The Financial Management of Non-Profit Organizations
By Lauren Edith
Jan 13, 2012 - 10:23:11 AM
Groups of people that help hospitals, orphanages, environmental agencies, and labor unions are called non-profit organizations.
These organizations obtain
their finances from donations and fund-raising activities as a substitute for
profits from business deals. As opposed to working with the funds to create
additional revenues, they use it for their target beneficiary. Even though they
differ from profit-oriented organizations, non-profit organizations still
require proper economical management to budget their resources.
When it comes to
financial management, a key factor to consider is the accounting technique.
Profit-oriented organizations use systems or strategic plans to create and
calculate income. Non-profit organizations also need a system to manage their
funds. But, volunteer workers in non-profit organizations normally lack the
correct skill for the job. With this problem in mind, officers of non-profit
organizations should tell their members about the essentials of the accounting
One of the elementary
accounting systems that non-profit organizations can utilize is bookkeeping.
This involves recording the financial transactions produced by the group - in
this case, donations and outsourcing. The bookkeeping method is also divided
into two: accrual-basis systems and cash-basis systems. The former is often
utilized by commercial companies, but the later is taught and employed by non-profit
organizations. In the cash-basis process, both the transactions and costs are
merely recorded during the actual cash exchange.
individual in charge of all finances of a non-profit organization is the board
treasurer. With other board members, the treasurer helps make a monetary
spending budget for the activities of the organization. He/she also assists in
devising a set of policies and procedures for all monetary transactions. The
board treasurer is also responsible for helping other members recognize the
monetary plans and management from the organization. At times, the board
treasurer utilizes the Sage
fundraising software to make
finance accounting less of a hassle and much more accurate.
commercial organizations, non-profit organizations will need create annual
monetary statement reports. These will assist the organization determine their
financial standing. Non-profit organizations frequently use simple bookkeeping
details to create financial statements like cash flow reports, statement of
activities, along with the present financial status of the organization. They
can also employ of the Sage non profit
software to come up with
significantly more accurate calculations of these reports.
organizations have to make certain that their finances are on track, and in the
right hands. These organizations can avoid financial problems and security
breaches by using Sage MIP support computer software for their
accounting procedures. Via accounting software, board members can authorize and
restrict access to economic details besides other relevant information to
enhance organization's security.
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