Streetsmart Financial Basics for Nonprofit Managers

Chapter 1Structure of Nonprofit Organizations

Corporations

One of the distinguishing features of our legal and financial systems is that they have found a way to make something that no one can see or touch seem real—and therefore, it has become real. The high point of this accomplishment is that perfectly intelligent, normal people can find themselves debating the virtues of the behavior of this thing and even changing their own behaviors and choices because of its existence.

We are talking, of course, about the corporation. Even the word itself sounds substantial, and when various names or other identifiers get put in front of it, we accept the results easily. But the idea of a corporation is nothing more than a construct that gains substance and credibility in financial matters largely because we need it to do so. Our acceptance of the metaphor of a corporate structure is tangible evidence that we human beings yearn for predictability and consistency even when the entity itself exists only in our minds and in the ways that a corporate structure is said to behave.

We say all this because whatever corporate structures lack in tangible qualities they more than make up for via their widely accepted ways of indicating financial boundaries. As you will see later in this book, those boundaries can take on the nearly concrete feel of something that can seem to be virtually a physical presence.

The highest level of nonprofit management is the corporation that “owns” or runs the programs. ...