Management in nonprofit organizations

Nonprofits

At this point, unless there is a new grant, the project manager is not being paid to be in the Caribbean. The entire grant has been spent at this point, and the project manager is using his/her own money for the trip. There are no stipulations attached to what a person does with the salary he or she is paid -- if the grantor knows that $30,000 is for salary, then that is good enough. A grantor cannot tell somebody not to have vacations just because they work in a nonprofit organization.

Indirect rates reflect costs that are not directly related to the organization's charitable work. Fringe is an additional benefit provided, for example if the donor paid directly for the trip to the Caribbean. An in-kind contribution is a non-cash contribution. For example, if a food company donated surplus food to a homeless shelter, that would be an in-kind contribution. That contribution would be recorded as in-kind on the charity's income statement at its value, but distinct from a cash contribution. A match is any contribution where one party matches the contribution of another party. For example if a company decides to match employee contributions to a charity.

These items are all different from overhead. Overhead reflects the basic cost structure of the organization, as directly relates to the performance of its mission. Facilities and staff salaries are examples of overhead costs. Indirect rates and fringe are not overheads, but a different category of cost. Understanding the differences and which cash flows represent the different categories is important. In particular, donors want to know how their money is being spent. As such, they prefer to be able to see what percentage of expenditures goes directly to core programs, what does to overhead, and what goes to indirect and fringe.

3. The financial meltdown likely had a strongly negative effect on most non-for-profit organizations. Organizations rely on a number of different sources of financing. Some donations come as a means of lowering one's tax obligations. Such donations are less likely when companies are struggling with their cash flow, and have lower tax burdens anyway (Eversley & Keen, 2011). In addition, support from government also tends to decrease when things like the financial meltdown occur. The reason is that recessions suppress tax receipts, which forces the government to cut discretionary spending. Unfortunately, not-for-profit enterprises are often hit with these cuts.