Financial Management of Not-for-Profit Organizations

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Financial Management of Not-for-Profit Organizations: Generally, financial management of not-for-profit organizations is similar to the process of financial management in the profit making sector in several aspects. Nonetheless, there are several major differences that contribute to a different focus of a not-for-profit financial manager. In the commercial sector, the for-profit enterprises mainly focus on capitalizing shareholder value and overall profitability. On the contrary, not-for-profit organizations have the basic aim of providing certain socially desirable need on a continual basis instead of increasing shareholder value ("Financial Management of Not-for-Profit Organizations", 2011). The difference in focus between the for-profit and not-for-profit organizations is because the latter does not have financial flexibility of a commercial enterprise since its dependent on resource providers that are not getting involved in an exchange transaction. As a result, the resources provided are channeled towards offering goods and services to a client instead of he actual resource provider. Important Exercises for Not-for-Profit Organizations: Since the provided resources are given to clients rather than the resource provider in not-for-profit organizations, the organizations are required to show stewardship of these resources, which implies that finances donated for a particular purpose must be used for that purpose. Therefore, the organization's staff must demonstrate

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