Composition 2

Composition 2 - Unit 3 Research Assignment 1 1 Management...

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Unit 3 Research Assignment 1 Management Apprentice Style Profile Alicia Ayala MG2650 June 5, 2016 ITT-TECH 1
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Unit 3 Research Assignment 1 EXECUTIVE SUMMARY This paper will outline the similarities and differences between for-profit organizations and nonprofit and organizations. Many view for-profit and nonprofit companies as very different business organizations; however, they have many commonalities. Both for-profit and nonprofit organizations are corporations. As a corporation, both are legal enterprises created to operate and transact business. Corporations hire employees to manage day-to-day activities and act in its best interests. For-profit and nonprofit companies work to control spending, find ways to bring in revenue, operate under organizational structures and utilize accounting practices to track and report how efficiently assets are used. Nonprofit organizations fall under a large umbrella in respect to size and mission. The environment under which they do business helps set them apart from for-profit companies. Nonprofit companies have a great need for their services, face cuts in funding and capital limitations. In this paper I will focus on the financial management techniques used by for-profit and nonprofit companies. I will address the following questions: • What are the sources of funds available to for-profit and nonprofit companies? • Is there a conflict between the mission and bottom line of nonprofit companies? • What types of control functions and governance mechanisms face for- profit and nonprofit companies? • What financial reporting is used by for-profit and nonprofit companies? To help illustrate some of the issues, I will use affordable housing providers as an example of how a nonprofit organization operates. Before affordable housing provider can fulfill their mission and develop more affordable housing, they have to find revenue streams such as obtaining organizational and growth capital. By understanding the challenges, funding resources and creating a solid financial plan, nonprofit housing 2
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Unit 3 Research Assignment 1 developers can find success in making affordable housing available. INTRODUCTION For-profit and nonprofit organizations have a number of common characteristics. They have similar organizational structures, make financing decisions to raise capital, establish strategic planning as part of their business model, and use accounting and financial reporting systems to evaluate performance. There are also differences between for-profit and nonprofit organizations. They have different stakeholders which shape their business agendas. Unlike for-profit organizations, nonprofits often face scarce resources and funding challenges. The financial management techniques used by nonprofit affordable housing agencies is a good illustration of the operation of a nonprofit organization and will be discussed below.
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