Financial Management in Nonprofit Organizations
Running head: Financial Management in Nonprofit Organizations
Financial Management in Nonprofit Organizations Executive Summary
Successful management of a not-for-profit organization requires providing high-quality service, but at the same time, careful administration - to reduce expenses and automate processes are ongoing requirements. Each type of not-for-profit organization has unique management needs. For example:
• Social service and government agencies require meticulous reporting practices, essential for meeting regulatory compliance and securing future funding.
• Professional and trade associations are tasked with managing business events as well as maintaining education and certification records.
• Civic, fraternal, and religious organizations have complex membership relationship issues and vital fundraising projects.
The leaders and staff of nonprofit organizations must ensure that accounting records and financial statements are accurate and comply with regulatory requirements. For a manager of a nonprofit organization, managing the organization’s finances is especially challenging. A nonprofit organization’s revenue sources are frequently subject to changes in both economic forces and political climate. Yet, it has to compete for labor and other inputs just like any other organization. Accurate recording and reliable reporting of financial information are the preconditions for financial management. Public accountability also requires a high degree of accuracy and reliability of financial data. The financial statements of a nonprofit organization provide a useful overview of the organization’s fiscal health.
Financial management entails both planning and implementation. A nonprofit manager will need to be able to analyze and interpret historical and current financial information in order to prepare financial plans that will make certain operations of an organization are efficient and effective. Financial
Financial Management in Nonprofit Organizations Executive Summary
Successful management of a not-for-profit organization requires providing high-quality service, but at the same time, careful administration - to reduce expenses and automate processes are ongoing requirements. Each type of not-for-profit organization has unique management needs. For example:
• Social service and government agencies require meticulous reporting practices, essential for meeting regulatory compliance and securing future funding.
• Professional and trade associations are tasked with managing business events as well as maintaining education and certification records.
• Civic, fraternal, and religious organizations have complex membership relationship issues and vital fundraising projects.
The leaders and staff of nonprofit organizations must ensure that accounting records and financial statements are accurate and comply with regulatory requirements. For a manager of a nonprofit organization, managing the organization’s finances is especially challenging. A nonprofit organization’s revenue sources are frequently subject to changes in both economic forces and political climate. Yet, it has to compete for labor and other inputs just like any other organization. Accurate recording and reliable reporting of financial information are the preconditions for financial management. Public accountability also requires a high degree of accuracy and reliability of financial data. The financial statements of a nonprofit organization provide a useful overview of the organization’s fiscal health.
Financial management entails both planning and implementation. A nonprofit manager will need to be able to analyze and interpret historical and current financial information in order to prepare financial plans that will make certain operations of an organization are efficient and effective. Financial
References: Abraham, A. (2006). Financial Management in the Nonprofit Sector: A Mission-Based Approach to Ratio Analysis in Membership Organizations. Journal of American Academy of Business, Cambridge, 10(1), 212-217. Retrieved from EBSCOhost. Herzlinger, R. (1979). Managing the Finances of Nonprofit Organizations. California Management Review, 21(3), 60-69. Retrieved from EBSCOhost. Wedig, G. J., Hassan, M., & Morrisey, M. A. (1996). Tax-Exempt Debt and the Capital Structure of Nonprofit Organizations: An Application to Hospitals. Journal of Finance, 51(4), 1247-1283. Retrieved from EBSCOhost. Zietlow, J. (2010). Nonprofit financial objectives and financial responses to a tough economy. Journal of Corporate Treasury Management, 3(3), 238-248. Retrieved from EBSCOhost.