Close Search
 
MEDIA, JOBS & RESOURCES for the COMMON GOOD
News  |  General

Gaps In Financial Knowledge Challenge US NFPs - Survey


1 March 2012 at 9:06 am
Staff Reporter
A new survey of financial managers at mid-size US Not for Profit organisations reveals gaps in their financial knowledge, even as they grapple with economic challenges.

Staff Reporter | 1 March 2012 at 9:06 am


0 Comments


 Print
Gaps In Financial Knowledge Challenge US NFPs - Survey
1 March 2012 at 9:06 am

A new survey of financial managers at mid-size US Not for Profit organisations reveals gaps in their financial knowledge, even as they grapple with economic challenges.

The study was conducted by the Center on Philanthropy at Indiana University to help Not for Profits understand and increase their financial knowledge levels and improve their effectiveness.

The report says Not for Profits’ knowledge, policies and procedures were studied; some results were positive, while others revealed a clear need for financial education.

More than 500 NFP professionals who are most responsible for their organization’s overall financial management were surveyed. The study is a sample of primarily human services NFPs, as well as health, civic, environmental, arts and education NFPs with revenues of $1 million to $5 million.

“Seventy-six percent of financial managers at mid-size Not for Profits said they are knowledgeable about financial principles, but only a third correctly answered all three basic financial literacy questions asked,” said Una Osili, director of research at the Center on Philanthropy.

“This disconnect has potentially significant implications for Not for Profits and the donors who place their trust in them. Solid financial knowledge is critical to sound decision making as nonprofits strive for financial well-being and greater impact.”

The researchers say the survey is among the first to show a shift in financial priorities. Until recently, they say Not for Profits this size often focused on just breaking even. The findings indicate they are now putting more emphasis on longer-term planning and sustainability.

The top three financial objectives among NFP’s surveyed were:

  • Maintaining a targeted level of cash reserves and financial flexibility (38 percent).
  • Assuring an annual surplus so the mission can be achieved in down years (27 percent).
  • Breaking even financially (24 percent).

Patrick M. Rooney, the executive director of the Center on Philanthropy says Not for Profit managers and board members need a high level of financial literacy to establish a sustainable, long-term financial plan, maintain a healthy cash balance and fulfill their missions effectively.

Nearly half (49 per cent) of mid-size NFPs had less than three months’ worth of cash reserves for operating expenses available. A quarter (26 per cent) had four to six months’ worth on hand, while another quarter had more than seven months of operating expenses.

Other key findings:

  • Respondents said they were knowledgeable about negotiating with banks or lenders (78 percent), cash flow projections (75 percent) and financial scenario planning (72 percent).
  • Only 46 percent reported knowing about debt restructuring.
  • Financial literacy increased with the number of courses taken in accounting, economics, operations and financial management, and with the Not for Profit ’s revenue.
  • Boards were involved in accountability (66 percent), but less so in managing investments (38 percent), developing budgets (30 percent) and scenario planning (27 percent).
  • Less than 40 percent of nonprofits surveyed had an audit committee.

The full report can be downloaded here (PDF).



PB Careers
Get your biweekly dose of news, opinion and analysis to keep you up to date with what’s happening and why it matters for you, sent every Tuesday and Thursday morning.

Got a story to share?

Got a news tip or article idea for Pro Bono News? Or perhaps you would like to write an article and join a growing community of sector leaders sharing their thoughts and analysis with Pro Bono News readers? Get in touch at news@probonoaustralia.com.au or download our contributor guidelines.


Your email address will not be published. Required fields are marked *



YOU MAY ALSO LIKE

Meet Pro Bono News’ first editorial advisory board

Wendy Williams

Thursday, 16th April 2020 at 8:02 am

Unpaid Carers Facing Significant Economic Disadvantage

Luke Michael

Tuesday, 21st August 2018 at 3:45 pm

NFPs Driving WA Economy, Report Says

Wendy Williams

Wednesday, 15th February 2017 at 4:20 pm

Study into the Effect of the NDIS on Carers

Lina Caneva

Wednesday, 25th January 2017 at 9:26 am

pba inverse logo
Subscribe Twitter Facebook
×

We need your help.

Since the outbreak of COVID-19, Pro Bono Australia has seen a devastating fall in advertising and less people posting on our job board, which is how we fund our free news service. You can show us that you value the work we do by making a contribution.

 Make a contribution 

You have Successfully Subscribed!