Internal Controls In Nonprofit Organizations

Most nonprofit agencies follow the same management structure. The structure normally consists of a vertical hierarchal structure with the chief executive manager at the helm, and divisional leaders rounding out the strategic leadership team. Since 9/11, then government shutdowns, multiple wars, natural disasters, and the government sequester, the challenge to most nonprofits is to compete for every available charitable dollar. Chief Executive Officers (CEO) of nonprofits must not only be skillful in maximizing the outcomes with fewer dollars, but also politically savvy in vying for monies for federal, state, local, foundation, and private funding sources.

The board of a nonprofit organization plays a major role in the organizations processes and effects. Chris Morfas, the Board Chair of the nonprofit organization “California Bicycle Coalition” makes it clear that “it’s the board’s role to establish the long-term strategic direction of the organization: its mission, vision, values and goals” (Best Practices in Board-Staff Relationships). As a board, we are responsible for the direction, oversight and resources for the organization. The board steers the organization as a whole in the right direction, making sure that its mission is being respected and upheld. To do so, the board oversees and monitors the activities and overall behavior of the organization, making certain that no actions done

A vital part of the leadership system in many not-for-profit organizations is an unpaid board of directors or trustees. Often these individuals are bound by a common interest in the goals of the not-for-profit but come from dramatically diverging backgrounds.

In this discussion, I will reflect on the future of nonprofit leadership and management. I will discuss how nonprofits could remain sustainable and discuss what I vision as likely to change.

The financial management of any organization whether it be for-profit or nonprofit it is very important to having a successful outcome. Securing great financial management may be a little bit more important for the nonprofit sector because without proper funding the nonprofit cannot carry out the mission. The financial management of the nonprofit Habitat for Humanity will be analyzed thoroughly and recommendations will be made to help the organization remain financially successful.

Nonprofits are still mainly volunteer based but they are now more organized and articulate than ever. Most nonprofits are comprised of a group of people to oversee the volunteers and they are commonly known as the Board of Directors. Sometimes referred to as the board of trustees or the governing board, these people are entrusted with the major decisions of the organization and are responsible for providing leadership and directions for the nonprofit (Arshad). The Board of Directors are usually members of the community that have been elected to act as management and they make major decisions for the organization. These members are the governing body of the nonprofit and they are responsible for overseeing the organization’s activities (Grobman).

Those at the helm must be people of character, people of integrity, people who present the correct numbers no matter how easy it is to misrepresent them for profitable gain. These people must also be able to distribute responsibilities as or through an administrator. The reason for this corresponds with the major question and promotes success when there is a person to “manage the internal and administrative tasks so those dealing externally would have the freedom to continue their work without dealing with what should be delegated to others” (Schadt, 2018). This truly encapsulates the motive behind this study and its relevance to those in FBNPOs. If this type of structure does not exist, the nonprofit will not reach its

Once the followers of a nonprofit organization realize that their CEO is unaware of finances, they might attempt to take advantage of the situation. This could allow embezzlers to go unnoticed. If followers see that the CEO is uninterested in accounting they might also take an attitude of indifference concerning accounting regulations. Establishing a culture of accountability is a key duty of a nonprofit CEO and by hiring a professional to help teach nonprofit accounting would help create a culture of accountability, and awareness around nonprofit accounting. Another way to ensure a nonprofit leader is a strong financial leader is by having an outside organization periodically audit a nonprofit’s records. Accurate record keeping can be a true indicator of a nonprofit organization’s leadership. If records are kept haphazardly the normal assumption would be the CEO is not providing strong leadership for the

A case statement is a written document that states the most important facts about an organization, this includes the organization’s mission, vision, and values. This document will tell potential donors everything that they would ever need to know about the organization. Every nonprofit organization needs a case statement. Case for support are essential for every nonprofit because this is what will help the organization raise money in order to carry out its mission. Without a strong case for support, potential donors will less likely donate towards the cause. In fundraising the case of support will tell a story signifying why the organization’s mission and vision matters and why the donor should even care about this particular cause. More often

The nonprofit corporation exists solely to provide programs and services that are of public benefit. Often these programs and services are not otherwise provided by local, state, or federal entities. While they are able to earn a profit, more accurately called a surplus; such earnings must be retained by the organization for its future provision of programs and services. Earnings may not benefit individuals or stake-holders. Underlying many effective nonprofit endeavors is a commitment to management. Twenty years ago, the term "management" was distasteful to many of those involved in nonprofit organizations because of its connotations of "business." Non-profits prided themselves on being free of the taint of

In a not-for-profit organization, such as VHL, with limited financial resources there is a higher risk that segregation of duties will be compromised as employees often hold multiple roles and responsibilities, as is the case with the accounting functions at VHL. With only one accountant responsible for deposits, custody, disbursement of funds, maintaining financial records and preparing financial reports it raises the risk for potential material misstatement due to error or fraud. This could erode the trust and confidence the stakeholders have in VHL and their stewardship of contributed resources, possibly impacting future donations. This must be taken into

The nonprofit sector itself and all that it entails was entirely unfamiliar to me prior to taking the Intro to Nonprofit Management course. The amount of public problems addressed by NGOs (non-government organization) was well beyond what I imagined. In just April of 2016, the National Center for Charitable Statistics (NCCS) confirmed a total of 1,571,056 organizations with 1,097,689 of those being public charities (Sheppard, 2016). My readiness to learn more about this sector and exceedingly spirited passion for animals led me to the nonprofit organization Butts Mutts associated with the Butts County Animal Shelter. It was there where I interviewed Amanda Cooper. Amanda’s official title is the “Animal Welfare Supervisor”. Although Butts Mutts is just a small portion of what nonprofits represent, I now fully consider the nonprofit sector as nothing short

Another problem within the management area of finances within a nonprofit is the lack of discipline/integrity amongst the managers. Theft is at an all time high because of the lack or lax in financial management. The government has now instituted the new IRS Form 990 which requires all nonprofits to report any resources loss due to theft or fraud; however it may take years before it gets an accurate snapshot of the scope of the problem. That is why an effective financial

When the lawsuit against HHV was settled the founder and former chairman of the board’s estate was forced to pay 2 million dollars. This serves as an example that not only do nonprofit firms need protection, but also individual contributors might also need some controls to protect themselves. Another example could be a very well meaning CEO might get into trouble if there is not a well written and applied segregation of duties in place. In addition to working themselves to death they might also be engaging in some questionable acts and not be aware of it. Thomas McLaughlin offered this description when describing accounting systems “a series of vulnerable areas or pressure points susceptible to leaking and distortion of results” (2009). There are places that will naturally be more prone to “leakage” which is why segregation of duties is important. Any one person attempting to watch all of the potential leaks could be overworked or worse could be creating some leaks on purpose. Segregation of duties is when important financial duties are separated to reduce the risk of theft or negligence. “Different employees should be responsible for authorizing payments, disbursing funds, and reconciling bank statements” (Williams, 2013). This way if someone is doing something unethical that behavior should not go unnoticed.

Department Of Management Studies Assignment on Management Control System in Non-Profit Organization Management Control System MBA 3rd Semester