14.2: Non-Profit Organizations

Last updated
Save as PDF

Page ID: 46002

$ \newcommand{\vecs}[1]{\overset { \scriptstyle \rightharpoonup} {\mathbf{#1}} } $ $ \newcommand{\vecd}[1]{\overset{-\!-\!\rightharpoonup}{\vphantom{a}\smash {#1}}} $$\newcommand{\id}{\mathrm{id}}$ $ \newcommand{\Span}{\mathrm{span}}$ $ \newcommand{\kernel}{\mathrm{null}\,}$ $ \newcommand{\range}{\mathrm{range}\,}$ $ \newcommand{\RealPart}{\mathrm{Re}}$ $ \newcommand{\ImaginaryPart}{\mathrm{Im}}$ $ \newcommand{\Argument}{\mathrm{Arg}}$ $ \newcommand{\norm}[1]{\| #1 \|}$ $ \newcommand{\inner}[2]{\langle #1, #2 \rangle}$ $ \newcommand{\Span}{\mathrm{span}}$ $\newcommand{\id}{\mathrm{id}}$ $ \newcommand{\Span}{\mathrm{span}}$ $ \newcommand{\kernel}{\mathrm{null}\,}$ $ \newcommand{\range}{\mathrm{range}\,}$ $ \newcommand{\RealPart}{\mathrm{Re}}$ $ \newcommand{\ImaginaryPart}{\mathrm{Im}}$ $ \newcommand{\Argument}{\mathrm{Arg}}$ $ \newcommand{\norm}[1]{\| #1 \|}$ $ \newcommand{\inner}[2]{\langle #1, #2 \rangle}$ $ \newcommand{\Span}{\mathrm{span}}$$\newcommand{\AA}{\unicode[.8,0]{x212B}}$

Learning Outcomes

Evaluate a non-profit organization’s performance using financial and non-financial data

Since non-profit accounting systems are beyond the scope of this course, we will briefly discuss financial and non-financial performance goals.

Non-profit organizations may have different goals and needs than for-profit organizations as they work towards a mission or goal that is not profit driven. Financial aspects will include meeting budgets and following granting and funding organization’s reporting requirements. This process too, will vary by organization.

Non-financial goals are many in non-profits. Serving a specified number of clients is typically a very important goal in most agencies. Agencies also need “inkind” or non financial support through volunteer hours and donated supplies. Many agencies have requirements through funders, to obtain a certain amount of match to meet goals. Let’s look briefly at a small non-profit organization that operates a food shelf and retail thrift store.

	Budget	Actual	Over/(under) budget	% Over/(under) budget
Income
Retail Sales	$5,000	$6,120	$1,120	22%
Donations	$1,250	$286	($424)	−34%
Grants	$1,250	$1,250	$0	0%
Total Income	$7,500	$8,196	$696

Expenses
Rent	$500	$500	0	0
Utilities	$225	$280	$55	24
Payroll	$5,000	$5,125	$125	3
Supplies	$500	$700	$200	40
Marketing	$500	$400	($100)	−20%
Fundraising	$500	$250	($250)	−50
Total Expenses	$7,225	$7,225	$30	0
Net Position	$275	$941	$666	242

So what would some issues be that this little agency would need to look at from a financial standpoint? The first thing that stands out is a pretty large difference in donation levels compared to what was budgeted. This leads to a potential non-financial issue as well. We could then evaluate how donations are being requested. Are there a certain number of phone calls to be made each month by volunteers? Is the clerk at the retail store asking for donations at the conclusion of a sale?

Payroll was a bit high, so evaluating that expense line from a financial perspective would include looking at the hours worked to determine if overtime was a factor. Non-financial aspects might include analyzing the time used for opening and closing the store, or looking at procedures that may help to reduce hours worked.

As you can see, the non-profit organization brings a whole different set of challenges that are not within the scope of this course. This agency is not interested in making a profit, but in meeting the goals of the organization, by providing food to families in need through the sale of donated items. It is a mission driven organization rather than profit driven!

Practice Questions

https://assessments.lumenlearning.co...sessments/9694

Non-Profit Organizations. Authored by: Freedom Learning Group. Provided by: Lumen Learning. License: CC BY: Attribution