Request PDF on ResearchGate | Financial Management for Nonprofit Organizations: Policies and Practices | Financial Management for Nonprofit Organizations. PDF | The recent financial crisis resulted in a sharp decline in donor funding that caused Financial Management in Non-Profit Organisations: An Exploratory Study .. Zietlow ( ), in an empirical analysis of 47 NPOs, finds that seven. Financial Management for Nonprofit Organizations: Policies and Practices, Third JOHN T. ZIETLOW, D.B.A., CTP, is a professor of finance at.

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Presentation And Analysis Of Data Faith-based organisation Interview Analysis In order to address the objective of examining cash management and budgeting as well as the associated risks, a semi-structured interview of the finance manager of the church was first done.

Below is a summary of the outcomes by theme of what transpired in the interview. Theme 1: Cash management The finance manager pointed at cash and cheques donations from members of the church and friends of the ministry as being the sources of funding for the organisation.

Friends of the ministry according to her are those who are not members of the church but who believe in the cause that they are pursuing as a church. These donations are either given to them on a weekly basis during a Sunday service or in the course of the week through the post or via the phone through card payments. A combination of adults and youths are the bulk of donors for the church. The manager also made it clear that the record of cash and cheques they receive are reconciled to actual cash lodged at the bank on a weekly basis even though it is more or less done on a daily basis.

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This they do being mindful of how irregular reconciliation of bank accounts could affect the flow of cash and payments to customers in a timely manner. They also ensure that disbursements are properly documented with evidence of receipts of goods or services. The author was finally made to understand that there is a financial policy in place to guide their financial decisions and it is reviewed every three years.

Theme 2: Cash Management and the Associated Risks The finance manager explained that risk of theft, misappropriation of funds and poor reconciliations are the risks involved in the management of cash in the church.

MLD-401M - Financial Management in Public and Nonprofit Organizations

The manager also explained that rescheduling of payments and negotiation with customers are the coping strategies that they have adopted in order to cope with financial risk associated with unavailability of funds and the like.

Moreover, it was pointed out that reduction of programme or outright cancellations are the strategies they utilise to cope with income irregularities associated with having a large youth congregation.

As their absence during vacation periods affects the cash flow. The finance manager opined that the organisation has provision to save parts of its income in a reserve account during periods of windfall as they are not into trading and the charity money cannot be invested. Finally, the financial manager submitted that having proper financial control is important to them as it will help the donors to continue to trust and support them.

Theme 3: Budgeting According to the finance manager, planning for programmes is done through the conference planning committee CPC. The CPC meet to discuss the logistics, fundraising and how a programme will be handled few months to it. The manager also explained that financial solvency is the most important factor they consider whenever they are planning for programmes.

It was also stated that if the organisation is not solvent enough to handle the programme; they either scale it down or cancel it completely. More so, the target audience is also another factor they consider — youth programmes are put on hold when students are on vacation.

The manager explained that the Church has a comprehensive annual budget at the start of the financial year which is prepared by a group of people. The budget is not followed through because so many variables like inflation rate, interest rate and the valued added tax VAT affect the implementation of budget in the cause of the year. If the budget was followed through and a specific sum of money has been earmarked to cater for the items on the budget, in a situation of inflationary increase, VAT increase and other demands in the system, the money might not be sufficient.

In a situation like that, the cash flow will be affected as it is not possible to put too much pressure on the donors who have given out of free will. Budgeting was said to affect the availability of funds for programmes because if a programme that is not included on the budget comes up, it will affect the release of funds for such a programme as well as other programmes already budgeted for.

Finally the finance manager stressed that the mission of the church is always an undertone when considering planning for their programmes.

Community-Interest Company Interview Analysis In order to have a robust examination of the role which cash management and budgeting playing relation to financial management, a semi-structured interview of the finance director of the CIC was also done.

Below is a summary of the outcomes by theme of what was revealed at the interview: Theme 1: Cash management The finance director made it clear that the source of funds for the organisation is grant and the frequency of these grants depends on availability of funds as well as eligibility to apply. As they only apply for funds that relates to their objective as a company. But averagely they are able to get grants about two times in a year. He further noted that these grants are obtained from the government who is their major donor.

The director also made it clear that because most of the funds they get have strict regulations, when the money comes in the form of cheque, it is lodged at the bank. He further opined that, part of the condition of most grants is for them to precisely state what the money will be used for.

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Thus they have to ensure they reconcile the cheques given to actual cash lodged at the bank. Moreover, they carry out a reconciliation of their bank accounts regularly to ensure that no transaction is carried out that can affect any designated fund that has been given to them. Also, all disbursement of funds is properly documented with evidence of receipts as no expenses are allowed outside what is already stated in the proposal. Finally the finance director explained that the article of association contains their financial policy and they adhere to it but it has not been reviewed since the inception of the company.

Theme 2: Cash Management and the Associated Risks The finance director pointed that the risk that they have experienced in the management of cash is inflation and funders requesting a refund on items not included in a proposal. This happens because of the length of time it takes before they are able to get grants for proposed projects.

It was however admitted that it has been very difficult recently to get grants as little money is made available following the recent cuts in the economy.

This has made it difficult for them to embark on projects they would have loved to. Moreover, he stated that because they have a good standing with their funders, they have been able to cope well with income irregularities associated with their source of funding.

On the issue of saving, the researchers were made to understand that the organisation does not have any provision for savings as a result of the strict conditions attached to most of their funding.

They are looking for alternative ways of raising money for the future though. Finally, the director is of the opinion that internal financial control is vital to the company as lack of control could enlist them in the bad books of funders or even prosecution. Theme 3: Budgeting According to the finance director, planning for programmes depends on the kind of funds they are able to get. Their plans for any proposed project is already incorporated in the proposal that they submit for grants.

Also, he stated that the main deciding factor for embarking on projects is availability of funding. Finally, the director believes that budgeting can affect availability of funds for programme if the company had the chance to budget ahead of time and try to solicit support from other nongovernmental sources. They could be better off.

Financial Analyses The financial performances of the two organisations were analysed using quantitative data that was collected from the published annual report of the both organisations covering three financial years Some selected ratios were estimated for both organisation and the results were analysed.

Financial Management for Nonprofit Organizations: Policies and Practices, 3rd Edition

The results obtained are presented in table 1 Table 1: Financial Performance of Faith-based Organisation Analysis for the faith-based organisation see table 1 above for ratio computation for year to Liquidity: The current ratio for the financial year was at its highest value of 0.

This value however fell by 1. Though, in , the current ratio peaked at 0.

For the period under study, the current ratio suggests some signs of cash flow problems. To gauge this problem, a more severe test was carried out using the quick ratio. As was seen with the current ratios, the quick ratio for the financial year was the highest at Moreover, the net working capital for the three year period followed a similar trend like the quick ratios with negatively descending values.

Following the liquidity measure, it is obvious that church is experiencing some cash flow problems as it has not been able effectively meet its short term obligation. Debt structure: As measured by the debt-equity ratio, the debt structure showed relatively high values for the three year period under study with the highest value of 0.

This is a total deviation from what was deduced from the liquidity measure. Sources of funds: this measure shows that the Church was too dependent on donations and gifts from voluntary donors at 0. Though the measure reveals that the organisation is heavily dependent on donation and gifts, this might be as a result of significant improvement in donations and gifts over the three year period.

Over the three year period, uses of funds revealed that the administrative expenses are receiving more attention at the cost of direct charitable expenditure. Net operating results: this measure revealed a deficit at 0. However the situation changed in and when there was a surplus at 1. The organisation had more income compared to the expenditure Analysis for the Community-Interest Company The result obtained for ratio computation is presented in table 2 below Table 2: Financial performance of Community Interest Company Liquidity: based on the two year financial report Company had a dormant account in so no data was available.

In the company had an abbreviated account in that the financial report was not full. This ratio suggests that the CIC company has the capacity to meet up with its short term debt obligation. Moreover, the net working capital of the organisation further confirms the initial suspicion. The net working capital was in which was more than doubled in In spite of the data restriction, the liquidity measure suggests that the organisation have no cash flow problems.

Debt structure: the available data shows a debt to equity ratio of 0.

The liabilities ratio in was relatively low compared to total assets. Sources of funds: The level of dependence on grants and donations was at the rate of 1. The timing of certain items and specifics may change during the course depending on the individual needs of the students.

Canvas is the major source of communication for the Course it is essential that you use it as such to ensure that you have current and complete information for the classes.

No new material will be introduced in these sessions; rather, they will be opportunities to clarify what has already covered that week in class. They are designed for students who feel they need more time to assimilate the concepts already taught, who are confused about material presented in class, or who have fallen behind for some reason. The discussion in the review sessions will be based on questions from students and also will include additional examples and problem sets for further review of the materials.

While the sessions are optional, all students who enroll in the class should ensure that their schedule permits them to attend the Friday review sessions as necessary. Attendance at Review Sessions is factored into Class Participation and will be used when the course grade is on the bubble.

Seeking Help Outside of Class We encourage you to actively interact with classmates, our teaching fellow or the professor in order to learn the material. The first three classes are particularly critical to the entire course so make sure you have those basics in place.

If you feel you do not understand a set of concepts either before or after the class session, you are strongly encouraged to attend review sessions.

The review sessions are the major source of assistance for this module.


The goal of these interactions is to raise questions and work through the material so that at the end of the interaction you have a better understanding of the key course concepts, reading and understanding financial statements, financial analysis tools and financial management terminology Other Course Materials All readings are available on Canvas. Note: Materials used in this class, including, but not limited to handouts, exercises, cases, discussion questions, charts, and graphs are copyrighted and may not be used for purposes other than the educational experience of this class without the written consent of the instructor.

Other Reference Materials Thomas A. Students may stand out either as having made valuable contributions to the learning environment or by being poorly prepared. Contributions to the learning environment include but are not limited to insightful comments or constructive questions in the classroom or by working with or assisting their peers outside of class. This includes participation in review sessions as well. Class participation will be used in determining grades for the course especially for grades on the margin.

We have prepared two case analyses and four problem sets for grading in the course.

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Each student can elect which three of the four problem sets they wish to prepare. The two case analyses are required of all students. Beyond this, many higher service demand in Finally, there are the possibly growing availability of volunteers fewer transfers of appreciated stock that capture and interns.

Left the end of Endowments dropped in value, central banks allowed for low interest for new along with their corresponding income streams. Yet, as indicated decades. Some are revenue were experiencing slowed payments managing revenue and expense streams as well from federal, state and local governments. The paper now presents a primer on central bank step-ups of interest rates. These constructs include solvency, into a freefall.

A brief namely the growth rate of money supply and overview of terminology follows.

This resultant nominal and real interest rates, US discussion is developed more fully elsewhere. A positive aspect of a Organisations do not necessarily hold all cash focus on solvency is that these ratios explicitly reserves in current demand deposit accounts, include working capital accounts such as as some of these monies may be moved into accounts receivable, near-term contributions short-term investments.

If held as operating receivable, inventories, accounts payable and reserves, the motives might include 1 accrued expenses.Another argument raised by Zietlow et al.

The choice between the deductive or inductive research approaches has been discussed by a number of authors Saunders et al.

Moreover, availability of funds is the main deciding factor whenever they want to embark on projects. Any changes in due dates will be posted to the course website and announced in class..

The goal of these interactions is to raise questions and work through the material so that at the end of the interaction you have a better understanding of the key course concepts, reading and understanding financial statements, financial analysis tools and financial management terminology Other Course Materials All readings are available on Canvas.

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