Cover image for Financial and strategic management for nonprofit organizations : a comprehensive reference to legal, financial, management, and operations rules and guidelines for nonprofits
Title:
Financial and strategic management for nonprofit organizations : a comprehensive reference to legal, financial, management, and operations rules and guidelines for nonprofits
Author:
Bryce, Herrington J.
Personal Author:
Edition:
Third edition.
Publication Information:
San Francisco : Jossey-Bass Publishers, [2000]

©2000
Physical Description:
xxxix, 776 pages : illustrations ; 25 cm.
Language:
English
ISBN:
9780787950262
Format :
Book

Available:*

Library
Call Number
Material Type
Home Location
Status
Central Library HD62.6 .B78 2000 Adult Non-Fiction Non-Fiction Area-Reference
Searching...

On Order

Summary

Summary

"Elegant, helpful, accessible, and most of all pragmatic."--Regina E. Herzlinger, Nancy McPherson Professor of Business Administration, Harvard Business School, Harvard University

"An indispensable resource for teachers and managers concerned with ensuring the effectiveness of nonprofit organizations.... Nonprofit organizations require professional knowledge and skill if they are to succeed in their missions. The new edition of this book is essential to that success."--Lawrence Lynn, Sydney Stein, Jr. Professor of Public Management, Irving B. Harris Graduate School of Public Policy Studies, University of Chicago

"Bryce effectively weaves legal and ethical considerations into his comprehensive treatment of nonprofit strategy and finance. A sound knowledge of the rules of the game is increasingly important for nonprofit leaders in making strategic choices."--Gregory Dees, Miriam and Peter Haas Centennial Professor in Public Service, Stanford Graduate School of Business, Stanford University

"A must read for practitioners--managers as well as directors--of nonprofit management, particularly those whose focus is on the money-strategy interface. It should also serve as a useful text for graduate courses in nonprofit management."--Raymond Horton, chair of the Management Division and director of the Public and Nonprofit Management Program, Graduate School of Business, Columbia University

Now in its third edition, the highly successful Financial and Strategic Management for Nonprofit Organizations provides an encyclopedic account of all the key financial, legal, and managerial issues facing nonprofit executives. Organized into twenty detailed chapters, this comprehensive reference provides a firm grounding in the five fundamental pillars of effective nonprofit management: Mission, Money, Marketing, Management, and Membership. It then shows managers and trustees how to strengthen operations in each of these vital areas ethically, legally, and efficiently.

Many of the popular models and forms that appeared in the previous editions have returned in this latest volume. Bryce explores such diverse topics as nonprofit law, financial planning, fundraising, compensation and benefits, strategic planning, risk management, and more. He also adds several new features. These include:
* An expanded section explaining all the technical and legal foundations of managing a nonprofit
* Timely advice on developing ethical procedures to protect the organization against fraud and incompetence
* New and practical discussions on tax-exempt status, American and Canadian law for associations, corporate contributions, trust management, audits, anti-trust issues, program evaluation, partnerships, business revenue, and more


Written for serious nonprofit executives in general management, human resources, finances, and fundraising--as well as for nonprofit professors--this enduring handbook offers practical ideas and suggestions for achieving legal and financial success seamlessly.


Author Notes

HERRINGTON J. BRYCE is Life of Virginia Professor of Business at the College of William and Mary in Williamsburg, Virginia.


Reviews 1

Choice Review

This clearly written, comprehensive reference volume contains 19 chapters organized into five sections that address types of organizations and their operating rules; financing the organization; controlling organizational costs and risks; managing the organization's finances; and strategic planning for growth and survival. The first two sections take up more than half the book. In addition, the work contains numerous tables, figures, exhibits, and legal sidebars. Three problems mar this otherwise excellent book. The strategy section is too late in the text and does not emphasize that good management is good management whatever the sector. The financial perspective leads the reader to believe that finance is an objective rather than a constraint, and as a result modern cost management techniques such as activity based costing and budgeting are omitted. Lastly, and a major shortcoming, is the neglect of performance measures other than financial. This book is recommended particularly for managers and trustees interested in the legal and traditional finance perspective of nonprofit management. For expanded coverage of strategic and performance measure dimensions this reviewer recommends Leading beyond the Walls, edited by Frances Hesselbein et al. (1999), and Robert Kaplan and David Norton's Balanced Scorecard (CH, Jan'97). A useful reference for professional and academic collections, upper-division undergraduate and up. D. C. Daly; Metropolitan State University


Table of Contents

List of Tables, Figures, and Exhibitsp. xix
List of Sidebarsp. xxiii
Prefacep. xxvii
Acknowledgmentsp. xxxvii
The Authorp. xxxix
Part 1 Types of Organizations and Their Operating Rulesp. 1
1 The Fundamental Pillars of Nonprofit Managementp. 3
The Unique Challengep. 3
The Financial Benefits and Disadvantages of Being a Nonprofitp. 5
The Bases for Effective Managementp. 5
Elements of Strategic Efficiency in Nonprofit Managementp. 10
The Centrality of Mission and Financep. 12
Managerial Ethics and the Integrity of the Organizationp. 18
Summary and Previewp. 22
2 Protecting the Tax-Exempt Statusp. 23
The Nonprofit Corporationp. 23
The Process of Becoming a Nonprofit Corporationp. 24
Resolving Differences Between State Charters and the IRS Prototypep. 26
Specific Powers of the Nonprofit Corporationp. 26
Specific Prohibitionsp. 29
The Purpose or Mission of the Corporationp. 31
Tax Consequences of Specific Missionsp. 32
Purposes and Privileges of 501(c)(3) Statusp. 32
Acquiring Section 501(c)(3) Tax-Exempt Statusp. 40
Enactment of Dissolutionp. 52
Exemption Under 501(c)(3) Does Not Mean No Taxesp. 54
States and Blanket Exemptionsp. 55
Factors That Threaten the Loss of Tax-Exempt Status Under 501(c)(3)p. 57
The Charitable Purpose in Canadap. 63
Summary and Previewp. 64
3 The Nonprofit as a Public Corporationp. 65
Forming the Publicly Supported Organizationp. 65
The Basic Requirements of 501(c)(3)sp. 66
Privileges of Public Organizationsp. 66
Fee-for-Service Organizations: 509(a)(2) Organizationsp. 74
Diversification and Preservation of Tax-Exempt Statusp. 75
Comparison of 509(a)(1) and (a)(2) Organizationsp. 77
The Subsidiaries and Affiliates: Section 509(a)(3) Organizationsp. 77
Canada's Charitable Organizationsp. 81
Summary and Previewp. 83
4 Private Foundationsp. 84
The Private Foundation--What It Isp. 84
The 501(c)(3) That Is Not Privatep. 86
Private Nonoperating Foundationsp. 87
Restrictions on Expenditures, Economic Transactions, and Investmentp. 88
Private Operating Foundationsp. 94
Soliciting Private and Community Foundationsp. 95
Private Foundations, Public Foundations, and Charitable Organizations in Canadap. 98
Summary and Previewp. 100
5 Associations and Other Forms of Organizationsp. 101
Revenues of Associationsp. 101
Powers of Associationsp. 102
Associations of Individualsp. 103
The Structure of the Organizationsp. 108
Associations of Organizationsp. 113
Membership Powers, Duties, and Liabilitiesp. 117
Nonprofits Created for State Purposesp. 119
Florida Industrial Development Finance Actp. 120
ABAG Finance Authority for Nonprofit Corporationsp. 121
Lobbying and Solicitationp. 121
The Association in South Australiap. 122
Summary and Previewp. 124
6 Legal Responsibilities of and to Trusteesp. 125
Ultra Vires and the Duty of Trusteesp. 126
The Importance of Trusteesp. 126
Public Interest in the Boards of Nonprofitsp. 127
Size and Composition of the Boardp. 129
Qualification and Removal of Trusteesp. 131
Interlocking Directoratesp. 132
Prohibitions on Trusteesp. 133
Dealing with Possibilities of Conflicts of Interestsp. 134
States and Trustee Conflict of Interestp. 134
A Five-Part Conflict of Interest Policyp. 135
Standards of Action of Trusteesp. 138
Specific Functions of the Boardp. 141
Emergency and Appointive Powers of Trusteesp. 142
Trustee Oversight and Ethicsp. 143
Instituting Proceduresp. 144
Illustration: Trials and Tribulations of Trusteesp. 144
Duty of Organization to Trusteesp. 146
Rights of Trusteesp. 146
Volunteer Versus Paid Boardsp. 147
Controlling Trustee Meeting Costsp. 148
Liability of Trusteesp. 149
Legal Limitations on Trustee Indemnificationp. 157
Three Cs for Selecting Trusteesp. 158
Five Steps to Attracting Good Trusteesp. 159
Summary and Previewp. 161
Part 2 Financing the Organizationp. 163
7 Increasing Gifts and Contributionsp. 165
The Importance of Contributionsp. 166
The Competition for Gifts and Contributionsp. 166
Individual and Corporate Motives for Givingp. 167
Dangers in Receiving Giftsp. 170
Why Corporations May Say Nop. 171
Government Promotion of Givingp. 175
The Importance of Tax Deductibility of Contributionsp. 177
Tax Deductibility: Three Casesp. 178
Legal Characteristics of a Tax-Deductible Giftp. 179
Borrowing to Make a Donationp. 187
Problems of Accepting Gifts Subject to Debtp. 187
Bargain Salesp. 188
Lossesp. 189
Value of Gifts of Present Interestsp. 189
Alternative Minimum Tax and Appreciated Property: 1990p. 193
Gifts of Stocks: Perspectives of Donor and Doneep. 193
Limits on Givingp. 196
Problems and Strategies of Large Giftsp. 199
Gifts and Contributions in Canadap. 203
Ethical Guidance in Fund-Raisingp. 205
Mix Strategiesp. 206
Summary and Previewp. 206
8 Trusts, Wills, Annuities, Life Insurance, and Endowmentsp. 208
The Uses of Trusts: Deferred, Extended Benefits, and Cash Flowp. 209
The Law and the Management of Trust Fundsp. 211
Examples of the Application of Trust Conceptsp. 219
An Advanced Application of a Remainder Unitrustp. 239
An Advanced Application of a Charitable Lead Trustp. 240
The Uses of Wills: Gifts Deferred Until Deathp. 241
Life Insurance: Magnifying the Value of Small Giftsp. 245
Role of Insurance in Fund-Raising Strategyp. 253
Annuities: Providing Income Flowsp. 255
Steps for Determining Deferred Giving Instrumentsp. 257
Endowments: Perpetuating a Giftp. 258
The Law and the Investment of Endowment and Other Institutional Fundsp. 261
Four Essential Steps for an Endowmentp. 263
Valuation of Future Giftsp. 264
Summary and Previewp. 273
9 Business Revenues and Tax-Exempt Statusp. 275
The Nonprofit as an Economic Institutionp. 276
Gaming and Gamblingp. 280
Profit-Making as a Source of Revenuesp. 281
Costs and Other Stimuli to Generating Business Revenuesp. 288
How Will the Investment Affect the Tax-Exempt Status in Canada and in the United States?p. 290
How to Acquire a Businessp. 292
Should the Business Be Related or Unrelated?p. 294
Should the Business Be Separately Incorporated?p. 294
Where Does the Money Come From to Acquire the Business?p. 295
Is the Business Profitable?p. 295
Is Profitability Enough?p. 296
What Will the Investment Cost?p. 297
From a Financial Perspective, Is the Investment Worth It?p. 298
Do the Benefits Exceed the Costs?p. 299
When Will the Organization Recapture Its Investment?p. 302
What Are the Risks?p. 302
What Will It Take to Break Even?p. 303
What Can Be Done with the Earnings of the Business?p. 304
How Will Entry into the Business Be Made?p. 304
What Is the Competition? Is It Fair?p. 306
What Do the Trustees Think of the Plan?p. 307
Ethical Dilemma of Business Competitionp. 308
Summary and Previewp. 309
10 Organizational and Tax Consequences of Business Venturesp. 310
The Importance of Business in the Nonprofit Corporate Structurep. 311
Definition of Related and Unrelated Nonprofit Businessesp. 312
Excess Profits: A Distinction Between Related and Unrelated Incomep. 315
Integration of Business Operations into a Conglomerate Structurep. 316
The Organization of an Unrelated Businessp. 319
Benefits, Consequences, and Opportunities of Unrelated Businessesp. 320
Tax Treatment of Different Types of Business Incomep. 324
Sources of Unrelated Business Income: A Simplified Viewp. 342
Ten Questions to Judge Whether Business Will Be Unrelatedp. 343
The Federal Taxp. 344
Other Costs of Unrelated Business Incomep. 346
Summary and Previewp. 346
11 Pitfalls in Marketing, Lobbying, and Solicitationp. 347
The Exchangep. 348
Choosing an Object of Marketingp. 352
Choosing a Targetp. 353
Unlawful Marketing and Solicitation and the First Amendmentp. 356
Marketing and Liabilityp. 359
Unrelated Business Income Tax: Advertisingp. 363
The Importance of Trustee Policyp. 363
Evaluationp. 364
Five Ms for Successful Nonprofit Marketingp. 364
An Ethical Dilemma in Marketingp. 366
State Charitable Solicitation Requirementsp. 367
Disclosure of Lobbyingp. 372
Federal Rules on Solicitation by Associations and PACsp. 373
Soliciting Through a Fund-Raiserp. 374
Ethics and the Donor's Rightp. 377
Summary and Previewp. 378
Part 3 Controlling Organizational Costs and Risksp. 379
12 The Budget as a Tool of Control and Contractingp. 381
The Budget as a Management Toolp. 381
The Budget as a Sum of Partsp. 383
The Budget as Contemporary Historyp. 383
Capital and Operating Budgetsp. 384
Budgets as Baselinep. 384
Budgets as Fictionp. 385
Principles Underlying Budgetsp. 385
Zero-Based Budgeting and PPBSp. 385
Efficiency: Costs and Supportp. 386
The Importance of Distinguishing Between Cash (Expenditures) and Costs in Budgetingp. 387
Classification and Treatment of Costs in Budgetingp. 388
Unallowable Indirect Costsp. 392
Managerial Use of Actual Indirect Cost Allocationp. 393
Allocating Joint Costs When Fund-Raising Is an Activityp. 394
Ten Steps to Cost Budgetingp. 400
How to Estimate Costsp. 404
Key to Controlling Costsp. 405
Leasing as a Fixed-Cost Strategyp. 405
Outsourcing as a Cost Strategyp. 407
Support and Revenuesp. 407
Allocating Dollars Across Programsp. 409
Permanent Revenues and Fixed Costsp. 411
Forecastingp. 411
Illustration: Costs and Revenues and Their Relationship to the Budgetp. 413
Budgeting by Scenariop. 416
Budget Formats: Form Follows Functionp. 418
A Recommended Format for Using the Budget as a Control Toolp. 425
A Budget Format for the Boardp. 428
Summary and Previewp. 431
13 Compensation and Employee Benefitsp. 433
Excess Executive Compensationp. 434
Reasonable Compensationp. 436
Social Securityp. 436
Disability Income Insurancep. 436
Life Insurancep. 439
Accidental Death and Dismembermentp. 442
Medical and Hospitalization Insurancep. 443
Pensionsp. 448
Cafeteria Plansp. 458
Profit-Sharing Planp. 459
Fringe Benefitsp. 460
ERISA and IRS Rulesp. 464
Ten Steps to Setting Up the Benefit Packagep. 466
Independent Contractors and Social Securityp. 467
Summary and Previewp. 469
14 Managing Against Claims of Negligence and Harassmentp. 470
The Basics of Risk Managementp. 471
Types of Risksp. 473
Risks Associated with Agents and Representativesp. 473
Protecting Against Liability of Independent Contractorsp. 476
Legal Shieldsp. 479
Coverage: Shields Can Be Penetratedp. 482
Risks of Sexual Harassmentp. 483
Risks of Harassmentp. 484
Enforcement Guidance on Vicarious Employer Liability for Unlawful Harassment by Supervisorsp. 484
Summary and Previewp. 491
Part 4 Managing the Organization's Financesp. 493
15 Financial Statements as Tools of Conversation and Controlp. 495
Financial Statements as an Aid to Managementp. 496
The Balance Sheet or Statement of Financial Positionp. 496
Statement of Support, Revenues, and Expenses or Statement of Activitiesp. 502
Statement of Changes in Financial Positionp. 506
General Aspects of Interpretationp. 510
Funds: A Managerial Accounting Perspectivep. 511
Auditp. 516
Preparing for an Auditp. 519
Illustration of Managerial Use of Financial Statementsp. 520
How Much Do Financial Statements Tell?p. 533
The Notesp. 534
Summary and Previewp. 534
16 Evaluating, Setting, and Implementing Financial Goalsp. 535
Questions for Evaluating Old Targetsp. 536
Considerations in Setting New Targetsp. 537
The Treasurer's Reportp. 538
Assessment of Revenue Alternativesp. 539
Cash Management and Investment Strategies: Increasing Cashp. 540
Borrowing as a Source of Cashp. 542
Uses of Cashp. 548
Liquidity Versus Investment and Risk Versus Safetyp. 549
Ten Considerations in Selecting and Maintaining a Bank Accountp. 550
Setting Up a Portfolio: First Stepsp. 555
Selecting Securities and Rebalancing Portfoliosp. 560
Investment Poolsp. 561
Capital Planningp. 564
Capital Budgeting and Endowment Planning: Setting Targets and Identifying Sources of Capitalp. 564
Accumulation and Disbursement Strategiesp. 566
Preservation of the Terms of Endowmentp. 573
Time and Risks in Endowment Planningp. 574
Setting Target Prices, Fees, and Duesp. 575
Summary and Previewp. 579
Part 5 Strategic Planning for Growth and Survivalp. 581
17 Strategic Planning as a Management Tool for Growth and Survivalp. 583
The Importance of Strategic Planning: Growing the Organization Cohesivelyp. 583
The Importance of Strategic Planning to Associationsp. 584
Strategic Planning as a Winnowing Toolp. 585
Strategic Planning: Purposes and Approachesp. 586
Mission, Ethical Codes, and Strategic Optionsp. 590
Strategic Options: Profits Versus Missionp. 591
Strategic Options: Competitors and Cooperatorsp. 593
Life Cycle of Needs: Time to Changep. 601
Illustration: Life Cycle and Disastersp. 604
Planning Periodp. 604
Conducting Needs Analysisp. 605
Setting Priorities: An Illustrationp. 607
Monitoring for Performancep. 608
Monitoring for Risks and Controlp. 611
Evaluating, Benchmarking, and Reportingp. 612
Summary and Previewp. 617
18 Searching for Strategic Opportunities and Alliancesp. 618
The Importance of Identifying New Niches in Old Missionsp. 619
Economic Purpose of Nonprofitsp. 620
Symbiotic Relationshipp. 621
Nonprofit Opportunities Generated by the Market Economyp. 621
Nonprofit Opportunities Generated by Market Failuresp. 626
Pure Public Goods and Nonprofitsp. 630
Nonprofit Financing of Public Goods and Responses to Externalitiesp. 631
Nonprofits and Market Monopolyp. 632
Noneconomic Consequences of Market Behavior and Opportunities for Nonprofitsp. 632
Socially Complex Problems and the Need for Nonprofitsp. 633
Opportunities for Profitable Cooperation Between Nonprofit and For-Profit Corporationsp. 634
Illustrations: Coexistence of Charity and Capitalismp. 637
Designing a Partnership: Illustrationsp. 641
Strategic Alliances, Control, and Other Concernsp. 645
Market Activities and the Threat to Nonprofit Statusp. 646
Essentials of a Partnership Agreementp. 646
Seven Key Questions About Partnershipsp. 647
Limited Partnerships for the Purpose of Giving and Politickingp. 648
Summary and Previewp. 649
19 Reorganization: Mergers, Divestitures, Sale of Assets, Acquisitions, Conversionsp. 650
The Importance of Structurep. 650
The Importance of Reorganizationp. 656
Antitrustp. 657
Hospital Mergers the FTC Will Not Challengep. 658
Central Role of States in Reorganizationsp. 659
Types of Reorganizationp. 664
Merger of For-Profit with Nonprofitp. 668
Issues for the Trustees in All Dispositionsp. 674
Formal Plans for Reorganizationp. 675
Postmerger Traumap. 677
The Rebirthp. 677
Summary and Conclusionp. 678
Appendixes
1.1 Standards of the National Charities Information Bureaup. 679
2.1 Mathematics of Lobbying Expendituresp. 682
2.2 National Taxonomy of Tax-Exempt Entities--Core Codesp. 684
3.1 Draft Letter Awarding Tax-Exempt Statusp. 696
6.1 Sample Conflicts of Interest Policy (Revised 5/22/97)p. 700
7.1 Restrictions Attached to Donations Violate Antitrust Lawp. 705
8.1 IRS Example of Declaration of Trustp. 707
9.1 Breakeven Pointp. 712
10.1 Exclusions to Unrelated Businessp. 714
11.1 Unified Registration Statementp. 718
12.1 Key Concepts in Federal Contracting and Glossary of Common Financial Terms Found in Such Contractsp. 723
12.2 Risks of Cost Denialp. 733
15.1 Accounting for Gifts and Contributionsp. 738
Notesp. 741
Suggested Readingsp. 757
Indexp. 765

Google Preview