In today’s operating environment, parks and recreation departments confront social, economic and political pressures that result in decreased funding from traditional sources. To compound the problem, conservatism espoused in the form of privatization places additional pressure on public agencies to reinvent themselves as smaller images of what they once were — complete with new missions and statements of purpose. The increased pressures produce driving forces and an ensuing declination of funding that negatively impacts service delivery capacity. This decline forces publicly funded departments and agencies to seek new ways to fund their programs. To increase resources, these public entities turn increasingly toward linkages with nonprofit organizations in two significant ways. The first is to create alliances in the form of coalitions, collaborations and partnerships; and the second is to create their own nonprofit organizations as mechanisms for gaining direct access to hundreds of millions of dollars in donations and grant funded contributions available to nonprofit organizations but not to public agencies. Regardless of their selected strategy, public officials can benefit from a deeper understanding of the institutional nature of nonprofit organizations and improve their collective ability to forge meaningful, mutually beneficial, and long-lasting alliances with nonprofit organizations. Nonprofit organizations play a distinct role in society. They are quasi-public agencies in that they fulfill a partial business and a partial public role. Typically, their business purposes include functioning as a conduit for resources passing from donors and other funding sources, through the organization, to various constituent and stakeholder groups served as members, clients, parishioners, participants, students or customers. Another business purpose is to function as a resource magnet, attracting new resources to accomplish organizational purposes. They also act to funnel human energy into galvanized effort focused on special interests as well as quality of life perks for private (e.g., memberships) and the broader “public” good. And, they play a substantial role as significant members of the infrastructure, which drives the economic engine of the nation in the forms of research, development and innovation (where it is too costly for business to produce and requires greater efficiencies than government can produce); finance (e.g., foundations, credit unions, associations and community development corporations); and in education and training. Boards of directors lead the strongest nonprofit organizations with members representing some of the most powerful businesses and community families. Among other things, these boards provide policy direction, financial development resources (human and capital), executive support, political access and influence and substantial expertise. Often by virtue of board leadership, many nonprofits also look and feel like for-profit business enterprises. In fact, the combined assets of some of the largest nonprofits in the United States place them among Fortune 500 companies. Among the advantages enjoyed by the largest nonprofits is the ability to spread expenses, revenues, and assets across many cities. Another important ability is to provide high level, quality training in their most advanced techniques across all organizational levels through organized “program and management schools.” Nonprofit organizations are considered quasi-public institutions. Diagram 1 shows how nonprofit organizations “fit” a quasi-public role between for-profit commercial recreation enterprises and government public recreation agencies. It is important to note that no one owns a nonprofit organization. The surplus revenue generated through sales, fees, grants, donations, special events, etc., remains within the organization and is not distributed to “owners.” If the nonprofit is dissolved, its assets are distributed to one or more other nonprofit organizations.
Diagram 2 depicts some of the unique characteristics of nonprofit organizations. A nonprofit organization can apply for a federal tax-exempt organization status. While there are several types of nonprofit organizations, the 501(c)3 tax exemption enables donors, for tax purposes, to write off the Fair Market Value (FMV) of their donations. This provision enables nonprofit organizations to raise hundreds of millions of dollars annually. The most solvent nonprofit organizations seek a balanced financial development approach. If they solicit government, United Way, or foundation funding they view it as temporary or seed money to fund special projects or new initiatives, with the idea that a more permanent funding solution will eventually be found (e.g. endowment funding). They also want to ensure that program fees and private unrestricted donations comprise the lion’s share of their revenue stream to sustain solvency and independence. Well-led nonprofits also do not “chase” funding as they recognize this may cause leaders to stray from a well conceived mission or may lead the organization into service delivery areas best left to others.
By virtue of the composition of their boards, many of the most successful nonprofit executives become entrepreneurial in their thinking and actions. They pay special attention to business and economic trends, competitive advantages over their competition, increasing the numbers of customers, pricing strategies, setting growth targets, continuous market analysis and being aggressive. Often nonprofits are able to move more quickly on strategic initiatives than their public counterparts because they tend to have fewer layers of bureaucratic approvals and do not have the same requirements for holding public hearings before acting on a major planning effort. When public officials are contemplating the creation of a new nonprofit organization they should consider its role within the current organizational framework (institutional fit); the requisite leadership skills necessary to operate the nonprofit (which may be distinctly different from what exists in the public entity); whether the appropriate skills sets exist internally; designing the organization’s mission and vision statement; its board structure and leadership; and its financial development strategies. The role, structure and nature of nonprofit organizations create opportunities for public parks and recreation departments to build coalitions (alliances that may or may not be contractually formalized), collaborations (efforts to work together for a specific end) and partnerships (formalized contractual relationships) with them. Wood & Gray (1991) note that, “Collaboration occurs when a group of autonomous stakeholders engage in an interactive process, using shared rules, norms and structures to act or decide on issues related to a particular problem domain.” Gray (1996) and Crompton (1998) add, “The process of collaboration infers the pooling of appreciation and/or tangible resources, e.g., information, money, labor and other assets etc. by two or more stakeholders to solve a set of problems that neither can solve individually.” Successful, coalitions, collaborations and partnerships work best when the “partners” (the term is used loosely) cultivate relationships based on recognized interdependence by each understanding the needs of the other. Therefore, the prospective partners must come to the table with a cooperative spirit rather than one that is self-serving, which is particularly difficult in an American culture that prides itself on competition. However, by focusing on common interests and shared values each can offer their respective skills and knowledge openly to build partnerships thereby increasing their respective resources. In the spirit of cooperation, parks and recreation departments can utilize the coalition building process with nonprofit organizations to leverage its resources by, in effect, multiplying themselves through a memorandum of understanding (MOU) or other contractual forms of agreement to provide continuation of services that might otherwise be cut or as a cost-effective vehicle for adding new services. This produces five outcomes:
Taking this course of action requires strong leadership, facilitation, networking and collaboration skills. It requires strong leadership because undoubtedly something of value will seemingly be “given up” for the better good of the whole. A program, for example, that has been nurtured over many years or a facility with long tradition and history in a community might be targets for this consideration. It requires strong facilitation skills to work with various stakeholders and through deep personal stakeholder interests that might exist to maintain the status quo. It requires strong networking skills to identify and sift through the list of potential partners with an eye toward forging strong institutional bonds. And, it requires strong collaboration skills to create a shared vision and trust with the new partner(s) to feel comfortable enough to know that the interests of current parks and recreation constituents will be well served by the new partner(s). While public recreation and parks departments and nonprofit organizations tend to be fierce competitors, they each must recognize their interdependence. The two sectors share a common history, employees and many of the same constituents. In today’s tough economic times, they each must stop fighting over the “pie” and realize that they could each leverage their positions by collectively making more pie. Building coalitions, collaborations and partnerships provides mechanisms for resource sharing based upon common interests and values if there is an effort made to focus on the needs of constituents rather than the needs of the organization. Often, potentially successful collaborations fail because they are being done for the wrong reasons—funding. Leaders from both sectors need to set their differences aside and look to commonality in order to be able to expand the provision of services and resources to targeted groups for the purposes of meeting mission requirements. They must move away from the strategy that the bottom line is the bottom line and what do “I get out of it” mentality which is truly a capitalist notion, and remember that each ultimately exists for social purposes—most often defined as providing for quality of life and the common good. Another obvious course of action available to parks and recreation departments is to form and operate one or more of their own nonprofit organizations. Because this strategy tends to increase rather than decrease the competition for community resources, it should be given careful consideration. In this scenario, organizational planners should consider the costs, special skills sets and requirements necessary to effectively operate a nonprofit organization. In many cases, the skills sets needed by public sector professional leaders and managers are similar to those operating nonprofit agencies, but some skills sets are unique to the nonprofit sector. For example, what is common to both public and nonprofit agencies is that they both involve organizations, leadership and administration. This means that much of the literature, theory and skills sets are directly transferable between organization types. On the other hand, some of the differences include societal roles, legal structures, institutional financing mechanisms, accounting and budgeting procedures, governance, degree of reliance on volunteerism, size, institutional agility, resources and entrepreneurism. This means that many unique skills sets are required for the successful operation of a nonprofit organization. Further, parks and recreation managers should recognize the substantial difference between operating a stand-alone entity versus a department within a larger agency. According to a 2002 survey, thirty potential subject competencies were identified in an online survey administered to local area CEOs by a San Jose State University Task Force of Nonprofit CEOs, working to create a Master of Nonprofit Organizations, Leadership and Administration graduate degree program (see Table 1). The top ten subject competencies identified by the respondents as most important for nonprofit professionals to learn can be grouped into five general domains:
The survey was sent to 274 nonprofit executives via an email notice between June 2002-November 2002. The survey respondents were drawn from a United Way of Silicon Valley directory of nonprofit service providers. Of the original pool of 274 subjects, 82 responded, yielding a 29.9 percent response rate. Among other questions, the respondents were asked to indicate, “to what extent [do] you feel each subject would be useful to you?” The resulting subject competencies responses are rank ordered in Table 1 and were determined by aggregated scores based on a scale of 1-5 where 1 equals Not At All [Useful] and 5 equals Very Much So.
Nonprofit organizations are extremely exhilarating to lead in their distinctive societal roles and there certainly is enough work for nonprofit organizations, for-profit businesses and government agencies to work side by side to meet society’s needs. However, being a nonprofit CEO/executive requires a unique breed of individual because of the rigors of the position and the demands of stakeholders. Nonprofit leaders have to be wonderfully creative entrepreneurs, consummate business professionals and social advocates wrapped into one package. Because of their societal roles, nonprofit executives must also live with the highest integrity and ethical standards. They are in the unenviable position of having to serve many masters (boards, staff, volunteers and constituents to name a few), but they are in the most enviable position because they have the opportunity to generate hundreds of millions of dollars for the public good. They also have the wonderful opportunity to create magnificent programs and experiences for the most poor and underprivileged among us. That is the greatest gift of all and the best reason for working with or operating a nonprofit organization. References Crompton, J.L. (1998). Partnering: The complimentary assets of businesses and park and recreation agencies. Journal of Park and Recreation Administration, 16(4), 73-94. Gray, B. (1996). Cross-sectoral partnerships: Collaborative alliances among business, government, and communities. In C. Huxman (ed.), Creating Collaborative Advantage (pp. 57-79). London, UK: Pitman. Wood, D. & Gray, B. (1991) Toward a comprehensive theory of collaboration. Journal of Applied Behavioral Science, 27(2), 139-162.
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