I have been recently toiling with the concept of nonprofit management structures. My research on symphony orchestra organizational culture and artistic programming provided some broad management and artistic recommendations pertinent to performing arts organizations. However, the nonprofit arts all have similar challenges, whether visual or performing arts. Internal financial, artistic, and management issues in nonprofits often result from gaps or misunderstandings in the organizational structure.
In a discussion of the potential to partner with other community or government organizations, Hall & Kennedy (2008) note the challenge of measuring effective nonprofit management. Their article, Public and Nonprofit Management and the “New Governance gives these parameters of effective nonprofit management:
Clarity of mission will be demonstrated in a number of ways, but
the presence of a clear, concise mission statement is an important first step. Other indicators of the organization’s focus will be the absence of extraneous programs or activities that divert resources from the central mission and the presence of a strategic plan tied tightly to that mission. An organizational performance history will also yield clues.Legal compliance is an extremely important indicator of organizational capacity, and in some ways it is the easiest to evaluate. Inability to comply with basic legal regulations should set off warning bells.
Board of director characteristics—the election, composition, and conduct of the organization’s trustees—are among the most important indicators of organizational capacity. The 310 The American Review of Public Administration division of responsibility between the staff and the board should be clear, and the chief staff member should report to the board at designated intervals and in a meaningful way. There should be defined terms for board members and clear election procedures. The board should be broadly representative of the organization’s various constituencies and should ideally be diverse in occupation, skills, age, race, religion, and ethnicity—although for some organizations, some forms of diversity will be inapplicable.
Personnel management—the organization’s hiring and management practices—is another important element of capacity. There should be a written personnel or policy handbook; it should comply with all applicable laws and regulations and be available to all employees and board members. There should be written, detailed job descriptions. If volunteers are used in lieu of paid staff, these procedures may be considerably less formal, but whether volunteers are used in place of staff or in addition to staff, there should be clear policies pertaining to them, and even clearer expectations for them
A strategic plan that is tightly tied to the mission and periodically updated is another hallmark of effectiveness.
Fiscal health encompasses more than a positive bank balance and an absence of unpaid bills. Good fiscal controls and accounting procedures are supremely important. Lack of board involvement with development, or lack of board financial participation through donations to the organization, are warning signs.
There are obviously other indicators the public manager will use, including past performance. Satisfaction of these organizational elements is not a guarantee of effective program outcomes, but obvious deficits in any of these basic areas are warnings that the wise manager will heed.
Regarding the question of running a nonprofit like a business – elements of business management are certainly applicable for arts and culture organizations. However, the actual management of nonprofits must account for public value and artistic creativity in a way that traditional business models do not. Nonprofit organizations must effectively run on inherently bad business models: that of producing Shakespeare plays with no charge to the public, for instance. Therefore, some nonprofit managers may need to undergo a paradigm shift to create a more sustainable organization while others should revisit their mission and vision statements to reconnect with their original purpose.
Andrew Taylor, of the Wisconsin School of Business notes that: “For the past decades, our industry has fundamentally misunderstood what it means to run “like a business.” As a result, we’ve tended to become more rigid, less joyous and increasingly disconnected from the communities and the creative spirit we were formed to serve.” This blog post gives a relevant and appreciated twist on the usual business-nonprofit management dichotomy.
Another giant in nonprofit literature is Peter Drucker, author of Managing the Nonprofit Organization: Principles and Practices. This article pays homage to Drucker’s emphasis on community rather than profits in nonprofit management.
More on this topic to come…I think that it is critical for nonprofit managers to solidify their thinking in this area. My current work in Sisters is illuminating the many possibilities of effective nonprofit management.
Find more like this: Managing the Arts
