Financial management in Non Profit Organizations of the Executive Summary The need to portray effectiveness in any kind of organization requires the utilization of resources and transforms them into valuable products, services and offerings. There are several ways of yielding profits for a profit generating entity but the methods are limited for a nonprofit organization. Nonprofit organizations have adopted several financial and accounting techniques to determine the present financial performance of the organization. The report is prepared with the sole intent to study the various financial management practices in a non profit organization.
The author of the study will highlight the various financial management practices that ensure smooth operations of the business. It also highlights the difference in the financial management practices between profit and nonprofit organizations. The author of the study will also provide certain inputs which will help in the betterment of the nonprofit organization and help in achievement of goals and objectives. It was essential to conduct this study to understand the impact of financial management practices on the organizational performance of NPO. Introduction: Financial Management in Non Profit Organization Nonprofit organizations form an essential part of the society and exist to provide certain benefits for the members of the society.
They actually vary in size from large to small clubs and the operations are based on receipt of grants, donations, fundraising or receipt from members as the principal source of income. In certain instances nonprofit organizations (NPO) supplement income with the trading activities. Although, NPO operate on a nonprofit basis suitable practice of financial management ensures that there are sufficient resources and cash meant for operations of NPO.
Attaining profitability is not the main objective of NPO it is necessary to ensure that it is sustainable, capitalized and funded. It should be ensured that the NPOs should have an adequate cash flow to support their technical operations over the duration of the lives and help in contribution to the achievement of goals and objectives. Sound practice of financial management is needed to ensure that the human resource of NPO utilize the resources effectively. The operations and activities of NPO vary and organizations where trading activities are not present stock management practice will not be relevant.
Implementation of effective management practices will enable in attainment of strategic goals of the organization easily.
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