Financial Management for Nonprofit Organizations: Policies and Practices / Edition 1

Financial Management for Nonprofit Organizations: Policies and Practices / Edition 1

ISBN-10:
0471741663
ISBN-13:
9780471741664
Pub. Date:
01/02/2007
Publisher:
Wiley

Hardcover

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Overview

Financial Management for Nonprofit Organizations: Policies and Practices / Edition 1

There are many titles used to identify those persons responsible for the financial management of a nonprofit organization, including director of finance, chief financial officer, treasurer, controller, chief accountant, director of operations, business administrator, and financial secretary. While the title of the position varies from organization to organization, the responsibility involved does not, requiring knowledge, skill, and the ability to balance a realization of the nonprofit's mission in tandem with effective management of the organization's funds.

Written in the light of increased scrutiny and accountability of nonprofits, Financial Management for Nonprofit Organizations: Policies and Practices effectively weaves legal and ethical considerations into a comprehensive treatment of nonprofit strategy and finance, furnishing financial officers with a firm knowledge of ethical business management.

Indispensable for all types and sizes of organizations, from small religious groups and community social service agencies to major cultural institutions and colleges and universities, this important book imparts a clear sense of the technical expertise and proficiency needed as a nonprofit financial officer and includes real-world case studies, checklists, tables, and sample policies to clarify and explain financial concepts.

Unlike other books on money management within the nonprofit field, this timely book uniquely discusses the development of a basis for liquidity targeting as the primary financial objective of the nonprofit—especially noncommercial nonprofit organizations—and then ties other financial decision areas to this liquidity target throughout the book.

Financial Management for Nonprofit Organizations demonstrates that financial management functions are expanding—and supplies effective strategies that will make a real difference in every organization's ability to achieve its mission.

Product Details

ISBN-13: 9780471741664
Publisher: Wiley
Publication date: 01/02/2007
Pages: 624
Sales rank: 1,143,181
Product dimensions: 7.28(w) x 10.00(h) x 1.85(d)

About the Author

JOHN T. ZIETLOW, D.B.A., CTP, is a professor of finance at Southwest Baptist University, Bolivar, MO, and he also teaches graduate nonprofit financial management at Indiana University-Purdue University at Indianapolis and Indiana University, Bloomington.

JO ANN HANKIN is a nationally recognized consultant in the field of fundraising, and financial/administrative management for nonprofits.

ALAN SEIDNER was the founder of Seidner & Company of Pasadena, California, an investment management and consulting firm. He is currently a Senior Consultant for Client Development with the Pyatt Broadmark Real Estate Lending Funds.

TIMOTHY J. O'BRIEN, PHD, serves as a practitioner faculty at North Park University, School of Business and Nonprofit Management.

Table of Contents

About the Authors xxiii

Preface xxv

Acknowledgments xxix

1 Understanding Nonprofit Organization Finances 1

1.1 The Impact of the Great Recession 2

1.2 Definition of Nonprofit Organizations 3

1.3 Characteristics of Nonprofit Organizations 7

1.4 Understanding the Language of the Nonprofit Organization 9

1.5 Financial Policies 10

1.6 Financial Practices 11

1.7 Primary Financial Objective 12

1.8 Conclusion 17

2 Liquidity Management 29

2.1 Introduction 29

2.2 Noncommercial Nonprofit Organizations 34

2.3 Evidence on Liquidity Management in the Nonprofit Sector 37

2.4 Facets of Liquidity Management 40

2.5 Importance of Liquidity Management 42

2.6 What Is the Appropriate Level of Liquidity? 51

2.7 Conclusion 54

3 Managing Mission, Strategy, and Financial Leadership 59

3.1 Value of Strategic Planning 60

3.2 What Is Strategic Planning? 61

3.3 What Are the Organization’s Mission, Vision, and Goals/Objectives? 61

3.4 Strategic Management Process 65

3.5 Implementing the Strategic Plan 73

3.6 Performance Management Systems 78

3.7 Strategic Planning Practices: What Does the Evidence Show? 88

3.8 Conclusion 89

4 Managing Structure, Accountability, and Ethics 93

4.1 Financial Tools and Support Structure 93

4.2 Organizational Structure and Governance 96

4.3 Accountability Structure 122

4.4 Ethics 129

4.5 Structure, Accountability, and Ethics in Practice 135

4.6 New Forms 137

4.7 Conclusion 138

5 Developing Financial Policies 165

5.1 Introduction 165

5.2 Financial Policies 176

5.3 Putting Policies into Place 189

5.4 Establishing Procedures 190

5.5 Financial Policies and Procedures in Practice 191

5.6 Additional Resources 193

6 Understanding Financial Accounting Basics and Financial Statements 201

6.1 Introduction 201

6.2 Financial Statement Users and Uses 202

6.3 Accounting Basics 210

6.4 Three Financial Statements 213

6.5 The Audit and the Audit Committee 235

6.6 Financial Statement Users and Uses in Practice 236

6.7 Social Accounting 237

6.8 Additional Resources 237

7 Developing Financial Reports and Ratios: Making Sense of the Numbers 257

7.1 Introduction 257

7.2 Major Differences From For-Profit Business Reports 258

7.3 Objectives of Financial Reports 263

7.4 Reporting System Design 267

7.5 Major Reports 268

7.6 Internal Reports 268

7.7 External Reports 304

7.8 Conclusion 306

8 Developing Operating and Cash Budgets 333

8.1 Introduction 333

8.2 Overview of the Budgeting Process 335

8.3 Are Nonprofit Organizations Doing Their Budgeting Properly? 336

8.4 Developing and Improving Your Budgeting Process 337

8.5 Setting the Budgetary Amounts 346

8.6 Budget Technique Refinements 357

8.7 Cash Budget 363

8.8 Managing off the Budget 367

8.9 Conclusion 372

9 Long-Range Financial Planning and Capital Budgeting 389

9.1 Introduction 389

9.2 Planning for the Future 391

9.3 Financial Evaluation of New and Existing Programs 415

9.4 Capital Budgeting: Financial Evaluation of Projects That Arise from Existing Programs 418

9.5 Financial Evaluation of Mergers, Joint Ventures, and Strategic Alliances 425

9.6 Financial Planning and Capital Budgeting in Practice 434

9.7 Conclusion 435

10 Managing Your Organization’s Liabilities 447

10.1 Managing the Balance Sheet 448

10.2 Balance Sheet Management: Benefits and Steps 449

10.3 Payables 454

10.4 Short-Term Borrowing 455

10.5 Strategic Financing Plan 456

10.6 Steps to Successful Borrowing 458

10.7 Matching Financial Sources to Strategic Objectives 463

10.8 Preparing the Financing Proposal 464

10.9 Making the Presentation 465

10.10 Other Factors in Borrowing/Lending Decisions 466

10.11 Municipal and Taxable Bonds 470

10.12 Leasing and Nontraditional Financing Sources 477

10.13 Developing a Debt and Hedging Policy 479

10.14 Liability Management in Practice 481

10.15 Conclusion 484

11 Cash Management and Banking Relations 489

11.1 Introduction 489

11.2 What Is Cash Management? 492

11.3 Collection Systems: Managing and Accelerating Receipt of Funds 501

11.4 Disbursements 507

11.5 Structuring a Funds Management System 509

11.6 Monitoring Bank Balances and Transactions 509

11.7 Cash Forecasting 511

11.8 Short-Term Borrowing 512

11.9 Short-Term Investing 513

11.10 Benchmarking Treasury Functions 517

11.11 Upgrading the Caliber of Treasury Professionals 518

11.12 Security and Risk Management Issues 521

11.13 Trends in Treasury Management 522

12 Investment Policy and Guidelines 533

12.1 Investment Policy 533

12.2 Investment Guidelines 538

12.3 Checklist of Elements for Long-Term/Endowment Investment Policy and Guidelines 548

12.4 Investment Committee 550

12.5 Trends in Investment Management 551

12.6 Investment Policy Summary 553

13 Information Technology and Knowledge Management 587

13.1 Introduction 587

13.2 How Much Technology and Which to Choose? 591

13.3 Knowledge Management and Information Technology 596

13.4 Information Technology in Today’s Nonprofits 597

13.5 What Should I Know/Do Before Investing in Technology Tools? 602

13.6 Software: Design Internally or Purchase? 604

13.7 Disclosure, the Law, and Security 604

13.8 Needs Assessment and Analysis 609

13.9 Policies and Practices in Knowledge Management and Information Technology 613

Notes 617

14 Managing Risk, Legal Issues, and Human Resources 629

14.1 What Is Risk Management? 629

14.2 Identifying Risk 635

14.3 Primary Financial Risk: Illiquidity 636

14.4 Legal Environment 637

14.5 Safeguarding People 639

14.6 Directors’ and Officers’ Liability 647

14.7 Safeguarding Your Financial and Physical Assets 649

14.8 Risk Management and Human Resource Management

15 Evaluating Your Policies and Progress 671

15.1 Introduction 671

15.2 Evaluation 673

15.3 Evaluating Your Decisions and Ethics 673

15.4 Evaluating Your Communications 679

15.5 Evaluating Your Mentoring and Supervisory Skills 683

15.6 Testing Your Supervisory and Managerial Skills 684

15.7 Evaluating the Strategic Nature of Your Role 684

15.8 Evaluating the Financial Health of Your Organization 689

15.9 Evaluating Your Financial Policies in Six Key Areas 691

15.10 Evaluating Quality and Outcomes 705

15.11 Using External Consultants and Data Sources 706

15.12 Conclusion 706

Notes 707

Index 711

What People are Saying About This

From the Publisher

"This book is written from a corporate finance perspective - with a specific focus on cash management. In addition to content on core financial management processes, there are also chapters on managing mission and strategy; structure, accountability, and ethics; and information technology and knowledge management. This text is well organized. Each chapter begins with a detailed table of contents; there is also an extensive index and a few glossaries defining key technical terms. In conclusion, it is a thorough, well-organized guide to nonprofit finance." (Journal of Administration in Social Work, Vol 34, Issue 1)

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