Nonprofit Management Theory and Practice in Switzerland:
The Fribourg Management-Model for Nonprofit-Organizations
At a quick glance...
Nonprofit organizations (NPOs) satisfy certain human needs for social integration, political,
cultural and charitable involvement which markets and governments fail to address.
To fulfill their tasks in the best possible way, NPOs need to establish and safeguard efficient
and effective stewardship. The Fribourg Management Model for NPO developed by the
Research Institute for Association- and NPO-Management (VMI) at the University of
Fribourg/Switzerland provides a systematic introduction to this topic. Through its generic
and comprehensive approach the model offers fundamental knowledge as well as a
framework for the understanding of NPO related management problems and solutions. It
provides a systematic view of the field NPO-Management" by considering all (relevant)
problem areas. At the same time it offers a framework for the presentation, systematization
and classification of terms, concepts and teaching contents.
This article begins with the question why a specific management model for NPOs is
desirable. It then discusses the different views of the NPO. Further on, the Fribourg
Management Model in its very basic structure will be presented with the three subsystems:
environment system, marketing-/performance system and potentials system
Why a specific management model for NPO?
For 20 years the Research Institute for Association- and NPO- Management (VMI) has been
dealing systematically with the stewardship of nonprofit organizations. To begin, the wide variety
of different NPO-types needed to be systematized and categorized. Subsequently, a proprietary
management concept was developed which has under the present name of Fribourg Management
Model for NPO proven its worth in research and consulting work as well as in education and
training within the whole German speaking area until today.
Common characteristics of profit-oriented and nonprofit organizations:
They are purpose- and goal oriented. They pursue a certain mission which they try to
accomplish by providing specific performances and services.
Both are open, environment-dependent systems. They live on" their relationships with the
external environment; they procure their resources on markets, provide the outside world
with performances, and orientate themselves by the given conditions and developments of
their relevant surrounding environment.
These organizations are productive systems. They have to procure, raise or recruit
production factors (funds, labour), they have to combine" these factors into perfomances
designed for certain addressees (beneficiaries, clients, customers) according to a plan and in
an organized manner through processes characterized by division of work.
They are social systems. They are upheld by people. Human labour is the crucial production
factor which however cannot be solely procured and managed along purely rational lines the
way equipment and funds can be. Human beings need to be guided, motivated, driven"
towards acceptance of goals and tasks which they only accept if the organization offers
satisfaction of their individual needs (in form of prestige, appealing work relationships,
career-possibilities)
These organizations possess a fundament of norms and rules which determines structures,
rights and duties of the employees as well as policies and rules for procurement, production
and marketing.
If nonprofit organizations can analogous to enterprises be equally understood as goal
oriented, productive social systems, does that mean that the findings and ideas of business
administration science can be transferred to nonprofit organizations? The answer is yes", but only
to a limited extent.
As there are some fundamental differences in characteristics, the transfer of knowledge from
the profit-oriented management science to nonprofits has its clear limits. For this reason the NPO
management science is to be conceived as a particular business administration theory. It makes use
of those existing theories that fit into the context of NPO and generates additional knowledge and
rules of best practice for all the problem areas where the enterprise-centered science does not or
cannot make any adequate statements. Among these specific problems are for example those of
membership, voluntary work, specific organizational structures and consensus building processes
as well as special operations and performances in the marketing area.
To date there is no complete, mature theory complex for the young NPO management
science. The major part of business administration scientists still deals only with enterprises. As a
result, publications on NPO are few, albeit tendentially growing in number. The Fribourg
management model for NPO presented here gathers existing knowledge systematically and shows
possibilities and directions for further development.
The management model is not a management science in a comprehensive sense. The model
aspect" consists of an analytical-descriptive presentation of the essential elements and components
of an NPO-management science. Primarily, it answers the question: What is the subject matter, the
contents of this science?" By this, it indicates those problem areas which need to be tackled
subsequently in an intensive and detailed manner by the management science. For this reason, the
number of normative statements in this model is still limited.
The views of NPO as starting point for the model design
The raison d'être of an NPO lies exclusively in the accomplishment of the assigned mission
and purposes. To accomplish these, the organization needs to produce", id est to conduct
performances and to provide them to certain beneficiaries (target audiences). To achieve such
performances it either needs to recruit or raise, to use and administer means (production factors,
resources) or to devise and build them up on its own.
From this reasoning we can deduce the three subsystems of the Fribourg management model
(display 1):
a) For an NPO the accomplishment of its purpose consists of influencing" the environment
resp. of creating utility for certain environment segments. The Environment-/ Beneficiaries
System is the one which delineates the boundaries and fields of action for an NPO.
b) The Marketing-/Performance System is where the design and provision of the performance
in its widest sense takes place, whereby these performances need to be targeted consequently
at the needs, requirements and expectations of the concerned environment segments.
c) The Potentials-System encompasses the entire domain of conception, build-up and expansion
of the performance potentials in the sense of those resources (capacities, capabilities,
instruments) which are necessary for actual operations and for the management and control
of the entire NPO activity.
The model can be read" and interpreted top-down or bottom-up.
a) The marketing logic follows the need and environment orientation mentioned earlier: The
demands of the environment segments determine (initiate and guide) the conception of the
performances (qualitatively and quantitatively) from which the required potential is derived.
b) The production logic on the contrary rests on the fact that NPOs as service organizations
need to first devise and establish their performance potentials before they can conduct
performances and accomplish their purpose in the relevant environment.
Display 1: Logic of the Fribourg Management Model-structure
This basic notion of the NPO can be explained further through the view of the NPO as an
input-output-system (see display 2), leading to a clarification of the environment function. Primarily,
the NPO determines its beneficiaries in the environment to which it supplies the output. At the same
time, the NPO has to recruit and organize its resources, i.e. the input, from the environment. Input
and output environment can thereby also be subsumed under the term transaction- or exchange
environment. The NPO maintains close exchange relationships with these surrounding transaction
partners.
Display 2: Environment of a Nonprofit Organization
However, not only the involved parties" of the transaction environment (i.e. stakeholders)
are relevant for NPOs. The transaction environment itself is surrounded by additional environment
spheres, which can be termed as orientation environment. The events and developments in the social
subsystems (resp. the actions of the organizations attributed to these subsystems) fix data and
conditions which may indirectly affect the NPO. Information about the orientation environment is
therefore necessary because it generates circumstances and facts which may sooner or later become
meaningful for decisions and activities.
The Fribourg Management Model in an overview (Categorization-/ Object Model)
As already stated, the Fribourg Management Model is based on 3 subsystems, the
environment system, the marketing-/performance system and the potentials system, the last of which
can again be divided into the resources- and cooperations system on one hand and the management
system on the other. NPO management theories and knowledge are categorized in line with this 3
systems framework and dealt with accordingly as shown in display 3.
Display 3: Overview over the Fribourg Management-Model
The Environment System
The environment system seizes and systematizes all possible environment areas or domains
to which an NPO can be related. For each NPO this general-abstract environment system needs to
be interpreted individually. This is to be done through the selection and specification of the
environments relevant for a particular NPO and their presentation in a relationship-/communications-matrix resp. in a model of the involved exchange-relationships.
The environment and its conditions (circumstances, developments, stakes, demands, norms,
offers etc.) are the orientation domain of the NPO. The organization must know (through information
collection) what is happening in the relevant environments. It has to acknowledge the threats and
opportunities caused by status and transformation of the environment, it has to determine
exogeneous facts within the collected information and has to determine decision variables as well
as to respect success factors. For this reason, securing the future existence and success
(accomplishment of purpose) of the NPO not only depends on its internal functioning", but above
all on the extent to which it succeeds in achieving a transaction equilibrium in the input and output
domain. This transaction view is also reflected in the equity (or benefit-contribution) theory as well
as in the stimulus-response-theory.
An NPO maintains different kinds of exchange relationships with its environment (partners):
1. Providing utility for money
This form of exchange relationship can be found above all in market transactions
(purchase/sale of goods or performances at given prices). It also occurs under nonmarket-conditions (e.g. with monopolies, purchase-obligations etc.)
2. Receiving support
This exchange relationship encompasses non-monetary inputs to NPOs or inputs without
monetary compensation. In an active form, support can take place through donations, help
etc.; passively through toleration, acceptance or acclamation.
3. Collective bargaining
Through negotiations and agreements with other organizations the NPO fixes certain forms
of conduct for itself, its members or third parties.
4. Communicating
Through its behaviour, decision making and active communication, the NPO consciously and
unconsciously sends" certain information to receiving environments in order to in-form and
influence them. Communication may appear on its own (e.g. in the form of pub-lic relations)
or along with other NPO activities (e.g. advertisements for a certain performance).
5. Giving support, participation/ membership
Mostly as a consequence of membership, cooptation or appointment the NPO resp. its
representatives can participate in the decision processes of other systems (NPO). This is for
example the case in all cooperations (work groups, umbrella associations etc.).
6. Providing external effects
We understand external effects as mediate effects (side effects often unintended in nature)
on certain environment segments:
Public goods" as positive effects for the receiver (e.g. a government's relief from
duties caused by a social organization's services to needy people),
Public bads" as negative effects (e.g. the negative implications of the success of
lobbying of a professional association for certain groups of consumers).
The purpose of the NPO is to achieve effects and to create utility for certain environments.
Consequently, the environment system is closely tied to the marketing-/perfomance system.
Marketing- /Perfomance System
The Fribourg Management Model incorporates a marketing-oriented interpretation of the
purpose of the organization. The accomplishment of purpose is achieved through production and
provision of certain perfomances/services as well as through an active influence on the environment,
in particular through communication. Thus the marketing-/performance system stands for a very
wide, modern conception of marketing: It does not only encompass the design and the provision of
performances, but it also involves the communicative side of the input procurement (e.g.
fundraising).
An active management of environment relations" in this marketing domain facilitates a clear
structuring of problems and offers in part also heuristic planning support for a systematic conduct
of the entire exchange management.
Theories and knowledge presented in the domain of the marketing-/ performance system can
be divided into four parts:
Fundamentals
Marketing philosophy
Marketing management concept
Marketing planning
Fundamentals: Exchange systems and control mechanisms
Marketing exchange relationships are more complex in the context of NPOs than in the
context of enterprises where market transactions clearly dominate. The exchange process underlying
for-profit marketing can be described by the axiom goods for money". As was evidenced by the
above presented typology of exchange relationships, NPO exchange processes may be characterized
by completely differing control mechanisms.
Control mechanisms:
Market control applies in the case of services which are offered (sold) to members
or third parties covering at least (full-)costs
Subsidy control systems appear in cases when services are provided for free or at
rates not covering costs. Costs not covered need to be financed through alternative
means (e.g. membership fees, donations, subsidies). Thereby different criteria apply
than in the case of a complete financing through market prices.
Political processes linked to direct democracy within the organization are in use
when members and/or voluntary workers determine in the course of conflict prone
consensus and intention building processes what has to be seen as the official
interest" of the NPO and needs to be adopted for the outside world. Which
performances should the NPO conduct at which terms?
Membership control with indirect democracy appear when the membership base only
has the option to elect representatives into the NPO managing organs (e.g. assembly
of delegates); the organs themselves make the effective decisions. To control"
his/her representatives a member can only use indirect control and influencing
mechanisms: To give rebellious representatives a no-confidence vote, to refuse
increases in membership fees, to withdraw from the NPO organization or to threaten
with collective exit or secession through organized protest in line with other
members.
If we look at an NPO as an input-output-system, exchange relationships can be distinguished
as either belonging to the input-, the inner- or the output-domain. In the input-domain the NPO
procures/receives operating resources and funds as well as personnel from the outside world. The
inner-domain is relevant for membership based self-help organizations. The output-domain encloses
all exchange relationships involving the supply of performances or services to the third parties (to
membership markets, to the extended environment and other organizations, e.g. associations of
market opponents). Marketing efforts can be structured along these three domains as well.
Marketing philosophy and marketing logic
In the profit sector we understand the marketing philosophy" as a market oriented (and
market conform) enterprise stewardship where customer needs are in the forefront of decision
making. This concept cannot be applied as it is to the NPO-sector. For each NPO, the adequate
marketing philosophy need to be discussed and determined individually.
Some common ground with the for-profit marketing, however, can be found in the following
notions:
A change from an self-centered view (bureaucracy) to a membership, client or citizen
orientation. Transaction partners are to be understood as market segments and must
accordingly be treated in a differentiated manner.
A change from a duty-fulfillment-view (identification with the system and the task)
to a service orientation (asking for a consequent perception, management and
structuring of the NPO as a service organization).
NPOs are primarily suppliers of services. The nature of the service production requires a
positive attitude of the beneficiary of the service. Affecting the client is therefore inevitable and
means in other words active market shaping. Additionally, there exists an organizational meta-structure consisting of multiple layers of organizational sub-structures in many NPOs. This asks for
an unequivocally perceivable identity of the organization which can be realized through an
appropriate structure, adequate management instruments and a thorough marketing concept.
The marketing philosophy can only be put into practice if the general marketing logic is
accepted. The marketing logic implies that the component of market influencing always goes hand
in hand with need satisfaction (adaptation to market needs). In parallel with all those tasks or phases
of the performance process where the needs of the receiving partners (members, nonmembers,
clients, donors) are in the center of attention, communication instruments should be used to increase
the acceptance of offered performances. However, as experience shows, this market influencing
component causes higher acceptance problems in NPOs than does the adaptation to market needs.
The Marketing Concept
Under marketing management we understand the practical use of marketing theories in the
NPO. This task can be meaningfully divided into the development of a marketing concept and in an
actual marketing action plan which is to be elaborated for each performance area. The marketing
concept includes two steps: The overall positioning of the organization and the determination of the
areas of marketing application.
The marketing concept is a mid- to longterm plan encompassing a comprehensive view of
an NPO's marketing effort. It serves as a guideline for the design of the marketing concepts in the
individual (marketing-) sub-areas.
An essential precondition for successful marketing is the overall positioning of the
organization because exchange partners rarely perceive an organization in isolation. The perception
mostly relates to existing semantic structures, to a given image and the attitude towards a competing
organization, a personally lived experience etc. These perceptive processes which unfold
automatically with exchange partners should be positively influenced through the design of the
organizations identity.
An essential element in this process is the positioning. How does the NPO want to be
perceived? This positioning must everywhere and always be lived and communicated. With each PR
campaign, with each service offer, with each donorship call the identity of the NPO should be
visible. To support identity creation for the organization it is worth to additionally summarize the
core activity in a catchy slogan (verbal positioning). This verbal positioning can be supplemented
through a mission statement in which the essential activities of the NPO should be pointed out.
The positioning is to be communicated towards the exchange partners. In NPO we
distinguish two identities, namely the Corporate Identity (CI) and the Cooperative Identity. Beside
the identity of the organization as an entity (Corporate Identity) appears the member identity (or the
Cooperative Identity). By this we mean the self-understanding, the we-feeling" of the membership
community which emerges through the collective accomplishment of membership tasks. These
organizational identities are to be established and then form the communicative platform (CI -
concept) for all marketing measures.
Analogue to the above described exchange relationships of an NPO, the Fribourg
Management Model distinguishes the marketing-action-areas input-, inner- and output-domain. For
each individual NPO the relevant areas of marketing-action need to be determined. In order to do
this, one can lean on the individually determined marketing philosophy, the overall positioning
chosen and the marketing tasks to be solved.
Marketing Planning
Standard Planning Sequence according to the Fribourg Management Model:
1. Marketing information
2. Determination of marketing objectives
3. Determination of marketing segments
4. Analysis of the relevant exchange transaction (for the appropriate planning area) including the corresponding control mechanism
5. Positioning of the performance offer, the object of negotiation
6. Determination of the marketing mix: Choice of the marketing-instruments
7. Determination of the marketing organization
8. Marketing budget
9. Marketing control and audit
All these steps in the planning process are to be adapted to the given circumstances of the
NPO. The problems related to the segmentation issue - for example - are far more complex in NPOs
than in enterprises.
The marketing-instruments (as used in the model) consist basically of the four classical
standard instruments (4 Ps")
Product
Price
Promotion
Place
These instruments are to be specifically adapted to the use with NPOs and - at times - need
to be considerably modified. As NPOs have other important means of financing (fees, contributions,
donations) beside market prices, the price policy gains additional dimensions in comparison to
business marketing. Promotion as an instrument also needs to be strongly adapted to the
characteristics of NPO-goods. In certain situations it has a different resp. higher significance than
merely the one of advertising".
Besides these classical marketing instruments, the NPO marketing instruments encompass
additionally
Public Relations
Politics"
Benefit-Contribution-Systems
Public relations (PR) is of far higher importance to NPOs than to enterprises. The importance
of advertising and PR as marketing instruments is just about invertedly proportional in NPOs
compared to enterprises. The carrying out of higher order PR-tasks is for example delegated from
enterprises to associations. These derived tasks are an important raison d'être for NPOs. The strict
separation of advertising (for the products) and PR (for the institution) within enterprise marketing -
which is justified in that context - is not desirable in the NPO-sector.
The instrument politics" indicates that NPOs work within political systems and need
specific instruments in order to influence it. Influencing the political system is not or only to a
limited extent possible for an individual organization/person and is for this reason delegated to a
cooperative organization.
PR and politics" are only then to be considered marketing mix instruments when they are
used as supporting measures for the other instruments. Besides that, however, they also have the
function of an own marketing area, an independent performance of the NPO.
Specific benefit-/contribution systems are employed for example in the domains of
membership marketing, fundraising, collective bargaining. The benefit-contribution principle,
however, applies in its core to all exchange relationships.
The Potentials System
Starting point for the reflections regarding the potentials system is again the chosen
structuring of the NPO id est the distinction of its exchange relationships in input, inner and output
domain. In this sense we are dealing with the potentials which are to be procured/raised in the input
or inner domain and which are to be employed/used and administered for the performance conduct
and for internal administrative work.
Economic theory as well as general business administration science speak primarily of
production factors (land, labour, capital, enterpreneurial input) and limit this term to scarce goods
which need to be procured on markets (input domain). These factors are also relevant (to a varying
degree and partially with modified or extended contents) for NPOs. Our term potentials"
encompasses these production factors, but it also reaches beyond them by including the potentials
built-up by the NPO itself, such as the management system or the accounting and controlling system.
Based on this view, the potentials system can be divided into two sub-systems: the operating
resources- and cooperation system and the management system.
The Operating Resources- and Cooperation System
We understand the operating resources as factors which need to be procured on markets, and
then employed/used and administered. People (members, voluntary workers, employees), material
input factors, equipment and facilities (real estate, operating and office equipment, machines etc.),
financial funds (membership fees, contributions, donations, susidies) as well as information
necessary for decision processes belong to this category. Cooperative agreements with other
organizations and their input can also be considered part of these potentials. Cooperative entities
(work groups, umbrella associations) are instruments with the help of which certain tasks are solved
in cooperation with other NPOs.
The Management System (MS)
The term Management System emerges from two approaches to the management field of
science resp. to the general business administration science:
1. the formal, universally valid approach (science of management tasks: e.g. planning,
decision making, controlling, organizing, coordinating, motivating)
2. the functional, operations oriented approach (science of operative functions: e.g.
procurement, use and administration of operative resources (marketing, EDP,
administration and finance and accounting)).
First of all, the MS refers to the formal, universally valid approach of management science
and means the capability" to manage or steer the entire NPO system with the help of certain
instruments and methods in a success-oriented way. At the same time the MS also includes the
bundle of stewardship-related tasks within each function. The MS can be understood as a system of
rules for action which applies to any person within an organization endowed with the necessary
competencies to plan, control, decide etc.
In this sense, the MS is interlinked with the so called execution system, which encompasses
all the activities of an organization that cannot be considered as stewardship tasks. From this point
of view, certain task bearers (persons, positions) in the NPO are at the same time managers and
executants. Regarded as a teaching content the MS is treated as a purely formal-general problem
resp. the management is viewed on a general level detached from technical execution problems.
The MS designs and controls the execution system. To do this it has:
to accomplish certain core tasks (decision making, consensus and intention building)
and to carry responsability (for problem solving)
to lead and guide people (employees, voluntary workers)
to organize or establish structures and procedures (processes)
to manage activities and the entire NPO-system (setting objectives, planning and
controlling)
to adapt the NPO system and its subsystems" through innovation and reorganization
to environmental changes.
In order to accomplish these management tasks, management instruments need to be
developed, formally implemented and then consequently applied.
Quintessence
The Fribourg Management Model for NPOs is the result of a long-lasting process in which
scientific findings and knowledge have been combined with experience from NPO work practice
(action research). The model was designed for practitioners. It is meant to help understand the NPO
as a comprehensive system and to point out the specific characteristics of such organizations. It
offers an overview of the fundamental term of NPO management science and provides a systematic
categorization resp. a framework of relevant fields of study. That the model is able to meet these
claims is not least proven by the multitude of nonprofit organizations in the German speaking area
which successfully apply the model.
Literature
Schwarz P./ Purtschert R./ Giroud C.: Das Freiburger Management-Modell für NPO, Bern 1995
Schwarz P.: Management in Non-Profit-Organisationen, Bern 1992
Schwarz P.: Management-Brevier für Non-Profit-Organisationen, Bern 1996