Financial Management for Npos

In: Business and Management

Submitted By elisa89
Words 2485
Pages 10
Financial Management for NPO

I. Introduction
“Ten years ago, management was still a dirty word for those involved in nonprofit organizations. Nonprofits prided themselves on being free of the taint of commercialism and above such sordid considerations as the bottom line… Today, nonprofit organizations have learned that they need management and leadership even more than business does…” (Montana and Petit, 2009)

The years when “management” was a prohibited word in nonprofit organizations are long gone. Nowadays, nonprofit leaders are starting to realize what an essential role financial management plays in NPOs. Moreover, as the number of nonprofit organizations around the world keeps rising, more nonprofit leaders and managers have aimed to develop their skills in financial management. As a matter of fact, the nonprofit sector is one of the fastest-growing sectors around the world: just in the United States there are 1.5 million nonprofit organizations and growing, employing one in 10 American employees.
In this paper, we will look at: 1) the financial management process, 2) the importance of financial management for nonprofit organizations, 3) financial management for nonprofits organizations.

II. What is Financial Management?
One of the most accepted definitions of financial management was given by Kuchal, stating that “Financial Management deals with procurement of funds and their effective utilization in the business” (as cited in Paramasivan & Subramanian, 2008).
Konrad and Novak (2000) set the steps of the financial management process as follows: planning, budgeting, organizing, controlling and evaluating. 1. Planning
2. Budgeting
3. Organizing
4. Controlling
5. Evaluating
1. Planning
2. Budgeting
3. Organizing
4. Controlling
5. Evaluating

Figure 1. Financial Management Process. This figure illustrates the different…...

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