Financial Management in Nonprofit Organizations Essay - 2

Financial Management in Non good Organizations - Essay ExampleSeveral performance measure indicators be also discussed and they have a unintelligible co-relation with how the initial funds ar generated. Performance indicators of both the types differ slightly but this is the only aspect in which most general finance principles whoremonger be applied to both. Finally, we looked at how corporate governance is ensured for non pelf yet they lack in strong monitoring as the real focus of government, agencies and creditors is on how for profits are performing. Financial Management in Nonprofit Organizations Financial Management for nonprofit organizations has many similarities with the financial management practices being adopted by profit organizations yet it differs in some respects. Maximization of Shareholders wealth and return on investment are the key performance indicators for a for-profit organization. However, as far as a not for profit organization is concerned, the key emph asis is on developing the welfare projects of the society by contributing in one form or the other. Major stakeholders of a not for profit organization are not entitled to any wealth maximization. ... This actually leads to the definition of the mission statement of a not for profit organization (Blackbaud, 2011). The disclosure and administration activities of a nonprofit organization must be scrutinized therefore the running(a) staff must be accountable for every incoming dollar. This is for donors satisfaction and for the transparency of the management processes (Cass, 2010). Fund accounting system has sour even more critical considering an increasing shift in the greatness of external financial reporting (McFarlane, 2012). Therefore, budgeting and cash flows management are of immense importance in a not for profit organizations financial management setup. Liquidity and asset management is important too since commitments of service of process are to be continued over an exten sive period of time. Cash Flow prediction becomes challenging due to two main factors. Primarily, operational cash flows are negative and financial cash flows are not certain. Another reason for this unpredictability is the fact that cash flow donors arent the ones who are receiving services or any other advantage on their investments. Severe management crisis can be an outcome of a demand increase in the resources of the nonprofit organization. bill control also becomes important since the forecasted revenue is unreliable and thats the reason why not for profit organizations are not inclined in servicing newer clients until they have done a thorough research on that. With control comes budgeting, thus, a not for profit organization requires risk averse financial managers and tactical marketers. Sources of Funds Nonprofit organizations utilize a method known as fund accounting for maintaining books pertinent to the received resources by