Finance for the Non-Financial Manager

This course is not being offered in the Winter 2015 and Spring 2015 semesters.

This course deals with financial management in the nonprofit arena. Anyone with an interest or stake in administration and management, not just specialists in finance, stand to profit. First off, we ask why non-financial managers should even care about finance? The answer is simple enough; no matter how specialized an organization is, no matter its size, complexity and focus, one thing is for certain. Finance is a core function that cannot be ignored, even for philanthropies that exist to give money away. Indeed, some would argue that finance is quintessentially the core function of any organization. And that is why virtually all members of an organization can help themselves-and benefit the organization they work for in the process-if they come to grasp the basic vocabulary of finance.

Some organizations are large enough that they have entire finance departments. Others do not. In neither case should the non-financial manager leave finance to the bean-counters. Being in the dark about finance is just that; whether you are an artist, teacher, member of the clergy, administrative assistant or even mid-level manager, finance must be perceived as your business. Below are some specific ways a non-financial manager stands to benefit from a basic understanding of finance:

  • Leaders of organizations, or those who aspire to be leaders, cannot understand key strategic and management challenges without a grasp of budgets, finance and accounting.
  • Managers who are not in the finance area tend to be frustrated and confused by finance staff and its specialized nomenclature, rules and policies. Informed engagement with the finance function is almost always helpful in these circumstances.
  • Individuals in charge of a down-to-earth function like copy services are likely to benefit if they have a sound understanding of the basics of investment analysis-- leasing versus buying, say, or breakeven analysis.
  • Line managers who are confronted with tough resource allocation decisions need to know the basics of budgeting if they are to thrive in a more complex environment.
  • Senior members of the management team need to understand how to evaluate such disparate departments as marketing, human resources, IT, facilities and law—and they cannot do this without a sound understanding of the principles of finance.

This course is built around practitioner-oriented needs, and the idea that good organizational citizenship requires some knowledge of what drives the organization forward, including whether it is operating effectively in financial terms. Some of the topics covered include, but may be expanded upon depending upon the interests if the participants in the course:

  • The definitions of a "nonprofit" and the wide range of nonprofit entities
  • Why nonprofits have a more complex 'bottom line' than for-profits
  • Components of nonprofit financial statements, including balance sheet and statement of activities.
  • Federal form 990.
  • Basics of ratio analysis.
  • The role of restricted funds in nonprofit finance.
  • Cost reporting and cost accounting.
  • Breakeven analysis.
  • The function of an external audit and the role of an outside audit
  • The importance of cash to financial health.
  • Access to capital.
  • The present value of money.
  • The multiple functions of the budget, both as a tool for financial management and as an aid to accomplishing strategic objectives.
  • The importance of controlling indirect costs in a nonprofit.
  • How nonprofits price their services.
  • The distinction between a surplus (which a nonprofit can produce) and a profit (which it cannot).
  • The importance of external relations and fundraising to most nonprofit entities.
  • Insurance as well as the broader question of risk
  • Internal controls.
  • Secrecy vs. transparency.
  • Compensation in the nonprofit arena
  • Nonprofits and the public trust