“Non-Profit Organizations”
Question 1:
- Propose two techniques that a nonprofit can use to measure management and employee efficiency within its organization. Speculate on the major benefits that these techniques may have on the organization.
Question 2:
- Determine whether or not traditional financial and management evaluation ratios such as return on assets (ROA), return on equity (ROE), economic value added (EVA), and market value added (MVA) apply to nonprofits. Support your response with at least two examples of these instances.
- Please use quality research in your internet search. Cite your references.
This 3rd question does not need citations. Please put the following paragraphs in your own words.
Question 3:
- One of the most distinct differences between the income statement for a nonprofit organization and a for-profit organization is the bottom line. For-profit organizations’ income statements list net profit; however, nonprofit organizations simply list excess/deficit of revenues over expenses. For profit organizations are largely judged by their ability to provide financial returns on the income statement; however, non-profit organizations do not aim to provide financial gain. Therefore, nonprofit organizations should be evaluated by their ability to achieve their mission. Also, nonprofit organizations are generally tax-exempt; therefore, the income statement will likely not have a line item for income tax expenses.
- I think the fact that the goal of nonprofit organizations is not to produce a profit, ratios such as ROA and ROE are not applicable for evaluating the success of management. In my opinion, nonprofit organizations should establish metrics to measure the success of management at achieving the organizations goals. I think it’s important that their is a way to effectively evaluate management success, and the metric(s) must be communicated and understood by managers.
