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6 Pages

Nonprofit Organizations: Financial Management

WithWoods Bowman

The first half of this entry covers technical issues, beginning with the unique features of nonprofit revenue streams. It then looks at the most popular metrics of financial position (equity) and performance (profit) and explains how to reinterpret these concepts when analyzing a nonprofit's overall financial health. Special attention is given to operating reserves and endowment financing. The second half of the entry sketches key regulations affecting nonprofit financial management in the areas of unrelated business income, compensation, and investing. The entry concludes with a discussion of three controversies of interest to policy makers. 1) Is it legal and/or advisable to regulate overhead costs? 2) Do government grants crowd out private donations? 3) Are endowments of public charities excessive?