Week 1 Managing a Non-Profit Firm

Managing a Non-Profit Firm

Financial management of non-profit organizations is similar to financial management in a regular for-profit firm in many respects; however, certain key differences shift the focus of a non-profit financial manager.

• A for-profit enterprise focuses on profitability and maximizing shareholder value.
• A non-profit organization’s primary goal is to provide some socially desirable need on an ongoing basis.

A non-profit firm generally lacks the financial flexibility of a commercial enterprise because it depends on resource providers that are not engaging in an exchange transaction. The resources provided are directed towards providing goods or services to a client other than the actual resource provider. Thus the non-profit firm must demonstrate its stewardship of donated resources — money donated for a specific purpose must be used for that purpose. The managers of a non-profit must emphasize stewardship for these donated resources and the staff must be able to demonstrate that the dollars were used as directed by the donor. (Source: Blackbaud Links to an external site.)