Due to the soaring or not-for-profit organizations, there has been the need for the implementation of financial management mechanisms to ensure that grants of funds from donors are used for their intended purposes. To ensure this, these organizations ought to create a budget indicating all the activities they intend to do and how much these activities would cost. Subsequently, rules and regulations should be set to govern how funds are used. There are regulatory bodies in every country whose main objective is to assess whether not-for-profit organizations comply with legal and ethical standards related to management. Not-for-profit organizations get their funds from individual donors, institutional donors, and even governments. For-profit organizations, on the other hand, get their funds from investors. In performance evaluation, a tool referred to a balanced scorecard is used to evaluate performance based on clients perspectives, financial perspectives, learning perspective, and also on the basis of internal processes or procedures. One of the recommendations is the adoption of this tool in financial evaluating performance and implement strategies to ensure compliance. Subsequently, it is also important to have a clear vision for the organization in order to ensure funds are used for their intended purposes. .
To effectively understand and comprehend these issues, it is of significance to define a nonprofit organization as well as a for-profit organization. A for-profit organization can be referred to as a commercial entity of organization. In other words, this main objective is to generate revenue. A nonprofit organization, on the other hand, is an organization established with the main objective of helping the society in general rather than for commercial purposes. In addition, a nonprofit organization is excused from paying levies as opposed to a for-profit organization where all services and commodities ...Show more