Financial Management in Nonprofit Organizations

Financial Management in Nonprofit Organizations Essay example
Undergraduate
Essay
Finance & Accounting
Pages 6 (1506 words)
Download 0
Financial Management in Nonprofit Organizations Student Name University Date Executive Summary The financial management technique for a nonprofit making organization is markedly different from that is a profit making organization. There are several advantages and privileges for a nonprofit organization which are otherwise not present in profit making organizations…

Introduction

Another important difference in the financial management of the two types of organizations is the constraint of non distribution. Nonprofit organizations cannot distribute the profit generated to the owners. Nonprofit organizations do not have any owners. Thus the people who fund the organizations do not necessarily gain any kind of control over the firm. The nonprofit organizations have board just like profit making organizations. Although there is one major difference, that the boards of the nonprofit organizations are self appointed. Thus the board members are not accountable to the shareholders. There is considerable debate in these two matters, one is the bringing in accountability in the actions of the board members and other one is granting the investors with the rights to control the firm. It is advisable that the board members be held accountable for the actions taken, since this will help to bring in controllability and responsibility in the actions. The second recommendation is to grant the investors who provide the firm with specific and important investments, the right to control the firm to some extent. Introduction The mode of operations for a nonprofit organization is markedly different than that of a profit making organization. ...
Download paper
Not exactly what you need?

Related papers

Financial Management in Multinational Organizations
In addition, it becomes convenient for an organization to draw additional funds from the shareholders if it supports shareholder wealth maximization. Financial management also helps organizations in financial planning and controlling, and evaluation of risks. It has been rightly argued that maximizing shareholder value perhaps only most effective method to benefit every stakeholder. Table of…
Financial Management in Nonprofit Organizations
urban, sub-urban, rural area. Most of the non-profit organizations are small in size. For-profit organizations are basically profit motivated. They do not depend on funds or donations but depend on other sources like loans, debentures, ventured capital and leasing among others. The accumulated profit is divided among the stockholders themselves rather than investing it in the company. Both the…
Financial Management in Health Care / Health Care Budget
This has followed a breakdown of the various components i.e. revenues and expenses. A final analysis of the projected income is obtained in the end. Inflation has played a major role in this process and has been considered. The projections show an increase in net income which can sustain the running of the organisation (John et al, 2007). Financial drivers A clear indication of financial…
Financial Management in Nonprofit Organizations
As for example, social service organizations are required to be more specific with their financial reporting practices so as to comply with the existing rules and regulations. Next, religious nonprofit organizations have vital issues related to the complex requirements of its memberships. Management of finances in nonprofit organizations is quite a challenging task. The sources of revenues of…
Financial Management in Nonprofit Organizations
The researcher found some key differences between the financial systems of both types of organizations. Those differences were mainly related to the sources of finance and its use by the organizations. The main difference that gives rise to all other differences is the motive of both organizations. The motive of the owners of for-profit organizations is to earn higher amounts of money to bring it…
Financial Management in Nonprofit Organizations
Several performance measure indicators are also discussed and they have a deep co-relation with how the initial funds are generated. Performance indicators of both the types differ slightly but this is the only aspect in which most general finance principles can be applied to both. Finally, we looked at how corporate governance is ensured for nonprofits yet they lack in strong monitoring as the…
FINANICAL MANAGEMENT IN NONPROFIT ORGANIZATION
The report is prepared with the sole intent to study the various financial management practices in a non-profit organization. The author of the study will highlight the various financial management practices that ensure smooth operations of the business. It also highlights the difference in the financial management practices between profit and nonprofit organizations. The author of the study will…