Streetsmart Financial Basics for Nonprofit Managers

Chapter 24Management Controls: Toward Accountability for Performance

Conventional ways of writing suggest we should begin a gradual wind-down right about now and then close with a safe, straightforward discussion of management controls in the nonprofit environment. We should talk about responsibility centers and cost centers and profit centers and all of those other pieces of financial terminology that serve mainly to complicate the obvious. We will do that. But we need to move beyond conventional thinking to position nonprofit institutions for the future, and that challenge is by far the more important one for these final chapters.

Nonprofit organizations reflect the environment in which they were created, and for years, the same command-and-control approach that won wars, mass-produced billions of dollars' worth of consumer goods, and built millions of housing units in this country and around the world served the industrialized world's nonprofits quite well. Management controls were the linchpin that made it all work. Managers exerted their influence on a nonprofit through a system of explicit controls, and the organization moved forward in a linear fashion. Things didn't change much, and when they did, it was usually in a reasonably predictable fashion with plenty of notice. Nonprofit financial management systems were essentially an afterthought, designed with a minimalist's brush and expected to run to keep up with programs' evolution.

Management Controls circa 1980

The ...