What is the biggest myth when comparing the differences
between non-profit and for-profit organizations? Non-profits don't make money,
right?
This could not be more false.
Non-profit organizations and managers are constantly on the
look to increase value, increase revenues, maximize potentials for revenue, and
decrease costs the same way that a manager in a corporation must look for ways
to maximize company, shareholder and owner profits.
There are differences of course; For-profit companies may
use a little different approach to financials and a different tax code to some
degree, and accounting managers in the opposing sectors may use a different set
of core indicators when defining success, however believe it or not many
non-profit leaders have to hone the highest level of financial acumen in order
to achieve any rate of sustained success just like their counterparts.
So here is a question to you board members and CEO's of
NFP's: Do you expect others in your organization to manage all the finances
without your direct input or knowledge?
No?
Then why would you ask your regional and mid level
management staff to manage their program without input into their financials,
or knowledge of how to analyze them? After all, you should be empowering them
to be the "CEO's" of their team or program, right?
Basic kills in financial management start in the critical
areas of cash and asset management, bookkeeping, and basic financial analysis.
This is where you should help your up and coming leaders learn how to manage
their programs actual revenue and expenses.
Let me be clear....I know that you know, that for your
organization to thrive in the long term, your financial controls must insure
the highest level of integrity in the bookkeeping and business management
process. But if you are truly looking at the long term, then you as a leader
and manager should be encouraging and giving the opportunity to teach your up
and comers as quickly as possible how to generate financial statements and
analyze and interpret those statements to really understand the financial
conditions of the business they are being asked to run.
Financial analysis can show one "reality" of the
situation of a business or organization, and can be an eye opener to a new not
for profit supervisor, and seen as such, good financial management is one of
the most important proactive practices in management.
Far too many employees that work in the non-profit sector
that find themselves in a new position of management due to a promotion, also
find themselves in a precarious situation of not understanding how to run a
business or analyze a financial statement.
So do yourself a favor; get your front line and middle
management staff enrolled in a bookkeeping or business finance class as soon as
you can
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