{"id":722,"date":"2018-04-19T22:27:09","date_gmt":"2018-04-19T22:27:09","guid":{"rendered":"https:\/\/courses.lumenlearning.com\/wm-accountingformanagers\/?post_type=chapter&#038;p=722"},"modified":"2024-04-29T17:38:37","modified_gmt":"2024-04-29T17:38:37","slug":"non-profit-organizations","status":"publish","type":"chapter","link":"https:\/\/courses.lumenlearning.com\/wm-accountingformanagers\/chapter\/non-profit-organizations\/","title":{"raw":"Non-Profit Organizations","rendered":"Non-Profit Organizations"},"content":{"raw":"<div class=\"textbox learning-objectives\">\r\n<h3>Learning Outcomes<\/h3>\r\n<ul>\r\n \t<li>Evaluate a non-profit organization's performance using financial and non-financial data<\/li>\r\n<\/ul>\r\n<\/div>\r\nSince non-profit accounting systems are beyond the scope of this course, we will briefly discuss financial and non-financial performance goals.\r\n\r\nNon-profit organizations may have different goals and needs than for-profit organizations as they work towards a mission or goal that is not profit driven. Financial aspects will include meeting budgets and following granting and funding organization\u2019s reporting requirements. This process too, will vary by organization.\r\n\r\nNon-financial goals are many in non-profits. Serving a specified number of clients is typically a very important goal in most agencies. \u00a0Agencies also need \u201cinkind\u201d or non financial support through volunteer hours and donated supplies. Many agencies have requirements through funders, to obtain a certain amount of match to meet goals. Let\u2019s look briefly at a small non-profit organization that operates a food shelf and retail thrift store.\r\n<table style=\"border-collapse: collapse; width: 100%;\" border=\"1\">\r\n<thead>\r\n<tr style=\"height: 30px;\">\r\n<th style=\"width: 20%; height: 30px;\" scope=\"col\"><\/th>\r\n<th style=\"width: 20%; height: 30px;\" scope=\"col\">Budget<\/th>\r\n<th style=\"width: 20%; height: 30px;\" scope=\"col\">Actual<\/th>\r\n<th style=\"width: 20%; height: 30px;\" scope=\"col\">Over\/(under) budget<\/th>\r\n<th style=\"width: 20%; height: 30px;\" scope=\"col\">% Over\/(under) budget<\/th>\r\n<\/tr>\r\n<\/thead>\r\n<tbody>\r\n<tr style=\"height: 15px;\">\r\n<th style=\"width: 20%; height: 15px;\" scope=\"colgroup\"><span style=\"text-decoration: underline;\">Income<\/span><\/th>\r\n<td style=\"width: 20%; height: 15px;\"><\/td>\r\n<td style=\"width: 20%; height: 15px;\"><\/td>\r\n<td style=\"width: 20%; height: 15px;\"><\/td>\r\n<td style=\"width: 20%; height: 15px;\"><\/td>\r\n<\/tr>\r\n<tr style=\"height: 15px;\">\r\n<th style=\"width: 20%; height: 15px;\" scope=\"row\">Retail Sales<\/th>\r\n<td style=\"width: 20%; height: 15px;\">$5,000<\/td>\r\n<td style=\"width: 20%; height: 15px;\">$6,120<\/td>\r\n<td style=\"width: 20%; height: 15px;\">$1,120<\/td>\r\n<td style=\"width: 20%; height: 15px;\">22%<\/td>\r\n<\/tr>\r\n<tr style=\"height: 15px;\">\r\n<th style=\"width: 20%; height: 15px;\" scope=\"row\">Donations<\/th>\r\n<td style=\"width: 20%; height: 15px;\">$1,250<\/td>\r\n<td style=\"width: 20%; height: 15px;\">$286<\/td>\r\n<td style=\"width: 20%; height: 15px;\">($424)<\/td>\r\n<td style=\"width: 20%; height: 15px;\">\u221234%<\/td>\r\n<\/tr>\r\n<tr style=\"height: 15px;\">\r\n<th style=\"width: 20%; height: 15px;\" scope=\"row\">Grants<\/th>\r\n<td style=\"width: 20%; height: 15px;\">$1,250<\/td>\r\n<td style=\"width: 20%; height: 15px;\">$1,250<\/td>\r\n<td style=\"width: 20%; height: 15px;\">$0<\/td>\r\n<td style=\"width: 20%; height: 15px;\">0%<\/td>\r\n<\/tr>\r\n<tr style=\"height: 15px;\">\r\n<th style=\"width: 20%; height: 15px;\" scope=\"row\">Total Income<\/th>\r\n<td style=\"width: 20%; height: 15px;\">$7,500<\/td>\r\n<td style=\"width: 20%; height: 15px;\">$8,196<\/td>\r\n<td style=\"width: 20%; height: 15px;\">$696<\/td>\r\n<td style=\"width: 20%; height: 15px;\"><\/td>\r\n<\/tr>\r\n<tr style=\"height: 15px;\">\r\n<td style=\"width: 20%; height: 15px;\"><\/td>\r\n<td style=\"width: 20%; height: 15px;\"><\/td>\r\n<td style=\"width: 20%; height: 15px;\"><\/td>\r\n<td style=\"width: 20%; height: 15px;\"><\/td>\r\n<td style=\"width: 20%; height: 15px;\"><\/td>\r\n<\/tr>\r\n<tr style=\"height: 15px;\">\r\n<th style=\"width: 20%; height: 15px;\" scope=\"colgroup\"><span style=\"text-decoration: underline;\">Expenses<\/span><\/th>\r\n<td style=\"width: 20%; height: 15px;\"><\/td>\r\n<td style=\"width: 20%; height: 15px;\"><\/td>\r\n<td style=\"width: 20%; height: 15px;\"><\/td>\r\n<td style=\"width: 20%; height: 15px;\"><\/td>\r\n<\/tr>\r\n<tr style=\"height: 15px;\">\r\n<th style=\"width: 20%; height: 15px;\" scope=\"row\">Rent<\/th>\r\n<td style=\"width: 20%; height: 15px;\">$500<\/td>\r\n<td style=\"width: 20%; height: 15px;\">$500<\/td>\r\n<td style=\"width: 20%; height: 15px;\">0<\/td>\r\n<td style=\"width: 20%; height: 15px;\">0<\/td>\r\n<\/tr>\r\n<tr style=\"height: 15px;\">\r\n<th style=\"width: 20%; height: 15px;\" scope=\"row\">Utilities<\/th>\r\n<td style=\"width: 20%; height: 15px;\">$225<\/td>\r\n<td style=\"width: 20%; height: 15px;\">$280<\/td>\r\n<td style=\"width: 20%; height: 15px;\">$55<\/td>\r\n<td style=\"width: 20%; height: 15px;\">24<\/td>\r\n<\/tr>\r\n<tr style=\"height: 15px;\">\r\n<th style=\"width: 20%; height: 15px;\" scope=\"row\">Payroll<\/th>\r\n<td style=\"width: 20%; height: 15px;\">$5,000<\/td>\r\n<td style=\"width: 20%; height: 15px;\">$5,125<\/td>\r\n<td style=\"width: 20%; height: 15px;\">$125<\/td>\r\n<td style=\"width: 20%; height: 15px;\">3<\/td>\r\n<\/tr>\r\n<tr style=\"height: 15px;\">\r\n<th style=\"width: 20%; height: 15px;\" scope=\"row\">Supplies<\/th>\r\n<td style=\"width: 20%; height: 15px;\">$500<\/td>\r\n<td style=\"width: 20%; height: 15px;\">$700<\/td>\r\n<td style=\"width: 20%; height: 15px;\">$200<\/td>\r\n<td style=\"width: 20%; height: 15px;\">40<\/td>\r\n<\/tr>\r\n<tr style=\"height: 15px;\">\r\n<th style=\"width: 20%; height: 15px;\" scope=\"row\">Marketing<\/th>\r\n<td style=\"width: 20%; height: 15px;\">$500<\/td>\r\n<td style=\"width: 20%; height: 15px;\">$400<\/td>\r\n<td style=\"width: 20%; height: 15px;\">($100)<\/td>\r\n<td style=\"width: 20%; height: 15px;\">\u221220%<\/td>\r\n<\/tr>\r\n<tr style=\"height: 15px;\">\r\n<th style=\"width: 20%; height: 15px;\" scope=\"row\">Fundraising<\/th>\r\n<td style=\"width: 20%; height: 15px;\">$500<\/td>\r\n<td style=\"width: 20%; height: 15px;\">$250<\/td>\r\n<td style=\"width: 20%; height: 15px;\">($250)<\/td>\r\n<td style=\"width: 20%; height: 15px;\">\u221250<\/td>\r\n<\/tr>\r\n<tr>\r\n<th style=\"width: 20%;\" scope=\"row\">Total Expenses<\/th>\r\n<td style=\"width: 20%;\">$7,225<\/td>\r\n<td style=\"width: 20%;\">$7,225<\/td>\r\n<td style=\"width: 20%;\">$30<\/td>\r\n<td style=\"width: 20%;\">0<\/td>\r\n<\/tr>\r\n<tr>\r\n<th style=\"width: 20%;\" scope=\"row\">Net Position<\/th>\r\n<td style=\"width: 20%;\">$275<\/td>\r\n<td style=\"width: 20%;\">$941<\/td>\r\n<td style=\"width: 20%;\">$666<\/td>\r\n<td style=\"width: 20%;\">242<\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\nSo what would some issues be that this little agency would need to look at from a financial standpoint? The first thing that stands out is a pretty large difference in donation levels compared to what was budgeted. This leads to a potential non-financial issue as well. We could then evaluate <strong>how<\/strong> donations are being requested. Are there a certain number of phone calls to be made each month by volunteers? Is the clerk at the retail store asking for donations at the conclusion of a sale?\r\n\r\nPayroll was a bit high, so evaluating that expense line from a financial perspective would include looking at the hours worked to determine if overtime was a factor. Non-financial aspects might include analyzing the time used for opening and closing the store, or looking at procedures that may help to reduce hours worked.\r\n\r\nAs you can see, the non-profit organization brings a whole different set of challenges that are not within the scope of this course. This agency is not interested in making a profit, but in meeting the goals of the organization, by providing food to families in need through the sale of donated items. It is a mission driven organization rather than profit driven!\r\n<div class=\"textbox tryit\">\r\n<h3>Practice Questions<\/h3>\r\nhttps:\/\/assess.lumenlearning.com\/practice\/4e169d5f-9822-4728-a03f-f73b8359c537\r\n<\/div>","rendered":"<div class=\"textbox learning-objectives\">\n<h3>Learning Outcomes<\/h3>\n<ul>\n<li>Evaluate a non-profit organization&#8217;s performance using financial and non-financial data<\/li>\n<\/ul>\n<\/div>\n<p>Since non-profit accounting systems are beyond the scope of this course, we will briefly discuss financial and non-financial performance goals.<\/p>\n<p>Non-profit organizations may have different goals and needs than for-profit organizations as they work towards a mission or goal that is not profit driven. Financial aspects will include meeting budgets and following granting and funding organization\u2019s reporting requirements. This process too, will vary by organization.<\/p>\n<p>Non-financial goals are many in non-profits. Serving a specified number of clients is typically a very important goal in most agencies. \u00a0Agencies also need \u201cinkind\u201d or non financial support through volunteer hours and donated supplies. Many agencies have requirements through funders, to obtain a certain amount of match to meet goals. Let\u2019s look briefly at a small non-profit organization that operates a food shelf and retail thrift store.<\/p>\n<table style=\"border-collapse: collapse; width: 100%;\">\n<thead>\n<tr style=\"height: 30px;\">\n<th style=\"width: 20%; height: 30px;\" scope=\"col\"><\/th>\n<th style=\"width: 20%; height: 30px;\" scope=\"col\">Budget<\/th>\n<th style=\"width: 20%; height: 30px;\" scope=\"col\">Actual<\/th>\n<th style=\"width: 20%; height: 30px;\" scope=\"col\">Over\/(under) budget<\/th>\n<th style=\"width: 20%; height: 30px;\" scope=\"col\">% Over\/(under) budget<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr style=\"height: 15px;\">\n<th style=\"width: 20%; height: 15px;\" scope=\"colgroup\"><span style=\"text-decoration: underline;\">Income<\/span><\/th>\n<td style=\"width: 20%; height: 15px;\"><\/td>\n<td style=\"width: 20%; height: 15px;\"><\/td>\n<td style=\"width: 20%; height: 15px;\"><\/td>\n<td style=\"width: 20%; height: 15px;\"><\/td>\n<\/tr>\n<tr style=\"height: 15px;\">\n<th style=\"width: 20%; height: 15px;\" scope=\"row\">Retail Sales<\/th>\n<td style=\"width: 20%; height: 15px;\">$5,000<\/td>\n<td style=\"width: 20%; height: 15px;\">$6,120<\/td>\n<td style=\"width: 20%; height: 15px;\">$1,120<\/td>\n<td style=\"width: 20%; height: 15px;\">22%<\/td>\n<\/tr>\n<tr style=\"height: 15px;\">\n<th style=\"width: 20%; height: 15px;\" scope=\"row\">Donations<\/th>\n<td style=\"width: 20%; height: 15px;\">$1,250<\/td>\n<td style=\"width: 20%; height: 15px;\">$286<\/td>\n<td style=\"width: 20%; height: 15px;\">($424)<\/td>\n<td style=\"width: 20%; height: 15px;\">\u221234%<\/td>\n<\/tr>\n<tr style=\"height: 15px;\">\n<th style=\"width: 20%; height: 15px;\" scope=\"row\">Grants<\/th>\n<td style=\"width: 20%; height: 15px;\">$1,250<\/td>\n<td style=\"width: 20%; height: 15px;\">$1,250<\/td>\n<td style=\"width: 20%; height: 15px;\">$0<\/td>\n<td style=\"width: 20%; height: 15px;\">0%<\/td>\n<\/tr>\n<tr style=\"height: 15px;\">\n<th style=\"width: 20%; height: 15px;\" scope=\"row\">Total Income<\/th>\n<td style=\"width: 20%; height: 15px;\">$7,500<\/td>\n<td style=\"width: 20%; height: 15px;\">$8,196<\/td>\n<td style=\"width: 20%; height: 15px;\">$696<\/td>\n<td style=\"width: 20%; height: 15px;\"><\/td>\n<\/tr>\n<tr style=\"height: 15px;\">\n<td style=\"width: 20%; height: 15px;\"><\/td>\n<td style=\"width: 20%; height: 15px;\"><\/td>\n<td style=\"width: 20%; height: 15px;\"><\/td>\n<td style=\"width: 20%; height: 15px;\"><\/td>\n<td style=\"width: 20%; height: 15px;\"><\/td>\n<\/tr>\n<tr style=\"height: 15px;\">\n<th style=\"width: 20%; height: 15px;\" scope=\"colgroup\"><span style=\"text-decoration: underline;\">Expenses<\/span><\/th>\n<td style=\"width: 20%; height: 15px;\"><\/td>\n<td style=\"width: 20%; height: 15px;\"><\/td>\n<td style=\"width: 20%; height: 15px;\"><\/td>\n<td style=\"width: 20%; height: 15px;\"><\/td>\n<\/tr>\n<tr style=\"height: 15px;\">\n<th style=\"width: 20%; height: 15px;\" scope=\"row\">Rent<\/th>\n<td style=\"width: 20%; height: 15px;\">$500<\/td>\n<td style=\"width: 20%; height: 15px;\">$500<\/td>\n<td style=\"width: 20%; height: 15px;\">0<\/td>\n<td style=\"width: 20%; height: 15px;\">0<\/td>\n<\/tr>\n<tr style=\"height: 15px;\">\n<th style=\"width: 20%; height: 15px;\" scope=\"row\">Utilities<\/th>\n<td style=\"width: 20%; height: 15px;\">$225<\/td>\n<td style=\"width: 20%; height: 15px;\">$280<\/td>\n<td style=\"width: 20%; height: 15px;\">$55<\/td>\n<td style=\"width: 20%; height: 15px;\">24<\/td>\n<\/tr>\n<tr style=\"height: 15px;\">\n<th style=\"width: 20%; height: 15px;\" scope=\"row\">Payroll<\/th>\n<td style=\"width: 20%; height: 15px;\">$5,000<\/td>\n<td style=\"width: 20%; height: 15px;\">$5,125<\/td>\n<td style=\"width: 20%; height: 15px;\">$125<\/td>\n<td style=\"width: 20%; height: 15px;\">3<\/td>\n<\/tr>\n<tr style=\"height: 15px;\">\n<th style=\"width: 20%; height: 15px;\" scope=\"row\">Supplies<\/th>\n<td style=\"width: 20%; height: 15px;\">$500<\/td>\n<td style=\"width: 20%; height: 15px;\">$700<\/td>\n<td style=\"width: 20%; height: 15px;\">$200<\/td>\n<td style=\"width: 20%; height: 15px;\">40<\/td>\n<\/tr>\n<tr style=\"height: 15px;\">\n<th style=\"width: 20%; height: 15px;\" scope=\"row\">Marketing<\/th>\n<td style=\"width: 20%; height: 15px;\">$500<\/td>\n<td style=\"width: 20%; height: 15px;\">$400<\/td>\n<td style=\"width: 20%; height: 15px;\">($100)<\/td>\n<td style=\"width: 20%; height: 15px;\">\u221220%<\/td>\n<\/tr>\n<tr style=\"height: 15px;\">\n<th style=\"width: 20%; height: 15px;\" scope=\"row\">Fundraising<\/th>\n<td style=\"width: 20%; height: 15px;\">$500<\/td>\n<td style=\"width: 20%; height: 15px;\">$250<\/td>\n<td style=\"width: 20%; height: 15px;\">($250)<\/td>\n<td style=\"width: 20%; height: 15px;\">\u221250<\/td>\n<\/tr>\n<tr>\n<th style=\"width: 20%;\" scope=\"row\">Total Expenses<\/th>\n<td style=\"width: 20%;\">$7,225<\/td>\n<td style=\"width: 20%;\">$7,225<\/td>\n<td style=\"width: 20%;\">$30<\/td>\n<td style=\"width: 20%;\">0<\/td>\n<\/tr>\n<tr>\n<th style=\"width: 20%;\" scope=\"row\">Net Position<\/th>\n<td style=\"width: 20%;\">$275<\/td>\n<td style=\"width: 20%;\">$941<\/td>\n<td style=\"width: 20%;\">$666<\/td>\n<td style=\"width: 20%;\">242<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>So what would some issues be that this little agency would need to look at from a financial standpoint? The first thing that stands out is a pretty large difference in donation levels compared to what was budgeted. This leads to a potential non-financial issue as well. We could then evaluate <strong>how<\/strong> donations are being requested. Are there a certain number of phone calls to be made each month by volunteers? Is the clerk at the retail store asking for donations at the conclusion of a sale?<\/p>\n<p>Payroll was a bit high, so evaluating that expense line from a financial perspective would include looking at the hours worked to determine if overtime was a factor. Non-financial aspects might include analyzing the time used for opening and closing the store, or looking at procedures that may help to reduce hours worked.<\/p>\n<p>As you can see, the non-profit organization brings a whole different set of challenges that are not within the scope of this course. This agency is not interested in making a profit, but in meeting the goals of the organization, by providing food to families in need through the sale of donated items. It is a mission driven organization rather than profit driven!<\/p>\n<div class=\"textbox tryit\">\n<h3>Practice Questions<\/h3>\n<p>\t<iframe id=\"assessment_practice_4e169d5f-9822-4728-a03f-f73b8359c537\" class=\"resizable\" src=\"https:\/\/assess.lumenlearning.com\/practice\/4e169d5f-9822-4728-a03f-f73b8359c537?iframe_resize_id=assessment_practice_id_4e169d5f-9822-4728-a03f-f73b8359c537\" frameborder=\"0\" style=\"border:none;width:100%;height:100%;min-height:300px;\"><br \/>\n\t<\/iframe>\n<\/div>\n\n\t\t\t <section class=\"citations-section\" role=\"contentinfo\">\n\t\t\t <h3>Candela Citations<\/h3>\n\t\t\t\t\t <div>\n\t\t\t\t\t\t <div id=\"citation-list-722\">\n\t\t\t\t\t\t\t <div class=\"licensing\"><div class=\"license-attribution-dropdown-subheading\">CC licensed content, Original<\/div><ul class=\"citation-list\"><li>Non-Profit Organizations. <strong>Authored by<\/strong>: Freedom Learning Group. <strong>Provided by<\/strong>: Lumen Learning. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/licenses\/by\/4.0\/\">CC BY: Attribution<\/a><\/em><\/li><\/ul><\/div>\n\t\t\t\t\t\t <\/div>\n\t\t\t\t\t <\/div>\n\t\t\t <\/section>","protected":false},"author":62559,"menu_order":11,"template":"","meta":{"_candela_citation":"[{\"type\":\"original\",\"description\":\"Non-Profit Organizations\",\"author\":\"Freedom Learning Group\",\"organization\":\"Lumen Learning\",\"url\":\"\",\"project\":\"\",\"license\":\"cc-by\",\"license_terms\":\"\"}]","CANDELA_OUTCOMES_GUID":"938c7386-0165-45b0-8595-84ace1c0d558, 26f42cde-8c29-46bc-a1e6-b7f533ac926b","pb_show_title":"on","pb_short_title":"","pb_subtitle":"","pb_authors":[],"pb_section_license":""},"chapter-type":[],"contributor":[],"license":[],"class_list":["post-722","chapter","type-chapter","status-publish","hentry"],"part":113,"_links":{"self":[{"href":"https:\/\/courses.lumenlearning.com\/wm-accountingformanagers\/wp-json\/pressbooks\/v2\/chapters\/722","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/courses.lumenlearning.com\/wm-accountingformanagers\/wp-json\/pressbooks\/v2\/chapters"}],"about":[{"href":"https:\/\/courses.lumenlearning.com\/wm-accountingformanagers\/wp-json\/wp\/v2\/types\/chapter"}],"author":[{"embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/wm-accountingformanagers\/wp-json\/wp\/v2\/users\/62559"}],"version-history":[{"count":9,"href":"https:\/\/courses.lumenlearning.com\/wm-accountingformanagers\/wp-json\/pressbooks\/v2\/chapters\/722\/revisions"}],"predecessor-version":[{"id":4177,"href":"https:\/\/courses.lumenlearning.com\/wm-accountingformanagers\/wp-json\/pressbooks\/v2\/chapters\/722\/revisions\/4177"}],"part":[{"href":"https:\/\/courses.lumenlearning.com\/wm-accountingformanagers\/wp-json\/pressbooks\/v2\/parts\/113"}],"metadata":[{"href":"https:\/\/courses.lumenlearning.com\/wm-accountingformanagers\/wp-json\/pressbooks\/v2\/chapters\/722\/metadata\/"}],"wp:attachment":[{"href":"https:\/\/courses.lumenlearning.com\/wm-accountingformanagers\/wp-json\/wp\/v2\/media?parent=722"}],"wp:term":[{"taxonomy":"chapter-type","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/wm-accountingformanagers\/wp-json\/pressbooks\/v2\/chapter-type?post=722"},{"taxonomy":"contributor","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/wm-accountingformanagers\/wp-json\/wp\/v2\/contributor?post=722"},{"taxonomy":"license","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/wm-accountingformanagers\/wp-json\/wp\/v2\/license?post=722"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}