Master Thesis Master's Programme in Strategic Entrepreneurship for International Growth with specialization in International Case studies of Swedish Non-Profit Organization’s (NPO) fundraising process -Adaptation of Balanced Scorecard Business Model for fundraising success Independent Project in Business Administration, 30 credits Halmstad 2020-05-31 Maitrayee Roy HALMSTAD UNIVERSITY Halmstad University School of Business and Engineering Master's Programme in Strategic Entrepreneurship for International Growth with specialization in International Marketing TITLE OF DISSERTATION Master Thesis on Case studies of Swedish Non-Profit Organization’s (NPO) fundraising process - Adaptation of Balanced Scorecard Business Model for fundraising success Independent Project in Business Administration, 30 credits Final Seminar Date: May 26, 2020 Author: Name: Maitrayee Roy Supervisor: Professor Klaus Solberg Söilen Examiner: Professor Ulf Aagerup Acknowledgements The author would like to express their deepest appreciation to the supervisor professor Klaus Solberg Söilen for his valuable guidance and encouragement towards the completion of thesis paper. The author would also like to show her gratitude to Navid Ghannad, Susanne Durst, Hélène Laurell, Venilton Reinert, Svante Andersson, professors of Halmstad University throughout two years’ Master programme. Finally, special thanks are given to parents and friends for their enormous support and inspiration. Halmstad, May 2020 Maitrayee Roy Title: Case studies of Swedish Non-Profit Organization’s (NPO) fundraising process - Adaptation of Balanced Scorecard Business Model for fundraising success Abstract The purpose of this study to review of Business Model elements of Non-Profit Organization (NPO) to discuss non-profit marketing activities and fundraising performance indicators that contribute fundraising success.
To prepare this paper, two Swedish non-profit organizations i. Sverige för UNHCR and Svenska Röda Korset has been chosen as the sampling organization. This paper is descriptive study, qualitative approach and case study method. Data is mainly collected from the annual reports and their official Websites.
The literature review covers Business model elements concept by Drakulevski & Nakov (2014); The Business Model Canvas (BMC) by Osterwalder and Pigneur (2010); Building Block of Business Model by Osterwalder, A. (2004); Niven’s Modified Balanced Scorecard model for non-profit organizations by Kwokwah Yeung & Connell (2006); and the theoretical model of the relationship between marketing activities and the fundraising performance by Cacija, L. The main findings of the paper are as follows: • Proposed Fundraising Framework • Nonprofit Marketing mix analysis. • Nonprofit Marketing Implementation.
• Financial performance by ratio analysis. The theoretical contribution of this paper is to show the interactions among different business model elements adapting with Balanced Scorecard model elements as success factors leads to marketing activities and fundraising key performance indicators of NPO. The practical contribution of this paper is to show key performance indicators measurement by ratio analysis that will be useful to managers, board members for their better strategic marketing decisions. Lastly, an empirical verification of the proposed fundraising framework is recommended to analyze in other non-profit organizations in another countries and cultures for future research.
Keywords- Fundraising, Non-profit organization, Business Model Elements, Balanced Scorecard Model, Non-profit Marketing Table of Contents 1.2 Problems identification and discussion .1 Business Model elements of the Non-profit organization.2 Balanced Scorecard Model of Non-profit organization .3 Balanced Scorecard Business Model: Essential Success Factors as interfaces and interactions of Business Model elements used in NPOs management practice .4 Marketing activities of non-profit organizations.6 Fundraising success of nonprofit organization .4 Choice of Research Methods .5 Data collection Methods .9 Extent to research interference .1 About Sverige för UNHCR .1 Human Resource Management of Sverige för UNHCR .2 Sources of Fundraising of Sverige för UNHCR .3 Contributions in marketing area of Sverige för UNHCR .4 Donor’s contributions to UNHCR: Sverige för UNHCR .5 Financial scenario: Sverige för UNHCR.6 Future of Sverige för UNHCR .2 About Svenska Röda Korset .1 Human Resource Management of Svenska Röda Korset.2 Sources of Fundraising of Svenska Röda Korset .3 Contributions in marketing area of Svenska Röda Korset .4 Donor’s contributions to IFRC and ICRC: Svenska Röda Korset .5 Financial scenario: Svenska Röda Korset .6 Future of Svenska Röda Korset.1 RQ1: The essential success factors in the context of business models used in NPOs management practice .1 Balanced Scorecard Business Model: Sverige för UNHCR .2 Balanced Scorecard Business Model: Svenska Röda Korset .2 RQ2: The non-profit marketing activities in fundraising carried out by NPO.1 Non-profit Marketing Mix analysis of Sverige för UNHCR .2 Non-profit Marketing Mix analysis of Svenska Röda Korset .3 Non-profit Marketing Planning of Sverige för UNHCR.4 Non-profit Marketing Planning of Svenska Röda Korset .5 Non-profit Marketing Implementation of Sverige för UNHCR .6 Non-profit Marketing Implementation of Svenska Röda Korset .3 RQ3: The fundraising performance indicators contribute to the improvement of nonprofit strategic marketing .1 Key performance indicators by Financial Ratio Analysis of Sverige för UNHCR .2 Key performance indicators by Financial Ratio Analysis of Svenska Röda Korset .3 Charts of Key Performance Indicators of Sverige för UNHCR .4 Charts of Key Performance Indicators of Svenska Röda Korset. Discussion and Conclusions. 61 List of Tables Table 1: Business Model Elements by various authors. 5 Table 2: The four business model pillars.
9 Table 3: Key performance indicators by Financial Ratios of the Nonprofit Sector. 12 Table 4: Human Resource Management scenario of Sverige för UNHCR. 22 Table 5: Donor’s contributions to UNHCR. 24 Table 6: Human Resource Management scenario of Svenska Röda Korset.
26 Table 7: Donor’s contributions to IFRC and ICRC. 28 Table 8: Key Performance indicators by Ratio analysis of Sverige för UNHCR. 49 Table 9: Key Performance indicators by Ratio analysis of Svenska Röda Korset. 50 List of Figures Figure 1: Balanced Scorecard performance system.
7 Figure 2: Niven’s Modified Balanced Scorecard. 8 Figure 3: Theoretical model of a relationship between marketing activities and the fundraising performance. 11 Figure 4: Framework for the analysis (authors’ elaboration). 15 Figure 5: SWOT Analysis of Sverige för UNHCR.
42 Figure 6: SWOT Analysis of Svenska Röda Korset. 45 List of Charts Chart 1: Sources of fundraising vs. amount of fundraising of Sverige för UNHCR (in SEK) (Year 2014-2018). 23 Chart 2: Sources of fundraising vs.
amount of fundraising of Svenska Röda Korset (in SEK) (Year 2014-2018). 27 Chart 3: Days cash on hand in Liquidity ratios- Sverige för UNHCR. 51 Chart 4: Months of Spending in Liquidity ratios- Sverige för UNHCR. 51 Chart 5: Savings Indicator Trendline in Operating ratios- Sverige för UNHCR.
52 Chart 6: Contributions and Grants Trendline in Operating ratios- Sverige för UNHCR. 52 Chart 7:Fundraising Efficiency Trendline in Operating ratios- Sverige för UNHCR. 53 Chart 8: Program Service Trendline in Spending Ratios- Sverige för UNHCR. 53 Chart 9: Management and General Trendline in Spending Ratios- Sverige för UNHCR.
54 Chart 10: Fundraising Expense Trendline in Spending Ratios- Sverige för UNHCR. 54 Chart 11: Days cash on hand in Liquidity ratios- Svenska Röda Korset. 55 Chart 12: Months of Spending in Liquidity ratios- Svenska Röda Korset. 55 Chart 13: Savings Indicator Trendline in Operating ratios- Svenska Röda Korset.
56 Chart 14: Contributions and Grants Trendline in Operating ratios- Svenska Röda Korset. 56 Chart 15: Fundraising Efficiency Trendline in Operating ratios- Svenska Röda Korset. 57 Chart 16: Program Service Trendline in Spending Ratios- Svenska Röda Korset. 57 Chart 17: Management and General Trendline in Spending Ratios- Svenska Röda Korset.
58 Chart 18: Fundraising Expense Trendline in Spending Ratios- Svenska Röda Korset. 58 List of Annexures Annexure 1:Summary of Proposed Fundraising Framework. 68 Annexure 2: Income Statement of Sverige för UNHCR. 78 Annexure 3: Balance Statement of Sverige för UNHCR.
79 Annexure 4: Income Statement of Svenska Röda Korset. 80 Annexure 5: Balance Statement of Svenska Röda Korset. 81 Abbreviations BMC Business Model Canvas BME Business Model Elements BSC Balanced Scorecard BSBM Balanced Scorecard Business Model FRII The Agency for Volunteer Fundraising Organizations ICRC The International Red Cross and Red Crescent Movement IFRC The International Federation of Red Cross and Red Crescent Societies KPIs Key Performance Indicators Mkr Million Kronor NPO Non-Profit Organizations SEK Swedish Krona SIDA Swedish International Development Cooperation Agency UNHCR United Nations High Commissioner for Refugees WWII World War II 1. Introduction This chapter presents the background of the relevance, originality and currency of the research questions based on prior literatures and articles to demonstrate the knowledge gaps i.
the purpose of the thesis paper.1 Background The concept of Fundraising defines the activities of raising money with following up people or organizations with the purpose of supporting an aid on contributions of charity i. education, health, shelter, microfinance, rights of refugees, etc. and providing with life-saving relief and creating solutions for a secured future. According to Hommerová & Severová (2019, p.
181) “Fundraising can be viewed as a systematic activity aimed primarily at raising financial resources for the activities of either an organization or an individual. From another point of view, fundraising can be viewed as a science that deals with the motivation to do good and the conviction of people that money is not everything. 2) states “Fund-raising is one of the most important business tasks for nonprofit organizations in order to operate the organization. Among other things, segmenting the donor market is considered core marketing application area for fund raising- task.
Several studies are found in the areas such as identifying the donor behaviors compared to that of non-donors, segmenting the donor market etc.” In recent, the number of non-profit organizations (NPOs) increases at Sweden every year resulting in difficulties to raise the fund for functioning the charity activities in the long run. The purpose of this study to review Business Model elements of Non-Profit Organizations (NPO) to discuss Swedish NPO’s non-profit marketing activities and fundraising performance indicators that contribute to fundraising success. The sources of fundraising of NPOs are important to understand the business model of NPOs, how it works in marketing area and contribute in NPO’s financial performance. Though there is no classification of fundraising sources in NPOs.
Hommerová & Severová (2019) states that categorization of sources of funding of non-profit organizations is divided into three parts (i) Public funding (i. domestic sources (state administration, local authorities) and foreign sources (European Union; (ii) Nonpublic funding (foundations, corporate donations); and (iii) Donations from individuals (Income from the NGO’s own activities, the organization’s own activities, membership fees, income from lotteries and games of chance, advertising and public collections. Cacija and Najev (2013, pg-61) state “sources of funding can generally be divided into four main sources: donations of individual donors, donations of profit entities, for-profit and non-profit foundations; income generated by own activities and income from the partnership with the private sector. Batti (2014) found out two categories for sourcing of funds or resources (i) Conventional Individual philanthropy, Private foundations, corporate agencies, government and foreign development agencies; and (ii) Non-Conventional Means Membership fees, businesses, income-generating activities, Prizes/Awards.
1 In Sweden, Swedish Collection Control (Svensk Insamlings Kontroll) is a nonprofit association check on NPOs with 90 accounts on an annual basis, ensures standards of the collection and grants of public fundraising of NPOs. They also ensure public fundraising satisfactory with reasonable costs, appropriate marketing activities used in fundraising. ("Om Svensk Insamlingskontroll | Svensk insamlingskontroll", 2020) There are four hundred thirty-three (433) active Non-profit organizations under Swedish Collection Control in Sweden. Among them, some of the largest non-profit organization are Cancerfonden, UNICEF, Läkare Utan Gränser, UNHCR, Svenska Röda Korset and many others.2 Problems identification and discussion During for few decades, many researchers have provided theories on the corporate- NPO collaborations.
There are no theoretical fundraising models that is considered one of the major activities of non-profit organizations. Besides, from the earlier research articles, it has not researched on the interfaces and the interaction between the different business model elements. 51) mentions “There is another area of research that has so far been neglected concerns actors & interactions in the context of business models.” Relating to the subject matter, this paper will discuss about interactions between Business Model elements of NPOs as fundraising success factors. Cacija and Najev (2013, p.