Nonprofit Organizations: Theory, Management, Policy - Research Paper Example

?Running Head: Non-Profit Organizations Non-Profit Organizations [Institute’s Non-Profit Organizations Executive Summary The paper includes description of non-profit organizations and their existence in the global society that has resulted in noteworthy contributions in different parts of the world. In addition, the paper is an attempt to identify challenges that cause confrontations for managers in non-profit organizations. The researcher has put efforts to acquire a global perspective while analyzing the role of non-profit organizations that will be very beneficial for students and professionals in comprehensive understanding of the role of non-profit organizations globally. Non-Profit Organizations Every firm is driven by a motive. The early stages of business school usually teach students only about one such motive, which is profit. They learn the marketing strategies, management techniques, and accounting methods as required by profit-driven organizations, because such firms make up majority of the firms in existence today. There is, however, a whole other side of business, which involves in running a business for reasons other than profit. The reason may be to collect charity, provide a social service or to bring together a certain community of people (Anheier, 2005). These organizations are non-profit organizations, and carry out their operations and procedure very differently than those carried out by profit-driven firms. Non-profit organizations operate for the good of community usually, instead of any personal interests, which are why they are not required to pay taxes on their incomes to the government (Holland & Rivto, 2008). The money they earn is not called profit, but income, and they are not allowed to distribute this income amongst owners or other stakeholders; instead, they have to invest that income back into the organization, in order to accomplish the mission that the organization revolves around. For example, a cancer research organization will work on raising funds through donations and fund-raisers, which it will then invest in research to find the cure for cancer. Any money it raises that is left over after their expenses have been covered, will all be invested in research once again, and will not be claimed by any party as ‘profits’. Non-profit organizations typically take up causes, which they feel are important but not given the required attention by the government or those responsible. These motives can include a variety of causes (Holland & Rivto, 2008). One common example is organizations aiming to conduct research on highly dangerous diseases with no known cure, such as AIDS or cancer, in order to find a cure and decrease the number of sufferers per year. This includes organizations such as AKDN, founded with the aim to continue research to find the cure for social, cultural, and economic poverty. Other examples include those organizations who are dedicated to preserving some form of nature before the constant industrialization and reckless treatment of animals and their habitats leads to their extinction. Examples of such organizations and societies are those who aim to prevent the extinction of animals, which are dying off, such as rare birds or insects such as WWF, the World Wide Fund for Nature. Other types of non-profit organizations are those firms, which work to provide a service to the community, which they feel that it needs but is incapable of providing for it, or a service, which they feel the government should be providing to the community but is not. This includes organizations that provide scholarship funds to deserving students who cannot afford education. They also include organizations, which form schools and similar organizations for special children belonging to poor families who cannot afford to enroll them in proper institutions, which will cater to their needs and educate them in the manner that they require, such as different societies for rehabilitation of special children. These are all a few examples of the many services that non-profit organizations provide to the community as their main order of business (Anheier, 2005). These nonprofit organizations work for a higher purpose than just reputation or profits, which is why their contribution to society is very large, and especially valuable considering that they take on jobs which the government fails to perform. People who personally witness how the lack of a certain service in society has a detrimental effect on that society often start such organizations, using their experience as the motivating factor behind the vision (Holland & Rivto, 2008). This is very common especially in countries where the government is not very effective when dealing with the several small issues that are harming the society, and thus such countries often have several hundreds of such non-profit organizations, all working towards different causes, to serve society. These organizations have the help of the government as far as tax exemptions are concerned, but still have several other issues to cater to due to their highly different nature from the profit-driven companies. They are especially by the difference in motives. A profit-driven organization is able to find several employees dedicated to working hard to earn a profit for the firm. This is because if their performance is directly in connection to the performance of the company, as in the case of salespersons, they are promised a bonus for the profits that they earn, or commission (Agard, 2010). This way, such companies are able to find several fulltime employees who remain dedicated to the job throughout, and in the same way, these companies are also able to motivate existing employees who may be becoming inefficient or demotivated. A non-profit organization; however, will not be able to offer such bonuses to its employees. It will count on the dedication of the employees to the mission of the organization, as the main motivating factor. In addition, while this would no doubt illicit a hearty response from most volunteers, there will be many who due to financial constraints have to look for a higher paying job, even when their moral compasses guide them to the NPO. Due to their main purposes, these organizations are also not able to pay their workers and volunteer a market rate for their services, which then often leads to workers either working part time or finding other jobs. This is also the main reason why they are not able to attract too many highly educated and skilled people; as such, people prefer to look for firms, which offer career advancement and high salaries. These are the main problems that a non-profit organization has to handle due to its nature of working for motives other than profit. Other than this, a non-profit organization may face several other problems in its operations. Firstly, since these organizations usually do not have experienced and well-paid directors in their board of directors, and so the quality of business advice their managers are able to give is not always as good as the kind that a for-profit company would receive. Other than this, the company will focus more on achieving its purpose than it will be in maintaining an efficient and productive workforce (Agard, 2010). This means that that they will not be as vigilant in supervising and continuously improving their operations and this may consequently lead to a downfall in their operations. Thirdly, the organization, since it does not have profit making as its main motive, will not consider itself under as much threat as a for-profit organization will be of fraud and such dangers. Thus, it will not monitor its accounting and bookkeeping departments as vigilantly as the latter would, thus making it more vulnerable to thievery and fraud. Furthermore, these NPOs are usually smaller than the large corporate multinationals, which means that there is often a lack of standardized procedures and proper division of labor and responsibilities into departments, as opposed to a multinational corporation. This lack of segregation of duties can often decrease the efficiency of operations of the company (Zeitlow, 2007). This lack of proper management is something that is often existent in non-profit organizations in third world countries, where such organizations lack proper management due to the shortage of skilled and willing managers. Finally, the problem of collecting funds may be an issue for several NPOs. While non-profit organizations often depend on donations from individuals or other organizations or funds collected through fundraising activities, these sources may not always have the yield of income needed for the operations of the non-profit organization of the company to accomplish its mission. This can happen if the organization fails to secure a sponsorship or donation from a regular donor, since this is not a guaranteed income in most cases (Zeitlow, 2007). Such failures can cause setbacks in a company’s operations. Thus, all these problems are unique to non-profit organizations, thus necessitating a good and dedicated management (Drucker, 1990). One can thus conclude that non-profit organizations offer a noble and selfless service to society, putting in hours of dedication and labor to help others around them. However, their operations are often hindered by their non-profit nature. Thus, the government should protect these organizations through more measures than tax exemption. This is the only way that such organizations will be able to provide society with the services that they initially and ideally aim to. References Agard, K. A. (2010). Leadership in Nonprofit Organizations: A Reference Handbook. SAGE. Anheier, H. K. (2005). Nonprofit organizations: theory, management, policy. Routledge. Drucker, P. F. (1990). Managing the Non-Profit Organization. Gulf Professional Publishing. Holland, T. P., and Rivto, A. R. (2008). Nonprofit organizations: principles and practices. Columbia University Press Zeitlow et al. (2007). Financial management for nonprofit organizations: policies and practices. John Wiley and Sons. Read More