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NPO Management Control Guide

This document discusses management control of non-profit organizations. It notes that obtaining funds is often the main issue for non-profits and they may not pay attention to service strategies and feedback. It then describes characteristics of non-profits, including that revenues come from voluntary donations rather than transactions, making financial controls more difficult. Specifically, a smaller administrative staff results in less segregation of duties and lower pay could tempt compromise of values. Finally, it discusses different types of controls for non-profits based on clarity of objectives, quantifiability of results, predictability of interfaces, and repetitiveness of activities.

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285 views7 pages

NPO Management Control Guide

This document discusses management control of non-profit organizations. It notes that obtaining funds is often the main issue for non-profits and they may not pay attention to service strategies and feedback. It then describes characteristics of non-profits, including that revenues come from voluntary donations rather than transactions, making financial controls more difficult. Specifically, a smaller administrative staff results in less segregation of duties and lower pay could tempt compromise of values. Finally, it discusses different types of controls for non-profits based on clarity of objectives, quantifiability of results, predictability of interfaces, and repetitiveness of activities.

Uploaded by

sunnysi
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd

MANAGEMENT CONTROL OF NON-PROFIT

ORGANISATIONS

Introduction
Obtaining funds to run the operations is often
the main issue for non-profit organisation.
Leaders of NPO may think that the service that
has a good cause will sell by itself, as a result
they may not pay attention for strategies of
selling, features of service and delivering the
service. Service without inputs and feedback
may lead to flawed design of the service
product.
Dr P K Vasudeva 1
Characteristics of Nonprofit Organizations
First, the revenues received by nonprofit
organizations are often derived from voluntary
contributions, grants and other nonreciprocal
transfers (i.e., the donor receives no goods or
services in return). It is more difficult to
determine if these transactions are properly
recorded than for reciprocal transactions (i.e.,
where consideration is received in return). For
example, if internal controls are weak, it may be
easy for an employee or even a volunteer, to
remove an incoming check or cash contribution
without recording it. . The donor of the check
will still have a canceled check and no one at the
organization is the wiser.
Dr P K Vasudeva 2
 The second characteristic that weakens
the financial controls of nonprofit
organizations is the deliberate choice of
many organizations to operate with a
smaller and often lower-paid
administrative staff than a comparably
sized profit-motivated business. This
results in a lesser degree of segregation of
duties and, because of lower pay, may
provide the temptation to compromise
one's values.
Dr P K Vasudeva 3
PROBLEMS OF NPO
 Service delivery improper
 Lack of proper reward systems
 Poor communication and relationships
between members and top management.
 Insignificant monetary incentives
 Control for Profit Organisations are
therefore different than for NPOs.
 Choice of controls also differ.
Dr P K Vasudeva 4
TYPES OF CONTROLS
 Geert Hofstede talks of criteria of controls of
NPOs.
 Clear objs., quantifiable results, predictable
interfaces, and activities that can be repeated for
better MCS
Types
 Routine controls
 Expert control
 Trial and error control
 Intuitive control
 Judgmental control
 Political control
Dr P K Vasudeva 5
Types of Controls for NPOs
Clarity of Quantifiabil-ity Predictability Repetitivene Types of
Objs. of results of interface ss of Controls
activities

Yes Yes Yes Yes Routine


Yes Yes Yes No Expert
Yes Yes Yes Yes Trial &
error
Yes Yes No No Intuitive
Yes No No Judgmen
No Political
Dr P K Vasudeva 6
Procedures to Improve Controls
 Hire all Employees Personally and Perform Background Checks

 Collections Should be Under the Control of Two People Whenever


Possible

 All Disbursements Should be Made by Check and Support for the


Disbursement Kept on File

 Someone Other than the Person in Charge of the Record Keeping


Function Should Receive the Unopened Bank Statements

 Executives Should Personally Approve all Adjustments and Write-


Offs of Assets

 Current Period Financial Results Should be Compared to Budgeted


Amounts and Actual Results from Prior Periods

Dr P K Vasudeva 7

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