Now Non-Profit Organizations Are Financially Managed Essay

Length: 4 pages Sources: 3 Subject: Business - Management Type: Essay Paper: #19401499 Related Topics: Scientific Management, Cost Accounting, Organizational Structure, Disaster Management
Excerpt from Essay :

Financial management has a significant role to play in the success of an organization, regardless of whether it is a profit-motive organization or a non-profit organization. In particular, financial management is taken into consideration as a course or direction that all organizations have to follow in order to become successful. This essay offers acumen and understanding on the application and implementation of financial management methods for a non-profit organization, as well as comparisons of this organization with a for-profit organization. While the strategic management approach for both these types of organizations is comparable, there are a number of differences. For instance, non-profit organizations tend to operate in a monopolistic setting or structure that provides services or manufactures products offering low returns; non-profit organizations are also reliant on finances and capital from outside sources. There is increasing growth in the non-profit industry, and there is great importance for understanding the roles of organization and governance of the sector for all the players involved. Non-profit organizations face a number of challenges and difficulties in their potential success. Effective measures have to be set, such as identifying objectives and having clear goals, together with the advantages obligated by the organization. For instance, ascertaining cash flow is difficult because non-profit organizations are solely reliant on the revenues generated from donors who in the end do not benefit from the services provided.


A non-profit organization (NPO), also referred to as a not-for-profit organization, is an organization or entity that is exempt from taxation. These organizations provide services as well as products to the general public without any intent of generating profit or returns. In order to be categorized as a non-profit organization, an entity has to be classified either as a charitable, educational, scientific, or religious organization. A non-profit organization does not allocate any surplus funds or capital to its stakeholders or owners; these funds...


For profit and not for profit entities are corporations; therefore, they both are legal entities formed to undertake business operations and transactions. These organizations employ personnel to manage everyday activities and to function in the best interests of the company. Both of these types of organizations strive to control their level of spending, come up with different ways of generating revenue, consider organizational structures to operate in, and also make the most of accounting structures to assess the effective use of their assets.

Cash management and budgeting are two fields in financial management that are exceedingly important practices for not-for-profit organizations. The company has to be very focused to ascertain whether it has sufficient cash reserves to be able to go on rendering services from resource providers who do not anticipate obtaining the services provided. In actual fact, an increase in the level of demand for the services of a non-profit organization can bring about a management crisis. It is quite challenging to predict revenue from contributions in a consistent and dependable way from one year to another. In view of that, the control of costs is an area of increased importance. Budgeting as a result befits an important activity for a not-for-profit organization (Jody, 1996).

The successful and effective management of a non-profit management necessitates offering high-quality service, and also instantaneously requires careful administration to decrease costs and systematize procedures. Every kind of non-profit organization has distinctive management needs. For instance, trade associations have the duty of managing business occasions, and maintaining records of education and certification. At the same time social service agencies and also governmental agencies need…

Sources Used in Documents:


Blackbaud. (2011). Financial Management of Not-for-Profit Organizations. Retrieved 3 June 2015 from:

Horngren, C.T., Foster, G., Datar, S.M. (1997). Cost Accounting: A Managerial Emphasis. New Jersey: Prentice Hall, Upper Saddle River.

Jody, B. (1996). Financial Planning for Not-for-profit Organizations. New York: John Wiley & Sons, Inc.

Robert, A.N., Young, D.W. (1994). Management Control in Not-for-profit Organizations. Boston: Richard D. Irwin, Inc.

Cite this Document:

"Now Non-Profit Organizations Are Financially Managed" (2015, July 18) Retrieved January 29, 2023, from

"Now Non-Profit Organizations Are Financially Managed" 18 July 2015. Web.29 January. 2023. <>

"Now Non-Profit Organizations Are Financially Managed", 18 July 2015, Accessed.29 January. 2023,

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