Financial Management In Nonprofit Organizations Essay

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A not for profit organization is a corporation or an association that conducts business for the benefit of the general public without shareholders and without a profit motive (Legal, 2013).” There are immense community benefits as a not-for-profit generally accepts everyone regardless of ability to pay. Nonprofit organizations are granted tax-exempt status which helps them to provide services to the public and are expected to be effective managers of their finances as well as being efficient (Financial Management, 2010). In doing so, they can gain exemptions from federal and state incomes taxes and have the ability to solicit tax-deductible contributions (Financial Management, 2010). Organization must follow legal financial…show more content…
They are generally funded by the government, endowments, grants and donations (Medical Dictionary, 2013). Research institutions which are endowed to do medical research and to acquire new knowledge to help prevent, detect, diagnose, and treat disease and disability, from the rarest genetic disorder to the common cold while gaining new knowledge that will lead to better health for everyone (NIH, 2013). They are usually funded by the government, endowments, grants and donations (Medical Dictionary, 2013). Public health programs are wide and varied and can be local, state or federal. They are generally government funding, but also get grants, and endowments (What is Public Health, 2013). Financially Management Financially healthy nonprofits use income-based, rather than budget-based spending which allows them to have income projections that are realistic and helps to determine realistic costs (Zietlow, Seidner, 2014). The most successful nonprofit should have an operating reserve to finance shortfalls and hopefully allows them to have a positive cash flow at the end of the year (Zietlow, Seidner, 2014). However, most nonprofit organizations fight to manage cash flow due to how income and the expenses often may occur at different times, so that there may not be enough cash to pay for the expenses as they become due and payable (Zietlow, Seidner, 2014). Financial
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