There are three significant trends that are affecting the nonprofit financial management environment today and in the near future. One of the biggest trends is accountability. Nonprofit organizations are being asked on all levels, Federal, State and Local to be accountable for the financial management of an organization records. Due to many unethical behaviors by nonprofit organizations, new laws are going into effect across the nation. These new regulations are being put into place to hopefully keep nonprofits stable. If nonprofits are found to be operating unethically or mismanaging funds they risk the loss of their nonprofit status, loss of donors and funding, as well as fines and penalties from the governing agencies that over see these organizations.
The second and third trend is a direct result of the nations’ economy as a whole. The second trend is donations from the public. Donors are not so egger to donate to organizations with the unstable national economy. The reduction of donations can put an organization’s financial stability in jeopardy. Most nonprofit organizations rely on donations to operate their programs and services. When these donations are reduced, this forces the organization to cut its operating budget. These cuts and reductions affect what programs and services the organization can offer. With increasing operation costs and the reduction of money and budget cut this risks the nonprofit organization staying in business.
The third trend is reduction of grant funding from federal, state and local agencies. Nonprofits that rely on grant money to help provide programs and services for their organization. Obtaining these funds is becoming very completive. More nonprofits are fighting for less grant money these days. The economy has forced many grantors to reduce or restrict the money they award to qualifying nonprofit organizations. Again, with a nonprofits income being reduced this puts programs and services they could offer at risk of being cut. If programs and services are cut the nonprofit organization is at risk of being force to close down or merge with another organization to make their programs and services available
The reasons are the same for all the nonprofits working in today’s economy. If the income goes down and expenses go up, programs and services are at risk of being reduced or cut entirely. Is causes a domino effect with the organization’s financial stability. These emerging trends will have a direct result in how nonprofit organizations manage their finances which will affect programs, services and the nonprofit’s financial stability. If the nonprofit is not accountable for their financial management, then this just spells more trouble for an already at risk nonprofit organization in the future.
References
Gittell, R., & Kaen, F. (2003). A FRAMEWORK FOR EVALUATING STATE-ASSISTED FINANCING PROGRAMS (1). Public Finance & Management, 3(3), 296-331. Retrieved from Business Source Complete database.
Llewellyn, S., & Tappin, E. (2003). Strategy in the Public Sector: Management in the Wilderness. Journal of Management Studies, 40(4), 955-982. doi:10.1111/1467-6486.00366.
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