INTRODUCTION TO THE FOURTH EDITION
David O. Renz
It is a pleasure to have the opportunity, on behalf of founding editor Robert Herman and all of us associated with The Jossey-Bass Handbook of Nonprofit Leadership and Management, to present this fourth edition. With Robert's retirement, it became my privilege to assume the role of editor for the 2010 edition of the Handbook, and now we have the opportunity to share the fourth edition with nonprofit leaders, managers, and students throughout the United States and the world. Needless to say, my aspiration is to sustain the legacy and value of the first three editions while increasing the relevance and impact with the latest and most substantive of insights into the changing and expanding world of nonprofit leadership and management. All chapters of this fourth edition of the Handbook present the most current of research, theory, and practice in the field of nonprofit leadership and management, written in a manner that is practical and relevant. To ensure that the Handbook continues to meet the needs of this fast-changing field, we have further developed our changes in emphasis in three important areas. First, we continue to focus our attention on the challenges that confront essentially all nonprofit leaders and managers with regard to heightened demands for accountability, transparency, and the need to demonstrate outcomes and results. Alnoor Ebrahim's seminal chapter on how to understand and address the complexities and implications of the “many faces of nonprofit accountability” sets the stage for this, and the issues and themes he highlights are addressed from the perspective of specific fields in subsequent chapters on ethics, finance, advocacy, marketing, and more.
Second, we continue to focus our attention on the increasingly popular phenomenon of social entrepreneurship, and all of the ways it is defined and understood, with additional focus on its implications for nonprofit leadership and management. The foundation for this discussion is Matthew Nash's revised chapter on social entrepreneurship and social innovation, and the majority of the chapters in the book reflect the need to consider the implications of this phenomenon with regard to each of their topics. Integral to this is the third area of emphasis, the increasingly complex and dynamic world of nonprofit financial management. The financial environment and character of the sector has been changing quite dramatically over the past fifty years, as Brent Never illustrates and explains in his chapter on the changing context of nonprofit management, and all chapters in the financial section of this edition have been revised to address this. Two chapters that were new to the third edition have been substantially revised to reflect the additional complexity of this new environment and the resulting financial leadership and management challenges that confront nonprofits and their leaders. First is the framing chapter on financial leadership by Jeanne Bell and Shannon Ellis, and second is the foundational chapter on nonprofit finance and resource development by Dennis Young and Jung-In Soh.
For this fourth edition, we also have substantially enhanced the chapter-by-chapter resources and tools that we make available to readers and educators via the Handbook's Internet resource site. All who purchase the Handbook are invited to visit the Wiley Premium Content Internet resource site (www.wiley.com/go/JBHandbook) where they will find an extensive array of supplemental resources designed to help readers make the most of the information presented in each chapter. Among the resource materials on the site are supplemental readings lists, annotated website reference lists with hot links to useful chapter-relevant Internet resources, plus application resources such as worksheets and checklists that can be used to begin to apply the knowledge and information relevant to each chapter. In addition, for educators, a special password-protected website has been created. Among the resources on this unique access-controlled site are the Handbook instructor's manual and chapter-specific teaching materials, including PowerPoint presentations, discussion guides and questions, sample assignments, and related teaching tools. Educators who wish to gain access to these teaching resources should go to www.wiley.com/college/JBHandbook and register to secure access.
This edition of the Handbook arrives at a very interesting time in the development of the nonprofit sector (throughout this volume, we will use the label “nonprofit sector” to refer to the sector that others sometimes label “the third sector,” “civil society,” “the independent sector,” or “the social sector”; and we generally will use the label “nonprofit organization” to refer to both nonprofits and organizations that typically are referred to as “nongovernmental organizations” or “NGOs” in many parts of the world). The pace at which the sector and its organizations change continues to accelerate, driven by a complex mix of internal and external dynamics. This edition goes to press as the nonprofit sector finds itself recovering from the effects of one of the most challenging and troubling of economic times. The results and implications of this difficult era are yet to be fully understood, although early signs suggest that the nonprofit world has been changing (and continues to change) in fundamental ways. As Brent Never discusses in this volume, the nonprofit sector as a whole is quite resilient. Some segments have recovered relatively well, yet many other segments—especially small and community-based organizations—have not been able to recover very well from the effects of the recession. “Lifeline” or “safety net” nonprofits continue to struggle from the “triple whammy”—continued higher demand for services, coupled with significant declines in governmental financial support and only recent rebound in philanthropic support (in the United States, but not everywhere), combined with a very slow recovery in nonprofits' own internal resources (to the extent they ever existed). Five years after the recession seemed to end, it remains true in the United States and in many other nations that the safety nets are fraying, the level of stress throughout the sector remains significant, and there is no potential to return to the conditions of the past. It is indeed a new era for nonprofit leaders and managers!
Challenges and threats notwithstanding, the dynamics of the current times also offer opportunity and hope. The enthusiasm that many have for the fast-growing interest in social entrepreneurship (no matter how you define it) is bringing new and sometimes different kinds of energy to the field. Some reflect the tensions of competition from new organizational forms (for example, hybrids that blur the lines between nonprofit and for-profit enterprise and for-profits that are created with the explicit goal of social impact rather than financial gain for their founders). Many of today's changes are the result of the very innovation and creativity that the nonprofit sector can be so good at fueling—the adoption of new ways of understanding charity and social good and the development of entrepreneurial new ways of meeting the needs of people and communities. In addition, fundamental shifts are under way throughout the United States and many other nations as a direct result of key demographic changes, as new cultures, perspectives, and generations become more fully integrated into the leadership of the sector. The pace and depth of technological change and the increased presence of various social media certainly fuel additional forces for change in the sector. And a new generation of enthusiasm for volunteering and community service seems to be emerging as well. From a leadership and management perspective, the challenges confronting the sector are exceptional. Yet so, too, are the opportunities—for those prepared to step in and make the difference!
The Jossey-Bass Handbook of Nonprofit Leadership and Management emerged in response to the need for a single volume that would offer a comprehensive and thorough treatment of the functions, processes, and strategies integral to nonprofit organization leadership and management. Writing in the preface obreak to the second edition of this Handbook, editor emeritus Herman observed that all too often advice on financial management, human resource management (for both paid and volunteer personnel), and organizational strategies and leadership has been available only in fragmentary pieces published in far-flung periodicals that are not readily available (p. xvii). In recent years, the volume of literature of the field has grown and developed in impressive ways. And yet, the need for a single comprehensive volume on nonprofit leadership and management remains. We are proud that this fourth edition of the Handbook (with its supplemental Internet resources) will extend the legacy as we meet this need with timely, substantive, and readable knowledge and information that is uniquely suited to the challenges of Twenty-First Century nonprofit leaders and managers.
Intended Audience
This volume is designed to provide comprehensive and in-depth explanations of effective leadership and management practices, relevant to and applicable throughout any nonprofit organization. We intend the Handbook to be of value to all who practice nonprofit leadership or management, as well as those who aspire to do so. It will be especially useful to anyone who has come to a management or leadership position from a program service background, to anyone who has moved from a relatively specialized management niche into a position with extensive general responsibilities, and to all who seek a solid core of support for the wide range of knowledge and skills that nonprofit leadership requires. In addition to those in paid staff positions, this volume will benefit board members and other volunteer leaders who are interested in enlarging their understanding of the nature of nonprofit organizations and their management. This Handbook also will be useful to those, both in formal education programs and in self-directed learning, who want to prepare for careers in nonprofit management. Finally, we want this book to continue to be an important resource to those who work with nonprofit organizations as consultants, technical assistance providers, regulators, and funders, and to inform their efforts to build the capacity, sustainability, and impact of the nonprofit sector across the globe.
Overview of the Contents
This volume is organized into five parts, and each part addresses the challenges of a significant part of the puzzle that is nonprofit management and leadership. Part One provides an overall perspective on the context and institutional setting within which nonprofit organizations and the sector as a whole have developed and currently operate, with observations about the ways this context is likely to change for the future. Nonprofit organizations have been shaped and will continue to be shaped by the historical times and forces, by social institutions, laws and regulations, and political and economic trends and events. The chapters in Part One consider how these large-scale phenomena have affected and are affecting nonprofit organizations and their leadership and management. In Chapter One, Peter Dobkin Hall succinctly describes the complex history of philanthropy and nonprofit organizations in the United States, exploring how and why the nonprofit sector has developed as it has. In Chapter Two, Bruce Hopkins and Virginia Gross offer a timely and current explanation of the national-level legal and regulatory environment in which U.S. nonprofit organizations operate. This chapter provides insight into recent legislative changes and discusses how the U.S. Internal Revenue Service is likely to proceed with implementation and enforcement. In Chapter Three, Brent Never provides an assessment of the impact of large-scale economic, political, and demographic forces on various segments of the nonprofit sector in the United States and discusses their implications for nonprofit management. Alnoor Ebrahim, in Chapter Four, describes the increasingly strong press for accountability in the nonprofit sector, discusses alternative ways that accountability can be understood, and offers key insights for ways nonprofit leaders might address them.
Part Two examines the ways that leadership is provided in nonprofit organizations, including the work of governance and strategic management. Boards of directors of nonprofit organizations govern their organizations and, therefore, are central to the process of nonprofit leadership. Many also engage in some forms of management work. There is clear evidence that there is an important relationship between board effectiveness and the effectiveness of nonprofit organizations, and nonprofits need effective boards. In Chapter Five, I describe the leadership and management functions of governing boards (including the legal and fiduciary responsibilities of boards and their members), discuss some of the major challenges that confront boards, and offer a board development framework that explains how nonprofit leaders can help build board capacity. In Chapter Six, Robert Herman examines the crucial role of chief executives in leading and managing nonprofit organizations and describes the board-centered, external, and political leadership skills of especially effective chief executives. Nonprofit executives and other leaders have the challenge of creating and sustaining organizational cultures and practices that uphold the highest of ethical standards. Thomas Jeavons offers important insight into the ethical challenges that leaders must address and provides important advice about how this can be achieved in Chapter Seven.
Leading and managing strategically is essential to nonprofit success, and one of the key leadership tasks facing boards and top executives is that of organizing and managing the work of the organization to ensure it achieves its mission. In Chapter Eight, William A. Brown presents a broad and strategic overview of the work of strategic management and the key elements that compose it. John Bryson, in Chapter Nine, builds on the these key concepts with a very complete and thoughtful explanation of the work of executives and boards in developing organizational strategy, including a comprehensive model of the strategic planning processes by which this might best be accomplished. Finally, for this part of the book, Robert Herman and I, in Chapter Ten, offer a general perspective and set of insights that we have developed from the research on the elusive concept of nonprofit organizational effectiveness, how it is related to leadership and management, and discuss its implications for organization and management practice. Each of these chapters offers important insights into the processes, dynamics, and practices that have an impact on the degree to which nonprofit organizations are effectively governed and led.
The contributions in Part Three begin to get at the heart of nonprofit organizational management operations. Effective nonprofit leaders and managers understand that their organizations develop, grow, and thrive because they have developed an important mutually beneficial relationship with the world they exist to serve. Similar to all organizations, nonprofits succeed because they offer value and make a valuable difference in the communities and societies they emerge to serve. The chapters of Part Three of this Handbook build on Part Two to explain how nonprofit organizations start, develop, grow, and (sometimes) disappear. In Chapter Eleven, Matthew T. A. Nash helps us understand various ways that nonprofits and other social ventures get their start, and how those with socially innovative ideas hone and develop them to become functioning organizations that make a difference—that achieve a social impact. This is the realm of the increasingly popular but oft-misunderstood topic of “social entrepreneurship.” Scott T. Helm, in Chapter Twelve, builds on the concepts presented in Nash's chapter with practical information about the development of a social venture, including, in particular, the processes by which nonprofit leaders can use the concepts and practices of business planning to effectively operationalize their visions for community service and impact.
In Chapter Thirteen, Brenda Gainer explains nonprofit marketing, the discipline that enables us to understand how to effectively develop and manage relationships and engage in the exchanges that every enterprise must develop with its key constituents, clients, and stakeholders to survive. And in Chapter Fourteen, Marcia A. Avner explains the process of advocacy by nonprofits, including a discussion of the most effective approaches that nonprofits can employ to engage constituents and exercise influence in governmental policy processes to have an impact on legislation and policy that will affect their work and their clients' lives. James E. Austin and M. May Seitanidi offer a new perspective on collaboration in Chapter Fifteen, and explain how nonprofits can understand and develop valuable collaborative relationships and alliances—alliances that have the greatest potential for generating additional benefit and impact for all partners. Of course, the press for nonprofits to show that the work they and their programs do makes a difference requires that nonprofit leaders and managers understand how to assess and communicate about the performance and impact of these programs. The final chapter of Part Three, Chapter Sixteen by John Clayton Thomas, addresses the core principles of program evaluation and offers guidance for how nonprofits can most pragmatically assess program effectiveness and results.
The chapters of Part Four collectively address the multiple facets of the process of securing, allocating, using, and accounting for financial resources, all with the orientation of maximizing the potential for mission impact and results. Jeanne Bell and Shannon Ellis set the tone in Chapter Seventeen with their discussion of strategic financial leadership; they discuss how the strategic orientation of effective financial leadership has the potential to open the door to new possibilities for nonprofit development and sustainability. Of course, raising money through philanthropic channels is a time-honored approach to securing funds for nonprofits. In Chapter Eighteen, Sarah K. Nathan and Eugene R. Tempel outline the key elements of an effective fundraising program for a typical nonprofit and explain key options that exist for nonprofits that seek gifts and donations. Dennis R. Young and Jung-In Soh approach the financial resource question from a broader and more strategic perspective in Chapter Nineteen, where they discuss the range of options for securing financial resources and present a framework to inform decisions about the critical question of revenue mix. In Chapter Twenty, Steven Rathgeb Smith examines the nature and implications of nonprofit-government contracting and how this has evolved in the United States, discusses the key benefits, challenges, and dynamics associated with it, and offers advice for ways that nonprofits might maintain an appropriate level of engagement and autonomy when engaged in this common yet potentially problematic nonprofit revenue relationship. Part Four closes with the most operational chapter on financial management. Woods Bowman's explanation in Chapter Twenty-One of the fundamental tools and techniques of nonprofit financial management addresses the challenges of financial sustainability, the need for mission-based decision making, and how to ensure that financial managers are good stewards who are using the financial resources of the organization to achieve the greatest benefit and impact. Readers are especially encouraged to supplement their review of this chapter with the extensive set of resources and tools that Bowman provides on the Handbook's Internet resource site.
Regardless of the mission, size, history, or geographic location of the organization, every nonprofit must be able to attract, retain, reward, and motivate its people. There is a valuable body of knowledge about human resource management and how it can be handled effectively, and the chapters of Part Five apply the insights of this field to the work of nonprofit managers. Mary R. Watson and Rikki Abzug lead into the topic in Chapter Twenty-Two, with an overview of human resource management and an explanation of the human resource systems, processes, and practices that are important to any well-functioning nonprofit organization. Nancy E. Day explains in Chapter Twenty-Three how to approach one of the most challenging yet important of human resource management issues, the challenge of compensating work and rewarding performance. Finally, in Chapter Twenty-Four, Jeffrey L. Brudney discusses the segment of the human resource world that is most unique to the nonprofit sector—the volunteer. Brudney presents a comprehensive explanation of the effective volunteer management program and how it should be developed and operated, and explains how a nonprofit can systematically and strategically implement a program that will enable it to attract, organize, lead, and manage the volunteers it needs and wants.
Finally, in the Conclusion, I discuss the ways that the sector may be developing and changing and offer a few observations about the future of nonprofit leadership and management. I am optimistic about the future of the sector and the capacity of the talented people who lead and manage it, and I share thoughts about various ways that nonprofit leaders and managers can address the myriad of conflicting and complicating forces that buffet the sector and their organizations.
Like the three editions that precede it, this fourth edition of the Handbook is designed to present the latest and most relevant leadership and management information currently available on this extensive range of topics. The authors and I have taken care to integrate the best of what we know about current practice with the guidance and insight that derives from the latest in research and theory. It is our goal that this fourth edition, like its predecessors, will become a valued and widely used reference and resource, informing leaders, aspiring leaders, managers, and aspiring managers for many years to come.
Acknowledgments
It is both a privilege and daunting responsibility to serve as the editor for a new edition of a resource as widely known, respected, and valued as The Jossey-Bass Handbook of Nonprofit Leadership and Management, and I want to express my great personal thanks to all who have helped bring this new edition to life. This must, of course, begin with thanks to editor emeritus Robert Herman. Bob is an exceptional colleague and friend, and he has been very supportive of our efforts to bring this fourth edition to press. Bob, thank you for entrusting yet another generation of the Handbook's legacy to my care; I hope you find it a fitting extension of the work you began more than twenty years ago when you launched the first edition of the Handbook!
My acknowledgements also must begin, of course, with a deep thank you to each and every chapter author. For most, this was their second or third round of service, and I greatly appreciate their willingness to tackle yet another round and to do so with such enthusiasm and energy. For some, this was their first opportunity to become a part of the project and they, too, showed great enthusiasm and energy for the work. All confronted tight deadlines and endured regular editorial harassment, yet every one invested an exceptional amount of effort and delivered their best. This is truly an outstanding group of colleagues, and it has been a pleasure to work with each and every one of them!
Sadly, it is a bittersweet challenge to acknowledge the exceptional contributions of two of our team of authors, in particular, because both have died in tragic automobile accidents during the past year. Both were sage analysts and exceptional leaders who invested decades of their lives in the development of nonprofit studies as a field, and we mourn their loss. Peter Dobkin Hall, preeminent nonprofit historian and one of the most thoughtful and significant leaders of the field, has been the author of the history of the sector chapter since the first edition of the Handbook was published. We lost Peter in April of 2015 and this loss is still being felt throughout our community.
Another of the giants in our field, Woods Bowman, is a man whom I was privileged to call a valued colleague and friend in the profession. A preeminent scholar and writer on nonprofit finance, public policy, and ethical leadership and management, Woods began work two years ago on his chapter on nonprofit financial management for this volume, and he completed the chapter in the spring of 2015. We had expected to work together to develop additional resources and conduct programs and workshops on the material he developed, but we lost Woods in the summer of 2015. He was a dedicated public servant as well as a prominent leader in the field of nonprofit management research, and he wrote extensively for both academic and practice audiences (including a widely followed column on nonprofit ethics and frequent articles on nonprofit financial management for the Nonprofit Quarterly magazine). Words cannot express the sense of loss so many of us feel as we reflect on the exceptional times we had working with Woods, a loss that never will be forgotten.
I am very appreciative of the essential support that I have received from Matthew Davis and Caroline Maria Vincent, our editors at Jossey-Bass, and senior editorial assistant, Heather Brosius. They have provided essential support throughout the various transitions of this project, and they responded with good humor and care as I lurched my way along this path. Thank you for all of your help!
Similarly, a great vote of thanks is due to each of my colleagues at the Midwest Center for Nonprofit Leadership—Mark Culver, Cindy Laufer, Scott Helm, Fredrik Andersson, and Nimisha Poudyal; and to my colleagues in the Department of Public Affairs at the University of Missouri–Kansas City: Arif Ahmed, Hye-Sung Han, Anne Williamson, Scott Helm, Sarah Martin-Anderson, Brent Never, Nick Peroff, and especially Barbara Domke. All tolerated my cycles of inattention and distraction with grace and encouragement, and they all stepped up to the plate to provide help whenever it was needed. I especially appreciate the assistance that Nimisha provided with specific elements of this project as we worked to bring it to closure. To all of you: it is a true pleasure to work with such exceptional professionals!
Finally, there are no words to adequately express my thanks to Sandy, my wife and partner in life, for her exceptional support and encouragement during this challenging project and always, and to our daughter, Sarah, our son Christian, and his family—our daughter-in-law, Margaret, and our very special granddaughter, Mia. Their care, support, and encouragement have meant everything to me, especially since this project has taken too much from our time together! Thanks for everything, guys!!
David O. Renz