Financial Management in Nonprofit Organizations Essay - 4

Financial Management in Nonprofit Organizations - Essay Examplewn that different object glass of for-profit and noncommercial organizations are the major factor which requires the change in financial management processes. It has also found that financial management techniques may vary across for-profit and nonprofit organizations because of different governance mechanisms, tax treatment, stakeholders and accounting requirements. Therefore, for the financial health of nonprofit organizations and to facilitate them in achieving their aims, such changes have become necessary.A nonprofit organization offers public services without any intention of achieving any personal gain or self interest and these organizations are exempt from paying federal taxes (Zietlow, Hankin, & Seidner, 2007). Under the selection 501(c) (3) of the Code, the described organizations are charitable organizations and they are eligible to get tax-deductible contributions and earnings of organization may not inur e to private shareholders or individuals (Credit Infocentre, 2006). Actually the number of nonprofit organizations is increasing vary rapidly and it is becoming important to control and monitor the financial practices of these organizations. Although these organizations can earn bills however, the money earned has to be used for public service purpose only. Therefore, the differences in financial management techniques appear right from the difference in financial objectives of the twain kinds of organizations. The primary financial objectives of nonprofit organizations found through a survey in 2002 highlight that most nonprofit organizations aims to achieve breakeven point, followed by those which aim to carry on a significant level of cash reserves and financial flexibility. Moreover, the other primary objectives identified include maximizing cash flow, net revenues, net donations and otiose and reducing costs (Zietlow, Hankin, & Seidner, 2007).Because of these financial objec tives the financial management techniques of not-for-profit and for-profit