Management Issues In Non Profit Organizations Business Essay


The topic of the paper is challenging because it involves a wide array of major problems involved, which deals with our understanding of non-profit management theory and practice. Like other organizations, non-profit organizations are different in terms of mission, size, mode of operation and impact specifically in a cross national terms (Greiling, 2010; Levine & D'Agostino, 2012). Some are closer to the model of a government agency and others are like a business organization. These variations are notwithstanding but there is an emerging research studies in the field of non-profit organizations have the characteristics of being organized, private, non-profit distributing, self-governing, and voluntary (Polonsky, Garma, & Chia, 2004; Cordery, Baskerville, & Porter, 2011; Levine & D'Agostino, 2012). It has been observed that the non-profit organizations are a major economic force and non-governmental organizations have turned into major political actors. In this process, different non-profit organizations embrace language, management practices, and the culture of the business world (Polonsky, Garma, & Chia, 2004; Prugsamatz, 2010; Cordery, Baskerville, & Porter, 2011). The purpose of the paper is to provide the issues of non-profit organizations in terms of the management in this recent era.

Management Issues in Non-Profit Organizations

Liability of Newness

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It is appropriate to consider the liability of newness, which entitles to the expression of tendency of new models and techniques to encounter issues that are related with inexperience and unfamiliarity. The non-profit organizations in industrial countries are a major economic force and they employ at least five percent of total employment. Moreover, the non-profit organizations within 22 countries possess the equivalent 10.4 million full time employees as volunteers (Wright, Chew, & Hines, 2012; Kosny & MacEachen, 2010; Stauss, Ferguson, & North, 2011). Sarros, Cooper, and Santora (2011) found that relative to the size of non-profit sector, organizations within this industry have contributed to the employment growth during the two decades. It can be assumed that non-profit organizations are discovering management because they are not inconsequential organizations. Therefore, it can be said that non-profit organizations do not understand the management because it is new for them but with the passage of time, the management practices in non-profit organizations can improve accordingly (Kosny & MacEachen, 2010).

Principle of Copy-cat

In contrast to liability of newness argument, another inexperience factor lies ahead of non-profit organizations is the 'copy-cat' principle, which emphasis the way in which the management has been revealed by the non-profit organizations. It should be noted that the non-profit sector has experienced growth in past few decades most specifically in European countries and the United States (Levine & D'Agostino, 2012; Greiling, 2010; Cordery, Baskerville, & Porter, 2011). Many non-profit organizations are facing uncertainties in the financial aspects because government budgets are being reduced and being non-profit organizations, they are being asked to shoulder more responsibilities. The reasons for such emphasis on management are found in the precarious revenue situation faced by non-profit organizations for being relied on dependable governmental support to greater extent (Polonsky, Garma, & Chia, 2004; Wright, Chew, & Hines, 2012; Kosny & MacEachen, 2010). It means that non-profit organizations are required to deal with the uncertainty factor. The organizations in distress look for external models, which they perceive as successful and promising. It is a copycat behavior, which is common in the business world and in government. The successful models are likely to find more self-confident era of business as compared to governments having insecure role in society. Non-profit organizations consider management tools of business organizations to find solutions for their perceived or actual financial issues. It focuses on business management, which is different from what happen in past when the public agency is considered as the organizational model close to the non-profit organization (Cordery, Baskerville, & Porter, 2011; Kosny & MacEachen, 2010; Sarros, Cooper, & Santora, 2011; Polonsky, Garma, & Chia, 2004). It can be said that the consequence of such past behavior is the state orientation of non-profit organizations specifically in Europe. The source of uncertainty for non-profits is considered in the area of financial resources; therefore, it is not surprising to consider management of non-profit organization in terms of financial management. The financial models emerge from government accounting and many of the non-profit organizations follow the camaralist accounting principles. It means that the financial reporting concerning taxes, efficiency concerns in activities are easy to measure and quantify along with the adaptation of fundraising (Stauss, Ferguson, & North, 2011; Kong & Farrell, 2010; Prugsamatz, 2010; Guthrie, Ball, & Farneti, 2010 ). In non-profit organizations, accounting is about establishing the internal and external prices that businesses can charge for goods and services. Alternatively, financial management is the management of costs, revenue for maximizing profits bur non-profit organizations cannot maximize monetary profits along with pricing of non-profit services, and financial management in non-profit organizations is more than controlling or reducing costs (Mano, 2010; Guthrie, Ball, & Farneti, 2010 ; Levine & D'Agostino, 2012; Polonsky, Garma, & Chia, 2004).

Bottom-line Issue

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After understanding the subtle reason for the misunderstanding of non-profit management, it can be said that the recent non-profit management attributes to financial issues. Financial resources are a way of non-profit organizations to adopt management models along with practices emphasizing the monetary bottom line due to which it can be ignored that what are non-profit organizations are for (Stirling, Kilpatrick, & Orpin, 2011; Greiling, 2010; Levine & D'Agostino, 2012; Sarros, Cooper, & Santora, 2011). The conventional management approaches are considered to operate from the assumption that non-profit organizations have no bottom line. It is said that due to absence of bottom line, non-profit organizations can be in greater need for management as compared to profit organizations. The management challenge for the non-profit organizations is not the absence of bottom line but the issue is the existence of many bottom lines due to price mechanisms that can aggregate the interests of clients, volunteers, and other stakeholders to match the costs to profits, and goals to achievements (Guthrie, Ball, & Farneti, 2010 ; Polonsky, Garma, & Chia, 2004; Wright, Chew, & Hines, 2012; Stauss, Ferguson, & North, 2011).

It can be said that the non-profit managers do not have the legitimate authority to set terms and prices external to the realms of their organization. The management approaches are required to be sensitive to the tendency of non-profit organizations with different bottom lines due to which it may be an issue to judge the important ones (Polonsky, Garma, & Chia, 2004; Greiling, 2010; Cordery, Baskerville, & Porter, 2011; Stirling, Kilpatrick, & Orpin, 2011). The first bottom line is the dual management structure of different non-profit organizations in which operating processes are the fundamental area of executive officers and the second bottom line is the complex motivational structure of staff involving volunteers and stakeholders to communicate between the selfless and self-centered goals. The third one is organizational environment in which non-profit organizations operate according to different expectations and motivation and the frequent importance of values provide convictions held among board members, staff members, and stakeholders (Polonsky, Garma, & Chia, 2004; Cornuel & Kletz, 2011; Wright, Chew, & Hines, 2012; Cordery, Baskerville, & Porter, 2011; Kosny & MacEachen, 2010). These bottom lines of non-profit organizations are closely associated to political fault line due to which it can be said that the management of non-profit organizations is a complex issues (Kong, 2010; Mano, 2010).

Law of Non-Profit Complexity

The missing motive of profit for variety of preferences involves the motivations and objectives to materialistic goals in non-profit organizations. The existence of non-profit organizations is linked to the nature of services being provided along with the fields in which they operate. These areas are mixed with externalities along with the operating matters involving trust and public goods. Such type of factors is sufficient to make business transactions precarious and less efficient (Polonsky, Garma, & Chia, 2004; Cordery, Baskerville, & Porter, 2011; Kosny & MacEachen, 2010; Stirling, Kilpatrick, & Orpin, 2011). In this aspect, the law of non-profit complexity refers to the complexity of managing non-profit organizations while stating that non-profit organizations tend to be complex as compared to the profit organizations. In terms of environment and internal elements, non-profit organizations surpass the complexity of managing equivalent for profit organizations. It can be said that a non-profit organization in the aspects of management is a combination of different motivations, challenges, and practices. A middle non-profit organization has a professional core of managers, client base, stakeholders, contractual relationships, business contracts, and service providers. Each of these elements place claims on the organization while developing the culture, routines, and processes with the passage of time (Cordery, Baskerville, & Porter, 2011; Kong, 2010; Guthrie, Ball, & Farneti, 2010 ; Kosny & MacEachen, 2010; Wright, Chew, & Hines, 2012; Levine & D'Agostino, 2012).

Case Study of Volunteering Organization UK

The Volunteering Organization is UK based and it has been facing challenging times regarding management. The operations and finance professionals in the organization are among the first to consider the impacts of weakening economy on the health of the organization. The organization has been facing following issues related to management and financial management (Cornuel & Kletz, 2011; Kong & Farrell, 2010; Levine & D'Agostino, 2012).

Issues in Reduction of Costs

Due to the economic conditions, the considered organization is being forced to make challenging decisions regarding its resources. It can be said that the staff accounts or the greater share of non-profit budgets and reduction in costs is the obvious decision in such case. The challenging times for the organization heighten the demand for services because these organizations operate in such a way that they cannot afford to manage costs (Cordery, Baskerville, & Porter, 2011; Guthrie, Ball, & Farneti, 2010 ; Kosny & MacEachen, 2010; Stauss, Ferguson, & North, 2011). The considered organization is not able to serve the elements through some terminations as services are being consolidated. Another area in the considered organization is the increased efforts to establish efficiencies in the aspects of operational support. The organization reports the changes in employees' salaries along with the benefits in the economy while reducing the job title along with the appearance on level as a common response. It is found that the considered organization has reduced the performance-based bonuses along with the reduced benefits packages (Levine & D'Agostino, 2012; Wright, Chew, & Hines, 2012; Sarros, Cooper, & Santora, 2011; Polonsky, Garma, & Chia, 2004; Cornuel & Kletz, 2011). The non-profit organizations are approaching the cost reducing strategy in the context of long term planning. It has developed two scenarios according to which a small and sufficient amount of reduction. The senior leadership team along with the organization's directors agrees to reduce the number of hours. The careful planning along with the analysis that is important during the times of challenges, which should consider the time for front-end assessment (Guthrie, Ball, & Farneti, 2010 ; Kosny & MacEachen, 2010; Greiling, 2010; Polonsky, Garma, & Chia, 2004; Sarros, Cooper, & Santora, 2011; Wright, Chew, & Hines, 2012).

Emphasizing Transparency and Communication

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The management of the considered organization are unanimous on this area because open and frequent communication is important during the uncertainties. The stakeholders of the considered organization need to know the position of the organization along with the plans. It is obvious that the employees know the personal position because it can enable them to inspire for solutions. The considered organization has issued formal communications regarding the impact of recession on the entire non-profit sector (Guthrie, Ball, & Farneti, 2010 ; Cordery, Baskerville, & Porter, 2011; Kosny & MacEachen, 2010; Mano, 2010; Wright, Chew, & Hines, 2012). It is further considered that the organization under consideration is being issues in managing the financial budgets but the senior management of the organization points the positive aspect of the non-profit's work while suggesting the ways employees can help the organization. It has been identified that the discussion of organization's financial aspects possesses benefits and potential drawbacks. The management of the considered organization encourages leaders to share the budget while increasing the awareness of employees regarding the costs of operating the functions of the organization (Levine & D'Agostino, 2012; Polonsky, Garma, & Chia, 2004; Wright, Chew, & Hines, 2012; Stauss, Ferguson, & North, 2011; Sarros, Cooper, & Santora, 2011). As a result of which, the management of the considered organization is required to understand the issues to make sound financial decisions. The leadership team within the considered organization is required to take sufficient care of addressing the emotional aspect of the downturn to include the entire team in every project (Cordery, Baskerville, & Porter, 2011; Guthrie, Ball, & Farneti, 2010 ; Kong, 2010; Stirling, Kilpatrick, & Orpin, 2011).

Strengthening Relationships

The engagement o the board members are important for the considered organization in different ways. It can provide significant expertise to organizational challenges and help in fundraising. The considered organization is found to have some sort of planning for the employees as they have to maintain jobs while being viable and solvent as they are doing part of their work to raise funds to fill some loopholes (Kosny & MacEachen, 2010; Stirling, Kilpatrick, & Orpin, 2011; Guthrie, Ball, & Farneti, 2010 ). It can be said that the cultivation of new donors can be challenging but accessing the existing funders can provide encouragement to help the organization to navigate the economy. The donors are followed to encourage the consistent commitment to help the considered organization in the existing projects. It is obvious that volunteers can play a vital role in challenging times for the organization under consideration but it is imperative for the management to fulfill the mission of the organization (Polonsky, Garma, & Chia, 2004; Stirling, Kilpatrick, & Orpin, 2011; Stirling, Kilpatrick, & Orpin, 2011; Levine & D'Agostino, 2012).


It can be concluded from the above discussion that the non-profit organizations react to the pressures of commercialization because the profits of the organization survive while undergoing rationalization. The issues of non-profit organizations are unique combinations of organizational elements pointing towards the strategic strengths rather than economical strengths (Guthrie, Ball, & Farneti, 2010 ; Stirling, Kilpatrick, & Orpin, 2011). It is also concluded that the organizations in the non-profit sector possess sufficient constraints relative to their market behavior for competing with the for-profit organizations within the same industry. The organizations have disadvantages of the abilities of increasing capital while introducing incentive schemes (Levine & D'Agostino, 2012; Wright, Chew, & Hines, 2012; Cordery, Baskerville, & Porter, 2011).