In charitable giving surged to a record high where Americans gave nearly billion in charity This undoubtedly has left a positive impact on the financial sectors of nonprofit organizations But that being the case the money thats received doesnt always meet the standards of those who have invested in NPO This problem has gotten more and more media coverage over the years and along with the increased capabilities of technology it has been put under the spotlight in the public eye due to many high profile losses by the nonprofit sector in recent year So while money in the billions is pouring into the nonprofit sector from all different angles the issue of what to do with that money once its gotten such as who gets to handle it where it goes what to do with it and many more questions like these are still under some scrutiny by experts in the field One of the biggest cases in recent history was the Red Cross and their response to the earthquake in Haiti in According to the nonprofit they had built at least new homes for the people affected by the disaster The number now currently stands at 6 permanent new homes This of course came as a surprise to many so the public outcry went through the roof Yet through all of this the Red Cross is still pounding its chest and declaring that they helped over million Haitians get back on their feet There is no evidence supporting this claim They received half a billion dollars have not disclosed how they spent it leading to confusion and wasted money While the loss of that money could be for many reasons in the industry overall in 2014 much of that loss was due to fraud In its Report to the Nations on Occupational Fraud and Abuse the Association of Certified Fraud Examiners ACFE estimated that organizations lose up to five of their annual revenue to fraud So, the estimated loss to the financial sector of NPOs in was billion That amount of money being lost in the public eye is unacceptable It makes people wonder why that money didnt go to another organization that has the ethics and capability to get projects done right Imagine what good billion can do in the hands of an ethical and upright organization But shouldnt we strive to achieve a goal in which that no matter where your money goes its handled properly and sent to where its needed most It can be done but NPOs must be able to adapt ito their environment around them both externally and internally
Recently under the Trump administration new tax laws have been implemented that has a great effect on anyone who pays taxes. So basically anyone with a heartbeat And for a while even those without a heartbeat All of us And so as one would expect this had a significant effect on the nonprofit sector as well Unfortunately it was a negative one Under these new tax laws its estimated that the sector will according to Patrick Rooney who is of the Lilly School of Philanthropy at Indiana University says that the sector could have losses that reach up to percent of billion Therefore going forward one of the actions that NPOs must take is gaining more influence in the halls of Congress in Washington DC NPOs can take several actions that will help them prevent and strengthen their financial sector They will benefit greatly from a closer look at the internal controls of an organization being able to analyze and improve upon their capacity building capabilities and must be able to engage more effectively with lawmakers in order to push their worthwhile agendas forward more efficiently resulting in greater outcomes for the sector Doing this will require quite an undertaking but doing nothing and allowing NPOs to continue operating as they are may result in continued losses that reach up the several billions of dollars down the road The struggles within the nonprofit sector have been a reoccurring theme in the industry ever since the During this time, NPOs focus began shifting on more creative ways of financing their organizations Many of the strategies that were developed that mirrored those of for profit ventures due to their success at the time Subsequently because of this trend NPOs began to be looked at much like ventures looking to profit when being analyzed by experts Understandably these experts then began making judgments based on how well a nonprofit does compare to another leading to a more competitive marketplace While some good came of this such as increased attention on accountability it overall has become a detriment to the industry Because of this competitive mindset tensions between NPOs increases leading to disharmony This is especially harmful considering that NPOs are an essential part of creating a balanced healthy and generous community One of the ways that NPOs can separate themselves from for profit ventures is by highlighting their differences By focusing on their differences they can determine where their strengths and weaknesses lie and be able to react and adapt accordingly to an ever changing environment increasing the potential for financial gain and disbursement
Nonprofit finance theory is essential to understanding how to improve any financial sector Any theory of nonprofit finance must account for three basic issues financing of current operations, financing of capital needs and the balance or mix among different sources of income for these purposes Financing of current operations refers to the short term financial goals that an NPO is trying to achieve, while financing capital needs speaks mainly to the survival of the organization down the road and balancing different sources of income speaks of problems that are related to administrative feasibility making sure they have enough to pay off their liabilities and risk assessments Improving on these three fundamental aspects of the theory will help nonprofits in their ability to maintain control over their finances However even if all of those are in an exemplary manner there are still other issues to account for that go beyond just the theories such as the actions of people within the organization the ever changing environment in which they operate and the actions taken by the government such as when new legislation is passed that affects tax breaks and government funding People can be unpredictable Whether this unpredictability is a result of purposeful action or a mistake the outcome speaks for itself One of these unpredictable actions that harm many NPOs is fraud Fraud accounts for significant losses within the NPO sector but goes largely ignored in many cases. The reason many of these organizations do not change is that they do not wish to admit fault leading to nothing being done to fix the issue allowing for the incident to take place once again. Admitting fault could also lead to problems with donors and reputation down the road which are two imperative elements NPOs need So how does an organization prevent incidences of fraud from taking place The answer lies within the internal controls of an organization A study conducted by Herbert Snyder Margaret Anderson and Jill Zuber professors of accounting at North Dakota State University addressed this problem with a question Using usable surveys they asked NPOs who had both experienced and not experienced fraud how they handled fraud within their organization It found that a large portion of NPOs are determined to believe that it is the work of individuals with a criminal mindset that is the root cause of fraud not because the internal controls are inadequate While this may be true to a certain extent there are many ways in which NPOs can help prevent these types of situations from occurring in the first place According to the study, NPOs that invested more in internal controls were more capable of finding when these situations occur than those that dont Out of irregularities within an organization on average of them are found through the specific investigation of employees This involves changing the workings of their internal controls Those that changed their internal control capabilities to mirror those that hadnt experienced fraud were found to have much better odds of it not recurring in the future as opposed to those who did next to nothing when such incidences occurred While not all these issues can be dealt with using definitive methods there are some steps that organizations can take to help minimize damage
No lines are longer than 80 characters, TYVM. Other specified properties aren't being scored automatically at this time so this is not necessarily good news...