Financial Management in Nonprofit Organizations Assignment

Financial Management in Nonprofit Organizations - Assignment Example Solid financial management obligates the organization to take part in long-term strategic planning as well as short-term operations planning and should become part of the organizations continuous process of planning. A solid financial management is important in assisting organizations to ensure they use their resources in an effective and efficient manner in order to achieve and fulfill the commitments that have been identified by the stakeholders. It also assists the organization to have more accountability to its donor, as well as well as other stakeholders, which will increase the respect and confidence of the agencies that fund it, its partners along with its beneficiaries. Lastly, it can assist the organization to gain a competitive advantage in regards to increasingly scarce resources, which will be important when preparing for long-term financial sustainability. Financial management is seen as an important path that should be taken by all organizations in their pursuit for success. The aim of this paper is to provide an insightful account of applying financial management approaches to non-profit organizations while comparing with for-profit firms regardless of the fact that the strategic management approaches for both organizations are the same. Nonetheless, a non-profit firm typically functions in a monopolistic setting that provides commodities with low measurability while being reliant on external financial sources. The non-profit industry is experiencing growth and this creates a need to appreciate its efficiency with governance being vital to the stakeholders, donors and tax authorities among others. A non-profit firm is an organization that is exempted from taxes that is created with the main aim of providing services to the public without making profits. In order to be classified as a non-profit firm, an organization