This chapter explores the dimensions of financial sustainability as well as the principles needed to manage a nonprofit organization that can generate continuous funding through diverse sources in order to support its vision and mission in a way that is socially and environmentally sustainable. Sustainability is the ability of a business, an organization, or a project to fulfill its vision and mission, meet its goals, and serve its stakeholders over time. The chapter discusses the inherent, collateral, and environmental factors of financial sustainability in nonprofit organizations. Inherent factors of financial sustainability include: Financial management, budget, financial statement analysis, financial sustainability plan, social enterprise, fund-raising, grant seeking, investment, and risk management. Collateral factors of financial sustainability include: Governance, leadership, and strategic planning. The chapter describes key indicators that can reveal whether an organization is financially sustainable or is on the path for financial sustainability.
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This book provides leaders and managers of nonprofit organizations with theoretical and conceptual frameworks, approaches, and strategies that will enable them to manage organizations that are financially sustainable. The book aims to equip students and nonprofit leaders with the information and conceptual frameworks needed to do financial analyses, manage budgets, and conduct various operations for organizational and financial sustainability. People have a tendency to think of financial sustainability almost exclusively in financial terms. The book argues that financial sustainability involves both financial and nonfinancial facets. To that end it provides a systemic conceptual framework. The chapters are articulated around four sections. The first part introduces the concepts of nonprofit organizations and financial sustainability. The second part is about key aspects of organization and planning for sustainability in a nonprofit organization. The third part discusses issues that are vital to the financial sustainability of a nonprofit organization. The last part emphasizes the contributions of management and leadership practices to the financial sustainability of nonprofit organizations. The book may serve as an introductory textbook for future leaders of nonprofit organizations, as well as students in schools or programs of nonprofit leadership, human service leadership, social work, public and community health, organization management, public administration, education, and other similar fields.
This chapter defines the concept of financial management and establishes the relationship between financial management and nonprofit financial managers. A nonprofit perspective on financial management includes financial planning, financial monitoring, financial decisions, and financial accountability in order to ensure that an organization can sustain its financial resources to fulfill its vision and mission through the achievement of organizational goals and objectives. The chapter discusses the various facets of nonprofit corporate finance and accounting and lists the most common funding sources of nonprofit organizations. It examines the financial and accounting principles and procedures related to the management of a nonprofit organization. The chapter addresses basic accounting principles that leaders of a nonprofit organization should be aware of, and the conditions surrounding the financial situation of a nonprofit organization. It describes a financial management system and explains the relationship between financial management and the financial sustainability of nonprofit organizations.