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Nonprofit Financial Analysis

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Words 1754
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Income and revenue are fresh blood for organizations regardless of governments, private sectors or nonprofits. The studies of the income sources, where the money goes and how the money is spent in nonprofit are essential to help finance managers and leaders understand how the organization operated in the context of current economic situation and to give a general quantitative analysis in terms of activities and programs executed by organizations. Knowing how finance and budget management looks like in nonprofits is also key to distinguish with for- profit organizations. This critique will start with the functions of finance management in the nonprofits and why we need to be prudent to make fiscal decisions, then I will focus on the diversification …show more content…
Finance plan and statement play the tool of managing, monitoring and evaluating the programs and actions currently executed by nonprofits. “The purpose and major function of finance statement is to permit external users to know how much of a nonprofit’s efforts are devoted to program and how much is spent on management and fundraising. Of course, nonprofits have some discretion about whether they categorize particular expenses as program expenses. In any case, the act of categorizing each expense into one of these three categories is a wonderful exercise for nonprofit staff. It forces staff members to examine seriously how they are using their resources” (Weikart, Lynne A., Greg G. Chen, and Ed Sermier. Budgeting and financial management for nonprofit organizations using money to drive mission success. Los Angeles: SAGE, 2013. Print.). The truth is that lots of small size nonprofits …show more content…
It is most important tool to know how the organization’s cash flows, and what to do if the cash doesn’t flow. Any nonprofits can run into cash flow problems. It helps people know the balance (positive or negative) and assess whether the cash flow shortfall is a problem with timing or is an indication of a deficit. Only we know how the cash flows, can we put forward strategic solutions. The foundation I work in doesn’t have cash flow. The foundation doesn’t charge the member fees and the board member or board directors don’t have any contribution or donation for the foundation. The only income resource comes from the dragon racing festival annually. How to expect those sponsors spending more than $10,000 on one-day festival advertising even though there will be almost 18,000 guests and market value. I would like to recommend foundation starting new minor programs or workshops to support dragon boat racing festival. For example, on the one hand we ask sponsors to pay $1000 per months and we print their logo on the boats. The boats will not only show up in the festival day (May 21st), but every weekend 365 days in community for exercise, training or entertaining. The sponsors are preferred to pay monthly $1000 (totally more than $10,000 annually) because the market value will be increased more due to more brand exposure. On the other hands, we can have dragon boat academy

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