Financial Management for Nonprofit Organizations, 3rd Edition

CHAPTER 1UNDERSTANDING NONPROFIT ORGANIZATION FINANCES

1. 1.1 THE IMPACT OF THE GREAT RECESSION
2. 1.2 DEFINITION OF NONPROFIT ORGANIZATIONS
   1. (a) 501(C)(3) Corporations
   2. (b) Bylaws and Articles of Incorporation
3. 1.3 CHARACTERISTICS OF NONPROFIT ORGANIZATIONS
   1. (a) Organizational Mission
   2. (b) Organizational Structure
4. 1.4 UNDERSTANDING THE LANGUAGE OF THE NONPROFIT ORGANIZATION
5. 1.5 FINANCIAL POLICIES
6. 1.6 FINANCIAL PRACTICES
7. 1.7 PRIMARY FINANCIAL OBJECTIVE
   1. (a) Differences Between Businesses and Donative Nonprofits
   2. (b) Survey Evidence on the Primary Financial Objective
   3. (c) Financial Objective for Purely Financial Decisions
   4. (d) Recommended Primary Financial Objective: Appropriate Liquidity Target
8. 1.8 CONCLUSION
9. APPENDIX 1A: THE LILLY STUDY FINDINGS

Nonprofits include a wide variety of organizations. They are ubiquitous and are part of the fabric of most communities in the United States with a wide array of missions, such as local neighborhood associations, social service agencies, churches, hospitals, and private colleges and universities. These organizations differ from companies in the private sector and government agencies in the public sector in that many of them exist to provide services that cannot or will not be provided solely by the other sectors. Nonprofits also play a unique role in our economy.

Their missions are diverse and offer complexity beyond the scope of this book. While diverse, they have common characteristics such as the fact that they are voluntary and cannot ...