MA3 group assignment - Introduction The widely used...

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Introduction The widely used definition for a Not for profit organization is, existence for educational or charitable reasons, and from which its shareholders or trustees do not benefit financially. In the following report, we will critically discuss the alternatives and challenges faced by NPOS (not for profit organisations) and propose how the organisation might best assess the performance of their activities. Not for Profit Organizations Not for Profit organizations face many challenges in their day-to-day activities. considerably over the last decade. one very powerful advantage over for Profit companies. That advantage is the mission statement. If you spend time in a NPO, it is obvious how eermployees and volunteers dedicate themselves to the missions and fulfilling the needs of their customers. Many For Profit companies will have mission statements posted throughout the organization, inserted in their literature and on the wall behind the CEO or in the reception area. I have had great fun when leading seminars by asking people to raise their hands if their company has a mission statement. When I ask someone from the For Profit sector to state what their mission is, 9 times out of 10 the rese is similar to “well it sort of goes like this” or “to paraphrase, it is” … The For Profit companies have missed the power of the mission statement to inspire, to drive decisions and to create culture. One huge advantage that the For Profit companies have in spades that the NPO’s fail to fully understand and implement is the drive to generate profits. There are many reasons and misperceptions why NPO’s have failed to generate adequate profitability including: 1. Government contracts which prohibit making money 2. Perception that making money is wrong 3. Misunderstanding that being mission driven is exclusive of being profitable 4. Lack of management skills to drive profit mentality 5. Lack of Board support to achieve profitability 6. Lack of operational skills to generate profits within programs 7. NPO’s are not allowed to “make” money 8. All money (and profits) should be spent on the customers
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Let’s reconsider these items in light of the following: 1. NPO’s are allowed to generate profits based on the Internal Revenue Code. The concern is that the organization is not functioning just to make money but to serve a special purpose (i.e. fulfilling their mission statement). 2. Money comes from only 3 sources: vendors, investors (stakeholders, contributors) and PROFITS! A rallying cry within the NPO world is “no margin (profits), no mission”. 3. NPOs need to be great stewards of their resources. This means that the resources that they are entrusted with should generate additional resources to continue to serve the mission years into the future. Remember how Jesus took the loaves and the fish from the young boy. Not only did he meet the needs of the crowd but they picked up all of the leftovers. What do you think happened to the leftovers? Yes – resources used for another day!
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This note was uploaded on 10/24/2010 for the course ACCOUNTING INFS2005 taught by Professor Steven during the Three '10 term at Australian National University.

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MA3 group assignment - Introduction The widely used...

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