Exam 1 Flashcards
5 charcteristics of a nonprofit
1) Public service mission
2) Organized as a non-profit or charitable corporation
3) Governance structures must preclude self-interest and private financial gain
4) Exempt from paying federal tax
5) Possess special legal status that stipulates gifts made to them are tax deductible
4 major challenges faced by nonprofits
1) Articulating a clear public service mission
2) Engaging in risk/survival analysis
3) Identifying and involving the constituency
4) Testing for “organized abandonment”
Roles of the board (6)
1) Determine mission and set policies
2) Planning: establish objective and eval criteria
3) Establish financial policies and controls
4) Fundraising
5) Hiring, evaluation, and working with chief exec
6) Communication link
Priorities for hiring staff (5)
1) Relevant skills for job
2) Management skills
3) Character traits favoring creativity, flexibility, and enthusiasm for solving problems, and an ability to work with others
4) Recognition of need for organizational structure/hierarchy
5) Familiarity w/ and passion for relevant non-profit field
2 important steps before hiring employees
1) Determining needed tasks to be done (now and in future)
2) Determine what kind of worker/provider is best for each task
why do you need an organizational chart?
- Delegate authority
- Establishing reporting responsibilities
- Establishing accountability
Why do you need job descriptions?
- Clarify whether job expectations are reasonable
- Protects employees
- Protects organization
2 key tools in accounting
1) balance sheet
2) income statement
balance sheet characteristics
- Statement of financial position
- Specific point in time
income statement characteristics
- Statement of activities
- Specific period of time
what must be balanced?
1) Assets - what an org is owed/owns
2) Liabilities - what an org owes others
current vs noncurrent (assets/liabilities)
Current: short term (<1 yr)
Noncurrent: long term (>1 yr)
Restricted vs unrestricted (net assets)
Restricted: things that have specific purposes
Unrestricted: can spend on whatever
what do income statements do?
- show profit or loss
- Show income and expenditures
- Evaluate company health
types of controls (4)
1) Expense related controls
2) Income related controls
3) Bonding (fidelity bond) - insurance against employee dishonesty
4) Physical controls - backups, security
