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Financial Management in Nonprofit Organizations - Essay Example
Author : aboyer
Finance & Accounting
Pages 6 (1506 words)
Financial Management in Nonprofit Organizations 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…
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. ...