Born to be a loser!

Table of Contents

Understanding How a Nonprofit Works                              6
Learning Objectives                                              6
Introduction                                                     6
The Nonprofit, Its Origin, Growth, and Future                    6
The Origin of the Nonprofit Organization                         6
Dealing with the Nonprofit Image                                 7
Nonprofit Organizations Are Diverse - According to Their Mission 7
A Language of its Own                                            9
How “Special” Is the Language of the Nonprofit?                  9
The Development of GAAP for Nonprofit Finance and Accounting     9
A Nonprofit Financial Glossary                                  11
• Statement of Net Assets                                       11
• Statement of Activities                                       11
• Resources                                                     12
• Activities                                                    12
• Program                                                       12
• Fundraising                                                   12
• Administrative                                                13
Semantics Are Important                                         14
An Exception to the Rule                                        14
When a Business Statement of Income May be Appropriate          15
The Mission                                                     16
Charities and Other Tax-Exempt Organizations                    17
Charity Is Big Business                                         17
Growth in Charities and Other Tax-Exempt Organizations          18
The Emergence of the Community Foundation                       18
Increase in Volunteerism                                        19
Businesses Help, But Have Other Priorities                      19
Governments Try to Help, and Do, But                            19
Enter the Nonprofit Organization                                20
Who Are the Players?                                            21
• Stakeholders                                                  21
• The Board Members                                             22
• Executive Director                                            22
• Staff                                                         22
• Volunteers                                                    22
• Financial Support Providers                                   22
• Beneficiaries                                                 23
• Consultants                                                   23
Can a Nonprofit Be Managed Like a Business?                     24
What Does it Mean to Manage?                                    24
Everyone Should Buy-in to the Concept                           24
Getting Down to Business                                        24
Roadblocks                                                      25
How the Nonprofit Organization Perceives Itself                 25
Can Dreamers Be Managers?                                       25
Nonprofits are Generally Understaffed                           26
People Skills May Overshadow Business Management Skills         26
The Negative Issue from the Public’s Viewpoint                  27
Comparing Nonprofits with Businesses                            28
Business Practices in a Nonprofit Setting: How Might That Work? 28
Similarities in Common                                          28
Both Exist to Achieve an Objective                              28
Both Need an Action Plan                                        28
Both Must Be Accountable                                        29
Both Must Be Able to Measure Performance                        29
Both Must Adapt to Contingency Planning                         29
Both Need to Be Effective and Efficient                         30
Both Entities Need Information and Accounting Systems           31
Both Have a Need for Internal Control                           31
Both Provide Products and/or Services                           32
Both Must Manage Resources                                      32
What Can We Learn from Businesses?                              33
Planning                                                        33
How Nonprofits Differ from Businesses                           34
The Bottom Line and the Objective                               34
Accountability and Transparency                                 34
Measuring Performance                                           35
Planning and Adapting to Change                                 36
Managing People, Materials, and Rules                           37
A Business Creates Its Own Market; a Nonprofit Cannot           38
Perhaps the Biggest Difference Is the Source of Funds           38
A Business Has Its Own Assets; a Nonprofit Does Not             39
The Nonprofit: Strength in Diversity                            40
A Review                                                        40
It Is All about Efficiency and Effectiveness                    40
Summary                                                         42
Questions                                                       43

Understanding How a Nonprofit works