nancy Chandler, ed., Best Practices for Establishing a Children’s Advocacy Center Program, 3rd ed., Washington, DC: National Children’s Alliance, 2000. 8. Shannon K. Vaughan and Shelly Arsneau.