About this free online Nonprofit Management course
This is a free nonprofit management course which will cover five topics within the sector. In this course, you’ll be introduced to a general overview of nonprofit organizations and nonprofit management. Next we will cover the history and future of nonprofit management. We will finish up the course with the challenges and opportunities within the field.
- What Is Nonprofit Management?
- History of Nonprofit Management
- Future of Nonprofit Management
- Challenges in Nonprofit Management
- Opportunities for the Nonprofit Manager
This free online nonprofit management course directs you toward free podcasts, videos, and resources coupled with questions to aid in processing this critical field. Each of the sections are created to provide two to three hours of learning material.
Whenever you see this icon, it is time to stop and watch, listen, read, or reflect.
At the tail end of each section within this free nonprofit management course, is an opportunity to invest further. These suggestions offer books, courses, or other reading material within a wide range of financial and time investments, to allow for further studies and enrichment in the field of Nonprofit Management.
1│What Is Nonprofit Management?
A nonprofit is an organization focused on furthering a social cause or advocating for something by reinvesting all revenue into the organization and mission.
In the United States, there are around 1.6 million nonprofits, of which there are 27 different types. Common types of nonprofits are social advocacy groups, foundations, public charities, and trade organizations. Most nonprofits are designated as tax-exempt by the IRS. Depending on the designation, there are particular rules centered on eligibility, lobbying, electioneering, and tax-deductible contributions.
Publication 557 from the IRS explains all rules and regulations required for an organization to qualify for tax exemption. The document provides extensive information on application, approval, and requirements for tax-exempt status, as well as an overview of all 27 types of designations. Chapter 3 & 4 lists these 501(c)(3) organizations. Is there any organization in this list that surprises you?
It is worth noting that there are those who believe nonprofits, on the whole, to be worthless since they are unable to effectively fix problems because they are bound by rules and regulations from the government, boards, sponsors, or grants regarding nonprofits. Still, others argue that nonprofits provide tax savings and protection of assets for the wealthy.
One of the reasons often given for those in the “nonprofits are worthless” camp is that they believe the organizations fail to bring about effective change. A major reason for this was a mentality that frugality equals morality. In 2013, entrepreneur and activist Dan Pallotta gave a TED Talk arguing that charities should be rewarded for what they accomplish, rather than how little they spend doing it. Take a minute to listen to his perspective.
This talk blew up and led to sector-wide changes. Read through some of the changes that took place in nonprofits in the wake of his TED Talk. Can you identify these shifts in nonprofits you are familiar with?
The Nonprofit Manager
There are a lot of misconceptions about nonprofits, but a TED Talk by civil rights lawyer Areva Martin reframes the idea that there’s no profit in nonprofits. Listen as she clearly illustrates that nonprofits can provide a great deal to their communities, but that can only happen when a nonprofit has strong leadership. Fundraising, effective leadership, and wise financial management are three keys to a successful nonprofit manager.
Many skills from the business sector transfer very well to nonprofit management as well, such as flexibility, good people management, organizational influence, and experience with stakeholders. Read this article on nonprofit leadership, which offers these and several other skills that transfer well between sectors. Are these skills you possess? Can you think of others you have that also bridge sectors well?
As a nonprofit manager, it’s important to understand that nonprofits are their own beast, both distinct from government and business, but inextricably intertwined with them as well.
Watch this University of Chicago seminar on Nonprofit 101. As nonprofit consultant Kelly Klieman said, “the most frustrating thing about working in the nonprofit sector is knowing that you’re being asked to do something that is vitally important that you don’t have the resources to do right.” Because of this quandary, she suggests that every executive director at a nonprofit must decide between doing something right for a small number of people or doing something superficially for a larger number of people. She says donors are looking for innovative, inefficient, and inexpensive ways to get things done. Thinking about a nonprofit you’re familiar with, in what ways do you see this trifecta manifest?
It’s tempting to think managing a nonprofit is akin to managing a for-profit organization. To an extent, that’s true. Both need to be fiscally healthy, articulate clear goals to stakeholders, and ensure that results grow as revenue grows. Are there other similarities you can think of between managing corporate and nonprofit management?
But what about the differences? Take a minute and jot down those characteristics that vary between the two types of management. Joan Garry has done both, from managing MTV in the 1980s to pulling nonprofit GLAAD back from the brink and into the national spotlight. She points out seven ways nonprofit management is distinctly different from corporate management in this blog post. Compare your list of differences with hers. Do you agree? Were there any that surprised you?
The Revolution Will Not Be Funded: Beyond the Nonprofit Industrial Complex is a collection of essays that explores how nonprofits, bound by rules and regulations from the government and foundations, often undermine their own goals, making them ineffective. Yet many struggle to move beyond our current nonprofit management model. The authors of these essays, who are activists, educators, and nonprofit staff, critique what they call the nonprofit industrial complex and how it ultimately works against the revolutionizing goals of these organizations.
2│History of Nonprofit Management
To understand our current nonprofit sector, it’s vital to understand the historical context it was born from.
Antebellum – Progressive Era
The late 1800s to about 1920 saw sweeping labor reforms and strong labor unions. However, it was also a period that saw a growing American upper class with money to spend on causes, such as Andrew Carnegie and John D. Rockefeller. It is important to note, however, that many of these businessmen, like Carnegie, made their money by paying their workers incredibly low wages with no oversight. With this money, they were then able to give to the poor through the establishment of philanthropic foundations.
In 1914, the Cleveland Welfare Council became the country’s first federated fund, which is intended to cut down on competition and build community between charities. Federated funds collect and distribute funds to all of its member organizations.
In 1917, the War Revenue Act was passed, which meant that taxpayers could deduct charitable contributions on their taxes. The idea was that these donations funded projects that the government would otherwise be paying for. By 1936, the law was expanded to include corporations. With World War II, American’s began fundraising for relief programs, like the creation of the very first war-related blood donor program with the American Red Cross, which was established in 1881.
New Deal Era – 1960s
With Roosevelt’s New Deal, the wealthy began to be taxed more. This shifted funding for nonprofits to the public sector. Because the rich were being taxed more, they had less wealth, and also less inclination to give money in other ways. But many put their money into foundations, which weren’t taxed, and continued to grow the nonprofit sector.
In 1969, the United States government passed the Tax Reform Act, which established Section 501(c)(3) and marked the beginning of the government becoming more involved in welfare programs. Because of the establishment of this new legal status for organizations, there was a rush for many to obtain their 501(c)(3) status, which led to what is now considered the nonprofit sector. In the same year, the five percent rule was established that said foundations must pay out at least five percent of their money to nonprofits in order to continue to qualify for their tax exemptions.
The Tax Reform Act led to questions around the role of philanthropy, which led to the creation of the Commission on Private Philanthropy and Public Needs in 1973. Funded with $200,000 from the Rockefeller family, this commission was also known as the Filer Commission because it was led by the chairman of Aetna Insurance, John Filer. From 1973 to 1975, the Filer Commission ran 85 studies and created 240 pages of recommendations based on their data that suggested that there was a “third sector” that was distinctly different from for-profits and government institutions. This third sector was run through private funding and played a significant role in American society. The recommendations from the Filer Commission made many suggestions as to how to keep the integrity and sustainability of these organizations.
As the Filer Commission suggests, the nonprofit third sector is a huge portion of the American economy. Listen to this master class from the nonprofit management program at Columbia University on the importance of the nonprofit workforce and its future in America. What did you learn about the impact of nonprofits in the economy? What do you think of the professionalization of nonprofits?
Move forward to 1976. A year after the Filer Commission’s report came out, the government passed a bill that allowed nonprofits to spend up to a million dollars each year on lobbying, which gave them the power to influence both the government and the for-profit sector.
In 1980, Independent Sector was founded as a coalition of foundations and nonprofits of all sizes. Independent Sector’s goal is to connect as many third sector organizations to each other as possible and provide education, resources, and leadership development to their workforce. Because of the 1976 bill that allowed for nonprofit lobbying, the Independent Sector is also able to help the sector impact public policy through lobbying efforts. Check out their member page and see if you can identify an organization near you and what their mission is.
Because of the growth of the nonprofit sector, by the 1980s, colleges and universities began offering nonprofit management programs. Because they were such a large part of the economy, nonprofits were expected to run in many ways like businesses, and thus, they began to require advanced degrees from their employees.
The late 1800s were a time of prosperity and success for many across the US. With this increase in wealth also came a growth in giving back. The release of Andrew Carnegie’s The Gospel of Wealth in 1889 fostered the idea of one’s responsibility and obligation to the greater society and encouraged donating to causes. However, as you read it, keep the source of Carnegie’s wealth in the back of your mind, remembering that he made his fortune off the labor of those who later became of the objects of his causes. In what ways do current nonprofits and philanthropists also profit off of those they aim to serve?
Pick up a copy of Making the Nonprofit in the United States by David C. Hammack. This book explores the history of American nonprofits through historical documents, interpretations, and critiques.
3│Future of Nonprofit Management
The future of nonprofit management will be as dynamic and creative as the last century of nonprofits and their social engagement. Much of the speculation about where nonprofit management will end up centers around the relationship between the government and nonprofits as well as public/private relationships.
Read the article by the Stanford Social Innovation Review, which lays out four scenarios of what the structure of future nonprofits will look like in 2025. Do you see nonprofits trending toward one scenario yet? Which of these do you feel is most likely to occur?
Nonprofits & the Government
As we’ve discussed, nonprofits are considered the third sector, distinct from businesses and government. But they are not islands unto themselves. Nonprofits are directly tied to the other two sectors if for no other reason than financially. Watch the conversation with Ray Horton and Matthew Harty at Columbia Business School, as they discuss their predictions about the future of the nonprofit sector.
Diversity, Equity, and Inclusion
The nonprofit sector is struggling to keep up with the field of diversity, equity, and inclusion, though nonprofits are certainly not alone in this. Only around 10 percent of nonprofits are led by Latinx or Black leaders, despite the fact that these groups make up around 30 percent of the U.S. The fact is nonprofits, like all organizations, are made up of people with biases, whether realized or not. Those biases shape the policies and practices.
As a nonprofit manager, it will be increasingly important to guide staff and volunteers through practices to uncover those biases in order to make the organization a place where diversity, equity, and inclusion can thrive. Consider the pointers offered in the article from the National Council of Nonprofits. Do you see any of these practices being used in nonprofits you’re familiar with?
Nonprofits often struggle to stay relevant in the ever-changing tech world. Often there is not the funding available to make significant investments in new technology for nonprofits, hindering the organizations’ abilities to keep better data, use that data to improve programs, and tell a good story to capture donors and volunteers. But new technology is the future of nonprofits.
Yale Insights from the Yale School of Management interviewed Suzanne Laporte, president of Compass. Read through this interview and note the future challenges and opportunities for nonprofits in the area of technology.
By now, social media is widely accepted as a necessity of the nonprofit world. But many nonprofits don’t use it effectively. As social media platforms continue to evolve, so must nonprofit manager’s ability to harness their power for their organization.
Listen to this Futures in Fundraising podcast. Peter Panepento from Turn Two Communications explores ways nonprofits can use social media in a future-focused mindset when it comes to fundraising, donor relations, and community awareness.
The outbreak of COVID-19 rapidly altered the landscape for all sectors, including nonprofits. Beyond pursing online education, like this free online nonprofit management course, how can nonprofit managers help their organizations learn to plan for major disruptions like this pandemic?
No matter what’s new on the horizon for nonprofits, they all need a solid strategic plan. As a nonprofit manager, it’s your job to help shape your organization’s overall goals with a smart strategic plan. This guide helps nonprofit managers break this process down into manageable steps.
4│Challenges in Nonprofit Management
From donors to volunteers to finances, many nonprofit managers find it challenging just to keep the lights on. They are often held under more ethical scrutiny than organizations in the other sectors because, for many, nonprofits are seen as the good guys. Here are some of the major challenges most nonprofit managers must grapple with.
Donor Retention & Loyalty
Closely tied to finances, donor retention is a huge issue for the nonprofit sector. Loyalty to an organization directly impacts fundraising efforts, and, by extension, the ever-scant budget. If most nonprofits are consistently a dollar short, then improving donor retention would seem to be a smart way to solve that problem. This is especially true when you consider that most organizations spend a huge amount of money on new donor acquisition. In the U.S., around 70 percent of new donors only give once. But how should a nonprofit go about improving said loyalty?
Dr. Adrian Sargeant is one of the leading authorities on fundraising. In a masterclass at Columbia University, Dr. Sargeant divided donor retention strategies into two camps: relational and transactional. As you listen to his masterclass, consider what metrics you would use/do use to determine donor loyalty. Are your metrics relational or transactional?
Dr. Sargeant argues that a relational strategy is more effective for nonprofit managers than a transactional one. And Fundraising Strategist Kara Logan Berlin agrees. Watch her TED Talk at Santa Clara University. As a nonprofit manager, consider how you would begin a conversation with a new donor. How is your conversation different from the one she presents?
Ethical issues can be a death knell to a nonprofit. A lack of trust in an organization leads to a drop in both volunteers and donors, which, as discussed above, is already a challenge to maintain. Depending on what the ethical lapse is, the effect can impact the trust people have on the sector as a whole and not just the offending organization. Some common areas where ethical questions arise are in salaries, financial accountability (including around issues of taxes), and conflicts of interest.
Independent Sector is a national membership organization for the charitable sector of the nonprofit community. The people at Independent Sector have created a document that lays out its 33 principles for good governance and ethical practices that all nonprofit managers should live by. These principles are related to governance, finances, fundraising, and legal compliance and public disclosure. After reading through these principles, consider how your current or future nonprofit follows these principles. Did you discover any blind spots?
It’s interesting to note that there are companies, like Ikea, that are in fact, nonprofits. If that surprises you, you aren’t alone. Watch this quick overview of how that’s possible. Do you believe there are ethical issues with the way Ikea, and other organizations like it, is run? Why or why not? Are these issues exclusive to the nonprofit sector?
Most nonprofits rely heavily on their volunteers. But, much like donor retention, keeping volunteers around can be a huge challenge. According to Independent Sector, a volunteer hour, on average, is worth over $25. Ideally, volunteers will not just be warm bodies, but key players to help advance a nonprofit’s mission.
Listen to this Nonprofit Ally podcast episode. It explores how a nonprofit manager can find the right volunteers to do just that by understanding their motivations and making them feel valued and appreciated. Think back to your own volunteer experiences. Did your organizations employ any strategies discussed in this podcast? Were they effective in encouraging you to continue volunteering?
The Jewish Board is currently the largest social services organization in New York City. Listen to this interview with David Rivel, CEO of The Jewish Board on the Nonprofit Leadership Podcast. He discusses the major fundraising hurdles he faced when he came on board in 2008. Despite deep the economic uncertainties of the time, what strategies did Rivel use to help build The Jewish Board into the organization it is today?
For better or worse, nonprofits live or die by their finances. As we’ve already discussed, effective fundraising strategies are essential for a nonprofit manager. Take this one-hour course on fundraising strategies for new or small nonprofits to start building a good fundraising foundation.
5│Opportunities for the Nonprofit Manager
The nonprofit manager carries many burdens, but alongside those challenges are rich opportunities to make a positive impact in their organization’s community. Two of the biggest areas of opportunity are in storytelling and data. Together, these are powerful tools for a nonprofit manager.
Tell a Good Story & …
A compelling nonprofit starts with compelling storytelling. Storytelling is essential in advancing a nonprofit’s mission. Stories influence and inspire people, from donors to volunteers to communities. A nonprofit manager should be able to harness the organization’s story.
Nonprofit managers are often good at telling about what is needed and what services their organization offers. Andrea Proulx Buinicki does philanthropic consulting. Watch this TED Talk of Buinicki sharing about how nonprofit managers can reframe how they talk about their needs and services by using the idea of transformation as an opportunity. Think about a nonprofit you’re familiar with. How can you tell their story using this model of transformation?
… Have Good Data
As important as storytelling is, data is also equally as important. If the story is what draws people in, it’s the data that makes them stick around. Good data backs up storytelling. Leveraging your data as a nonprofit manager can help your organization win funding. But it can also guide you in planning and programming for the most impact.
Andy Goodman is the founder of The Goodman Center, which teaches leaders, like nonprofit managers, how to leverage their stories on behalf of their organizations. For him, data and storytelling are two sides of the same coin. Read this interview he gave on why nonprofits need to be storytellers. What did you learn about the relationship between data and stories?
It should be noted that it’s easy for nonprofits to venture into the “poverty porn” or “survivor porn” type of narrative. Nonprofit managers have an ethical obligation to consider the how behind the stories their organizations are telling. As you listen to this podcast on the ethics of nonprofit storytelling, consider the power dynamics between the subjects of nonprofit storytelling and the organizations themselves.
There are a million different nonprofit software options out there for managing data. Explore three or four options. Which would you choose to help run a nonprofit? What factors went into your decision? How do the various platforms aid in supporting good storytelling?
Ethical Storytelling is on a mission to help nonprofits tell better stories ethically. They have created a training webinar for nonprofit managers and practitioners on how to incorporate ethical practices into their storytelling.
There are many ways to continue your education in this field, other than this free nonprofit management course. Take the opportunity to pursue an online certification or course, like this hour and a half course on data-driven nonprofits. Learn how to use your nonprofit’s data to shape decision-making and influence donors.
This is the end of our free online nonprofit management course. We hope it gives you a good background on the topic!