Streetsmart Financial Basics for Nonprofit Managers

by McLaughlin, Thomas A.

• ISBN13: 9780470414996
• ISBN10: 0470414995
• Edition: 3rd
• Format: Paperback
• Copyright: 2009-04-06
• Publisher: Wiley

Summary

This resource for nonprofit managers and board members simplifies accounting concepts and provides practical advice that can help nonprofits achieve a higher degree of accountability. Clearly written, concise, and insightful, the Second Edition of the popular resource explains in plain English how to read, interpret, and implement financial data from bookkeepers and accountants to make management decisions that ensure an organization's long-term financial viability.Thomas A. McLaughlin has over 25 years of nonprofit experience as a nonprofit manager, trade association executive, and consultant. He is nationally recognized as an expert in nonprofit mergers and alliances, financial management, and strategic planning.

Author Biography

Thomas A. McLaughlin is Director of Consulting Services, Nonprofit Finance Fund, and member of the faculty at the Heller School for Social Policy and Management at Brandeis University. He is also the author of Nonprofit Strategic Positioning: Decide Where to Be, Plan What to Do and Nonprofit Mergers and Alliances, both published by Wiley. His email address is [e-mail].

Table of Contents

Preface	p. xi
Acknowledgments	p. xv
Note to Reader	p. xvii
Analysis	p. 1
Organizational Structure: Programs and Corporations	p. 3
Types of Nonprofit Organizations	p. 3
Structure of Nonprofit Organizations	p. 8
Loss of Tax-Exempt Status - The Monster Within	p. 16
Mission: Managing Your Two Bottom Lines	p. 19
The Role of a Value System	p. 20
The Nonprofit's Dilemma and How to Solve It	p. 22
Accounting as a Second Language-A Nine-Point Program	p. 25
The Entity Principle	p. 25
Money Measurement	p. 26
Conservatism Principle	p. 26
The Cost Concpet	p. 28
The Materiality Principle	p. 30
Going Concern	p. 32
Dual Aspect	p. 33
Realization Principle	p. 34
Matching Principle	p. 35
Assets Are for Boards, Activities Are for Managers	p. 37
Concepts versus Details	p. 38
Boards Invest, Managers Spend	p. 39
If It Has to Be Decided Today, It's Probably the Wrong Question	p. 40
Boards Own the Controls, Managers Implement Them	p. 40
Balance Sheets: How They Get That Way	p. 41
Current Assets	p. 42
Noncurrent Assets	p. 45
Current Liabilities	p. 47
Noncurrent Liabilities	p. 47
Making the Balance Sheet Dance	p. 50
Transparency, Thy Name Is IRS Form 990	p. 53
Sweeping Change	p. 54
What to Do	p. 55
Financial Analysis: A Few Diagnostic Tools	p. 67
Financial Statement Analysis for Math Phobics	p. 68
Current Ratio	p. 75
Days' Cash	p. 76
Days' Receivables	p. 78
Cash Flow to Total Debt	p. 80
Debt to Net Assets	p. 81
Total Margin	p. 83
Operating Margin	p. 84
Accounting Age of Plant/Equipment (or Land, Buildings, and Equipment)	p. 85
A Footnote	p. 86
Accounting	p. 89
Nonprofit Accounting: Acknowledging the Strings Attached	p. 91
Net Asset Categories	p. 92
Other Provisions	p. 93
What It All Means	p. 93
Cost Accounting: How Much Does It Cost?	p. 99
A Form of Management Accounting	p. 100
Indirect Costs	p. 102
Certain Support Costs Get Assigned to Other Support Costs	p. 102
Breakeven Analysis-Another Use for Cost Data	p. 106
Cost Accounting versus Cost Reporting	p. 109
Auditing: Choosing and Using an Auditor	p. 111
Audit, Review, and Compilation	p. 113
The Auditor Market	p. 115
Getting Value from the Audit	p. 118
Conclusion	p. 120
Operations	p. 121
Cash Flow Management: Why Cash Is King	p. 123
Up the Balance Sheet	p. 124
How Much Cash Is Enough?	p. 134
Conclusion	p. 139
Capital: Why Capital Is Not a Four-Letter Word	p. 141
The Mechanics of Capital Financing	p. 142
The Present Value of Money	p. 148
Sources of Capital	p. 149
The Great Divide among Nonprofits	p. 151
Future Access to Captial Markets	p. 153
The Role of Net Assets	p. 155
Strategic Capital Management	p. 155
Budgeting: Taming the Budget Beast	p. 157
Playing Revenues Like a Symphony	p. 159
Expenses	p. 160
Indirect (General and Administrative) Costs	p. 169
Conclusion	p. 170
Indirect Costs and Other Despised Items	p. 171
Still, It's Low That Counts	p. 172
Secret of the Indirect Cost Game	p. 174
Pricing: How Much Should It Cost?	p. 179
Pricing Methodologies	p. 182
Going the Other Way-Contractual Adjustments and Subsidies	p. 186
Pricing Strategies	p. 187
How to Price	p. 189
	Profit: Why and
Profit Defined	p. 193
Uses of Profit	p. 194
Profit-How to Get It	p. 202
What Can Be Done	p. 204
To Raise More Money, Think Cows	p. 205
Donations	p. 206
Bequests-Cow to Charity	p. 206
Charitable Remainder Trusts-Milk to Beneficiaries, Cow to Charity	p. 206
Pooled Income Funds-Donors Put Their Cows in a Herd, Keep Rights to Milk	p. 208
Control	p. 211
Insurance: The Maddeningly Complicated Art of Covering Your Assets	p. 213
To Insure or Self-Insure?	p. 215
Risk Management	p. 216
Internal Controls for External Goals	p. 219
The Elements of Internal Control	p. 221
How to Monitor the System	p. 233
Maintaining the System	p. 235
Conclusion	p. 237
Enron Spawn	p. 239
Some Predictions	p. 242
The New Industry of Charity Watching	p. 244
Management Controls: Toward Accountability for Performance	p. 249
Management Controls Circa 1980	p. 250
Beyond Management Controls in the Twenty-First Century: How to Do It	p. 250
Messages	p. 251
How to Prepare-The CFO of the Future	p. 252
A Financial Management Cultural Primer	p. 257
Budget Bloopers	p. 263
Using the Web Site	p. 267
Index	p. 273
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