Consider the different financial analysis tools that nonprofits can use to evaluate their financial health. For this discussion, refer to the required reading in this module in Essentials of Accounting for Governmental and Not-for-Profit Organizations. Illustration 13-7, Performance Indicators, in the textbook will be particularly useful. This discussion will help you prepare for your final project as you will need to use three ratios/performance indicators to evaluate your organization's financial health. Address these items in your post:
Southern New Hampshire University
ACC-325-R5947 Accounting for Nonprofit Orgs
May 22, 2022
Establishing the Non-Profit Organization
The name of the non-profit organization is “One World” and it symbolizes the world as a single entity that carries everyone and treats them equally. In retrospect, the world has become full of inhumane behaviors, habits and devoid of values that create the boundaries needed for peaceful co-existence. The fundamental reason for the establishment of One World is to cater for orphans, who are a vulnerable population across the entire world. It is an organization that will take care of orphans that are infants up to 24 years. The rationale is to create a place of comfort for orphans who lack family or guardians to take care of them.
The mission statement for the organization is “Human service is the highest form of compassion in a world of social and economic imbalances” and this goes to describe the principal aim that the organization in ensuring that orphans between the ages mentioned received ample and rightful care. There are many vices in the world that affect this vulnerable population and they include drugs, alcohol, and substance abuse as well as prostitution, robbery and early pregnancy among others.
The headquarters of the organization will be in California, U.S and the expansion plan will ensure that three organizational premises are constructed in every state. The plan is to have state organizations in different counties that have high numbers of affected orphans (Foley, 2009). It is a rehabilitative and educational approach that the organization stands on to cater for the populations.
Corporate Structure and Governance
“One World” is an organization that strictly follows the nonprofit organizational structure to ensure that the federal and state laws are adhered to. At the top of the hierarchy is the “Board of Directors or Trustees” and their work is to provide a sense of direction to the organization. The board works to implement policies that govern the organization and overseeing all the organizational duties. The board will have between 8 to 10 members to ensure prudent decision-making processes (Foley, 2009). A history of working in a nonprofit organization is important to be qualified and accepted as a board member. The ultimate disqualification for a board member is engagement in corrupt dealings, favoritism, lack of interest in fulfilling organizational work and other unprofessional behaviors.
The Executive Director then comes under the board to fulfill different functions that are delegated by the board. He or she will have an assistant to oversee the functions of different positions under the director. The positions will constitute the Development Director, Program Director, Functional Divisions, and the Volunteer Director. These positions will be occupied with the minimal academic qualification being an undergraduate degree or diploma in the specified field (Foley, 2009). The importance of creating this qualification is to bar people that possess less qualification not to enter these positions as the organizational efficiency must be always at its peak. Other positions under these will be the Special Events Assistant, Housing Coordinator and the Volunteer Coordinator, Workforce Coordinator, Public Assistance Coordinator, and the Human Resources workers. Importantly, the Finance department will have its specified department to cater for all the issues related with finance.
Conflict of interests can originate from different factors that are against the principal objectives of the organization. For instance, a member in the board can have selfish reasons to squander money that comes in the form of grants to facilitate the financing of various expenses for the orphans. A professional member can counter the motive, and this can result in the creation of bad blood between them. On the other hand, highly professional directors have the ultimate vision of expanding the organization by sustaining transparency in all organizational workings (Foley, 2009). However, leaders that are less visionary can find this a nuisance and want to run the organization in a poor manner and lead it to inefficiency. Other factors that cause friction among the organization’s leaders can also cause unnecessary misunderstandings that can degenerate into conflicts of interest.
The Structure of a Finance or Audit Committee
The make-up of the finance or audit committee will have various sections that constitute the fundraising, nominating, program, budget, and finance committee. These are divisions under the committee that work together with different functions to fulfill the principal objectives of the organization by mobilizing, collecting, and allocating funds for different organizational functions.
The roles of the committee are numerous. Financial planning and budgeting that constitutes the development of an annual budget for the staff, orphans and other organizational expenses is a principal role. The budget must be approved by the finance committee and a subsequent monitoring process shall follow. The committee shall also develop readable reports using formats that are familiar to the staff. The committee shall also work with the staff to understand different operations in the organization. The committee shall oversee the organization’s accountability policies and internal controls. The controls and policies shall encompass the creation, approval and updating of the policies that ensure asset protection. The committee shall also ensure proper documentation of financial transactions in a structured manual.
Legal Requirements and Process
Setting a location is an important legal process that comes in the beginning of creating an organization like an orphanage. It requires the acquisition of a legal lease that can last between 10 to 15 years or a complete purchase of land to set the organization.
Getting the letters of support is another important legal procedure. The letters come from dignitaries, local panchayats, local businesses, dignitaries, and other entities deemed legal by the law to approve the establishment of an orphanage. These are imperatives in hastening up the registration process of the organization.
Registration of the organization comes later with the specification that it is a Society. It is a legal procedure that is conducted via the local “Registrar of Societies” office. The requirements for this registration are a Board of Trustees or Directors and By-laws as well as others that the office will specify.
Foley, E. (2009). The Finance Committee and Committee Chair Responsibilities | Nonprofit Accounting Basics. Nonprofitaccountingbasics.org. Retrieved 28 May 2022, from https://www.nonprofitaccountingbasics.org/reporting-operations/finance-committee- committee-chair-responsibilities.
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