Chapter 8
What is a financial statement?
A summary of the activities within a non-profit.
What is fraud?
Wrongful or criminal deception intended for personal or professional gain.
What are the 3 types of nonprofits affected by COVID-19?
Hibernators, Responders, Hybrids
What is a budget?
What ethics exist within finances?
Accountability
Transparency
Code of Ethics
What is an audit?
An official inspection of a business' or individual's accounts.
What often comes in the form of cash that is difficult for non-profits to estimate and control?
Funding sources
What is an example of a deficit reducing strategy?
Hiring freeze
Minimize support services/benefits
Across-the-board cuts
Is anything guaranteed when budgeting for a non-profit?
No!
No budget is certain. There is no right amount. And there are no guarantees for outcomes!
How many ethics are included in the NASW Code of Ethics? What are they?
6;
service, social justice, dignity and worth of the individual, importance of human relationships, integrity, and competence
What does a company look at from the previous year to create a new budget for the best chance of cost increase?
Activities and needed adjustments.
What constraints keep non-profits from being able to hire sufficient people to segregate duties?
Financial constraints
What are 3 causes of organizational decline?
competition
external events or crises
resistance to change or innovation
mismanagement/overexpansion of program activities or staff
overreliance on a funding source
loss of competitive edge
obsolete technology
crisis inaction
is it true that the main goal of a nonprofit is a budget that breaks even?
FALSE
Most non-profits would prefer to see a surplus!
How many stages are included in organizational decline?
5;
Blinded stage, inaction stage, faulty action stage, crisis stage, and dissolution stage
What is a statement of financial position?
The given point in time that the IRS reviews.
When is fraud most likely to occur?
When a non-profit has 100 or less employees.
What are strategies in managing organizational decline?
determine scope of problem
cost reductions
mission realignment
political influence
cooperative strategies & mergers
commercialization & fundraising
employee furloughs
refinancing
relocation
downsizing
What is funding depreciation?
This is when an organization sets aside cash for depreciation expenses.
YES
Why is it important to intentionally segregate duties within a non-profit?
Helps with financial constraints and staff accountability.
Who is most often the person held liable when fraud takes place within a business?
The administration i.e. CEO's, directors, financial officers, etc.
Why could funding for a non-profit be inconsistent?
Periods of economic growth & recession
Accounting frauds causing mistrust in non-profits
Legislation enforcing financial accountability
Donor giving behavior
Major disasters
What goals does the "No Numbers Budgeting" include?
Program and organizational goals
Is this presentation helpful for your understanding of finances and budgeting in the non-profit world?
We hope so!