Nonprofits include a wide variety of organizations. They are ubiquitous and are part of the fabric of most communities in the United States with a wide array of missions, such as local neighborhood associations, social service agencies, churches, hospitals, and private colleges and universities. These organizations differ from companies in the private sector and government agencies in the public sector in that many of them exist to provide services that cannot or will not be provided solely by the other sectors. Nonprofits also play a unique role in our economy.
Their missions are diverse and offer complexity beyond the scope of this book. While diverse, they have common characteristics such as the fact that they are voluntary and cannot distribute surplus. They also present challenges in terms of financial management and literacy. The intent of this book is to provide insights into the financial management of these organizations, how they differ from the other sectors, and how their finances are governed and managed. It is, in essence, about financial leadership in nonprofit organizations. Proficient financial management enables and enhances mission achievement.
The National Center for Charitable Statistics (NCCS) publishes Facts about Nonprofits:
In a report issued by The Moody's Foundation in 2012, financial literacy in nonprofit managers is increasing, but there is still much room for improvement.
As organizations deal with the fluctuations in their sources of funding, having an understanding of the need for financial flexibility has taken on increased significance, and financially literate managers can help their organizations craft sound strategies and objectives that will keep their organizations not only afloat, but thriving during temporary economic declines (Moody's 2012, 38).2
The number of registered charitable organizations has exploded from roughly 300,000 in 1970 to 1,599,471 in 2016. There are many more small organizations and churches that are not registered. One-half of the nonprofit sector's revenue goes to the largest 15 percent of these organizations, some of which are large hospitals and universities. Faced with growing missions and shrinking resources, many organizations have relied more on for-profit activities, such as issuing credit cards with their logos and selling their mailing lists to advertising firms in order to augment their revenues. Most of these same organizations have overlooked the potential of better financial management to enhance revenues from better investment management and faster cash collections or reduce costs from better negotiations with banks and other vendors and process reengineering.
The Urban Institute and NCCS published a research paper in 2014 on how the “Great Recession” (2008–2012) impacted the nonprofit sector. The study examined the closure rates of nonprofit agencies for two time frames. The baseline timeframe was from 2004 to 2008 and the recession time frame from 2008 to 2012. They looked at closure rates across several subsectors: arts and culture; education; environment; health; human services; international affairs; public and societal benefit; and others. Some conclusions of this study:
In 2012, Baruch College (CUNY) conducted research in six cities to determine how the economic challenges of the great recession affected nonprofit organization. Researchers found that corporate donations, government grants, and investment income decreased while individual contributions and demand for services increased. Organizations needed to reduce their service delivery and cut expenses in order to survive.4
In a challenging environment, proficient financial management is a must. The framework of this book is intended to be of immediate value to nonprofit financial professionals and board members. This handbook caters to the chief financial officer, budget director, or treasurer with little or no formal training, business-only training, or too little time (perhaps due to a multitude of responsibilities) or support staff to do the job the way he or she knows it can be done. Our other target audiences are the chief executive officer (or executive director) and board members. This handbook specifically includes material for small and resource-constrained organizations, as well as large ones. Material is presented in an easy-to-use format, including forms or checklists where helpful. The discussion goes beyond the buzzwords to provide reasonable steps toward more proficient treasury management. We incorporate a number of concepts:
In the broadest terms, nonprofit is a designation given by the IRS to describe organizations that are allowed to make a profit but that are prohibited from distributing their profits or earnings to those in control of the organizations. If these organizations apply for and receive tax-exempt status from the IRS, they are not required to pay federal income taxes or state business income taxes except in specific cases, which are discussed later in this book. This classification makes them distinctly different from for-profit corporations, which distribute profits to their owners or shareholders and must pay corporate income taxes on their earnings. As a Section 501(c)(3) organization, the entity does not have to pay federal unemployment taxes. Furthermore, tax-exempt organizations may also be exempt from paying property tax, sales tax, and use tax – not all states exempt nonprofits from all of these taxes and challenges are mounting in some locales to take back these exemptions to meet governmental budget shortfalls.
In addition, contributions to some nonprofit organizations are tax deductible for donors. After receiving federal tax exemption, refer to the National Association of State Charity Officials website (www.nasconet.org) to see whether your organization is required to register with a state to solicit for contributions or be exempt from state taxes in that state. Further details regarding nonprofit organizations can be found in Sections 501 through 521 of the IRS code (www.irs.gov).
The approximately 1.9 million nonprofit organizations in the United States include about 1.6 million tax-exempt organizations registered with the IRS as 501(c) organizations as well as the 312,000 churches that are not registered with the IRS. It is worth noting that over 275,000 charities lost their tax-exempt status in 2011 because of their failure to comply with new IRS regulations that required nonprofits with less than $25,000 in annual gross income to file a new form (Independent Sector, 2016).5 The number of nonprofit organizations in the United States must be estimated because many churches and very small nonprofits are not included in the IRS statistics. Churches, integrated auxiliaries of churches, and associations or conventions of churches, as well as any organization normally having gross receipts each year that are $5,000 or less may be considered tax exempt under Section 501(c)(3) even without filing the IRS Form 1023. Some of these may file this form to obtain recognition from exemption from federal income tax anyway, simply to receive a determination letter from the IRS that both recognizes their 501(c)(3) status and indicates whether contributions to them are tax deductible for federal income tax purposes.6
The Independent Sector report that in 2013, nonprofit organizations provided 5.3 percent of the United States' Gross Domestic Product7 is further underscored by these estimates compiled by the Independent Sector and the Urban Institute.
(a) 501(C)(3) CORPORATIONS. Most organizations are qualified for tax-exempt status under Section 501(c)(3) of the IRS code. These organizations are usually termed “charitable” nonprofits. Included here are religious, educational, scientific, literary, social welfare, private foundations, and other charities. Their 501(c)(3) status gives them tax-exempt status and enables donors to give tax-deductible donations to them. Other 501(c) organizations are tax-exempt, but donors may not deduct donations to these organizations from their federal income taxes.
The management implications of tax-exempt status are fourfold:
We shall see the significance for managers and board members of items 2 and 4 later in this chapter and then more fully in Chapter 2.
The 501(c)(3) category includes about 76 percent of all tax-exempt organizations registered with the IRS in 2015. Exhibit 1.1 profiles the various categories of tax-exempt organizations in the United States and Exhibit 1.2 provides a numerical breakdown of 501(c)(3) and other categories of 501(c) organizations. Faith-based organizations are the largest single category within the 501(c)(3) world, and they will receive correspondingly greater attention in this volume. We also highlight managerial applications for healthcare and education in most chapters due to the disproportionate size of many of these entities. Many of these are also faith-based organizations as they are affiliated with religious organizations.
(b) BYLAWS AND ARTICLES OF INCORPORATION. The articles of incorporation (or charter) and bylaws are the initial documents that spell out the rules, regulations, and procedures for nonprofit corporations and form the basis for subsequent policy setting.
Nonprofit charitable organizations are exempt under Section 501(c)(3) of the Internal Revenue Code. Other tax-exempt organizations covered in this section include those exempt under Sections 501(c)(4) through 501(c)(25). Descriptions of these organizations are in Exhibit 1.1. The number of organizations for each type is shown in Exhibit 1.2. Note the increase in the total number of tax-exempt organizations, despite the fact that the IRS has worked to weed out closed or merged organizations from its data file.
The trustees are responsible for preparing, periodically reviewing, and amending these documents to keep pace with the mission and support structure of the organization.
The articles of incorporation are prepared and submitted when the organization first applies for state corporate status, and they are maintained in the state office responsible for corporate records (i.e., secretary of state's office).
The board of trustees (or board of directors) is also responsible for drafting the bylaws, which serve as the organization's operating rules. Bylaws are more detailed than the charter and include information such as the number and tenure of trustees, how and when meetings are to be called, when reports are to be presented, how board vacancies are to be filled, and other details needed to ensure the consistent and efficient operation of the organization.
The trustees are legally responsible for periodically reviewing the nonprofit organization's bylaws and articles of incorporation to ensure that they accurately reflect what is happening in the organization. It is also the trustees' responsibility to ensure that those provisions of the governing documents are followed.
Once these two documents are in place, the trustees should develop policy manuals covering their own service, personnel, finances, equipment, and other areas. These policies should address issues related to the operational and financial means of implementing the organizational mission, such as conflict of interest, human resource management, cash controls, cash management, investment guidelines, debt and liability guidelines, risk management (including financial statement compilation/review/audit and cyber risk), property, and facility use.
A nonprofit organization has most or all of these characteristics:
We shall introduce the mission and the organizational structure in this chapter. We detail these items as well as governance structures and tax and legal provisions in subsequent chapters.
(a) ORGANIZATIONAL MISSION. One essential difference between a nonprofit and for-profit corporation centers on its mission. The ultimate mission of for-profit organizations is to generate wealth for the owners/shareholders, ranging from an individual, as sole proprietor, to corporate ownership through the purchase of shares.
A nonprofit organization does not include the concept of ownership and, therefore, has a completely different thrust. Its mission is to serve a broad public purpose, which is clearly incompatible with ownership and personal gain. This prohibition of “private inurement” does not prevent nonprofit organizations from paying salaries to their employees, including the chief executive officer or chief financial officer. The board members typically donate their time as a public service and receive no compensation, with the exception of a few private foundations which compensate directors a nominal amount for necessary services the directors perform for the organizations.
These requirements also do not prevent nonprofit organizations from making money. Nonprofit organizations can and do make money in the same way as for-profit organizations. The difference is that the surpluses earned must be directed to the public purpose for which the nonprofit organization was established, held in reserve, or turned over to another organization with a public purpose. Thus, a key element of all nonprofit organizations is the use of earnings from the endeavor to promote the organizational goals, not to enrich the owners or stockholders.
The customers of nonprofit organizations are as diverse as their missions. Constituencies may include not only people, but also historic buildings, forests, endangered animals, and sports teams, individually or collectively. In addition, the people who have given their time, money, and other types of assets to further the cause are as much customers of the nonprofit as the actual recipients of the service being provided. They ask the most difficult questions of the nonprofit, have the greatest knowledge of the asset base, and are able to measure it against the activity performed on behalf of the organization. The organization acts as a steward both for its clients and its donors.
A for-profit organization has a clear mission (to make a profit) and a clear decision-making path for achieving it. However, the public service nature of a nonprofit poses a major challenge in terms of identifying and articulating its mission and developing criteria for measuring its success. The mission statement must not only define what the organization is and does; it must also state these concepts in a way that enables its achievements to be measured and evaluated. As we shall see a bit later in this chapter, many nonprofits are unclear even as to the primary financial objective(s) that they are or should be pursuing.
After developing its mission statement, a nonprofit organization faces two additional major challenges: identifying its client population and sources of funding, and within funders, identifying its donor constituency and level of involvement. After clearly identifying the group it intends to serve, a nonprofit must design an organizational structure that reinforces its commitment to the target group. It must then establish an image in the community, provide direction to potential funding sources, and either attract or repel the people to be served by the nonprofit organization.
(b) ORGANIZATIONAL STRUCTURE. The structure of an organization defines the roles and responsibilities of those charged with pursuing its mission – the board of directors/trustees, committees, staff, officers, outside contractors, and volunteers. A nonprofit organization must be structured to meet its goals. Water reclamation projects will require a structure involving engineers and construction experts, while feeding the homeless requires a completely different set of skills and financial resources to meet that goal. Although both operate as nonprofits, one may need to retain a huge amount of capital-intensive equipment, while the other may require only a portable cooking facility.
The type of nonprofit determines the organizational structure and complexity of its membership. Medical research, conducted in conjunction with commercial medical development, requires a strict accounting for the input of each member or contributor and an equally strict accounting for any profit or gain realized from the joint venture. The organizational structure for financial management, including treasury and controller duties, will be addressed in greater detail in Chapter 4. We shall document how control and reporting duties, springing from chief financial officer (CFO) education and training as well as time and staffing concerns, have unfortunately taken precedence over treasury duties.
Some of the terms most commonly used by nonprofits with working definitions follow:
We cannot emphasize this strongly enough: The most important aspects of proficient financial management in the nonprofit sector are the primary financial objective and the financial policies the organization uses. Second in importance are the tools and practices used, but these are primarily means of implementing the objective and policies. Throughout this book, we emphasize how the various financial management areas link up to the primary financial objective, and we provide guidance on appropriate financial policies in those areas. While we view this as critically important, many clients and students report that their organization does not have financial policies or that if there are policies, they are not aware of them. We postulate that sustainable financial practices in nonprofit organizations rely on this foundational concept.
Policy is the rule of law for an organization in a particular decision area. Examples include an organization's investment policy or internal cash control policy. Policies should be viewed as a set of guidelines (laws, rules) or principles for how day-to-day business should be performed. Some policies are determined internally; others are prescribed for the organization by outside organizations and are necessary in order to accept funds from those organizations or to work within applicable laws and regulations. Even if policies are not written down, all organizations have some financial policies that comprise the guiding principles regarding how they do certain things. Were it not for policies, a method or plan would have to be established each time someone needed to do something. Think of procedures as the specific steps that will be followed in order to implement a particular policy.
To help us distinguish between policy and procedure, let's consider two general definitions for policy and procedure, one authoritative and the other practical:
| Authoritative | Practical | |
| Policy | A definite course of action adopted as expedient or from another managerial consideration | A set of guidelines or principles defining an organization's philosophy about how business should be conducted |
| Procedure | The act or manner of proceeding in any action or process; conduct | Steps and/or actions to be taken to comply with a specific policy |
Throughout this book, we illustrate financial policies and some financial procedures. In addition, for those wishing to further investigate policies and procedures, Chapter 5 provides guidance on how to go about setting policies in many areas, for organizations that have never before formalized their policies and for those organizations that wish to revisit their policies periodically to modify and update them. Chapter 15 builds on that discussion and introduces additional ways to review policies. In today's donor, grantor, and regulatory environments, it is extremely important to be able to document and communicate policy.
A special focus in this book that sets it apart from other books in the field is the our presentation of the “state of the art” regarding practices in nonprofit financial management. We develop this profile in three ways:
Practices covered include the following:
In the companion book, Cash & Investment Management for Nonprofit Organizations (published in 2007), we provide more in-depth guidance on:
All of these decision areas steer the organization toward accomplishment of its primary financial objective.
Board members and financial executives who come to nonprofit organizations from the business sector are often confused and frustrated by the different environment. Consider the two polar extremes in Exhibit 1.3. At one extreme are organizations that are able to gain all of their revenue from product or service sales. These “commercial” organizations look much like businesses and are sometimes labeled “businesses in disguise.” But most nonprofits are religious organizations or charities, which find themselves at or near the opposite pole, with their revenues coming from grants and gifts. These are termed “donative” or donation-dependent nonprofits. They provide “public goods” free of charge or at subsidized rates to their clients. Before directly addressing the most appropriate financial objective for a nonprofit, let us discuss why this is important.
(a) DIFFERENCES BETWEEN BUSINESSES AND DONATIVE NONPROFITS.
(i) Businesses Have a Numerical, Specific Objective: Maximize Stock Price. This specific objective typically translates into maximizing long-run risk-adjusted profits. Intermediate targets that foster increased profits and stock price are also pursued. These targets include increasing market share (a company's percentage of total industry sales), increasing quality, increasing share of mind (identified by company's target audience), and increasing short-run revenues or reducing short-run costs (or both). Nonprofits that are business-like in nature, such as hospitals and private schools or colleges, can adopt many of these same intermediate targets. However, donative nonprofits generally do not see their revenues automatically increase when they provide more services. This fact is significant for three reasons.
For these reasons, financial management is more challenging for the donative nonprofit. Soon we shall point to a more appropriate primary financial objective.
(ii) Businesses Can Price Their Services and Then Use Revenues to Gauge Their Marketing Success. “Business-like” nonprofit entities, such as hospitals and educational organizations, can and do gauge marketing success from revenues for some of their programs and services, insofar as they do not violate their exempt status and societal role. Donatives and dues-based nonprofits may also apply this standard to certain of their earned income ventures. Revenues do not clearly reflect the quality and quantity of all services provided, however.
(iii) Businesses Typically Know Who Their Customers and Owners Are. Knowing who customers and owners are may be difficult for nonprofit organizations, particularly donative ones. Are the donors the customers, the owners, both, or neither? Or is the organization tied permanently to the activities specified in the charter and/or articles of incorporation, in a sense owned by its founders or society? Determining this is important because in order to assess trade-offs correctly when making major programmatic decisions, especially when finances are tight, managers must make the assessment based on the proper criteria. Some organizations have gone overboard with this, defunding, mothballing, or radically changing key programs due to declining financial support, even though those programs were central to their missions.
(iv) The Typical Pattern of Cash Flows Often Differs, Particularly for the Donative Nonprofit. In donative nonprofits, the fiscal year often begins with a stockpile of financial resources that must cover the shortfall of donations experienced prior to the major inflow around Thanksgiving and Christmas. The stockpile may include one or more of: cash on hand, short-term securities, bank loans, soon-due pledges receivable, or salable merchandise. The service effort is typically constant or almost so during the year, and the payroll and supplies expenditures continue on a fairly steady basis. Donations tend to cluster around Easter and the period from Thanksgiving to Christmas. The organization lives off its stockpile, to a large degree, until the heavy inflows materialize, at which time it replenishes its stockpile. When face-to-face fundraising is done, and wills and bequests are received periodically as a matter of course – as with Father Flanagan's Boys Town – the organization may use an income stream generated by endowments to partly offset the dry periods. The restricted nature of many of the large gifts, wills, and bequests may preclude interest or principal from being used for operational needs. Consequently, many nonprofits may experience a short-term need for funds during their operating cycles. The need for funds may have resulted from a downward trend in donations, a predictable seasonality in the receipt and disbursement of cash, or an unexpected event affecting costs, such as a strike. The worst case may occur when demand suddenly accelerates: When a business experiences higher sales, the sales revenues typically offset the higher costs, but a nonprofit has no assurance that donations will increase quickly when more services are provided. During the height of the Great Recession (2008–2009), many nonprofits were faced with the perfect storm of financial management. Their donations went down, the value of their investments decreased, and the need for services rose.9
Taken together, these operating characteristics of organizations that depend on donations for a significant percentage of their annual revenues drive their financial focus to a different objective. We now turn to some survey evidence to find out what that objective is.
(b) SURVEY EVIDENCE ON THE PRIMARY FINANCIAL OBJECTIVE. In our early 1990s Lilly Endowment–sponsored study of 288 chief financial officers of faith-based organizations, “financial break-even” (revenue equals expenses) was the dominant financial objective (111 respondents), followed by “maximize net revenue” (59 respondents).10 As secondary objective, respondents indicated a concern for cost minimization (34 respondents), avoiding financial risk (25 respondents), and maximizing net donations (20 respondents). One observation we make here is that financial risk avoidance is justifiably gaining attention from nonprofit organizations. Yet we believe that break-even and cost minimization are inadequate as primary financial objectives. It would be much better to focus on net revenue, financial risk, net donations, or cash flow – all of which represent more focused attention to the positive contribution the finance function can make to mission achievement. Maximizing cash flow or net revenue, or attempting to break even, will force attention on cost control. Accordingly, cash flow or net revenue may retain the best of each of the other two related objectives while adding to them. This in no way negates the importance of program outreach and quality attainment, but indicates ways in which resources will be allocated to carry out the mission. Yet, we argue that the primary financial objective is to set and strive to achieve a targeted liquidity level. (See Exhibit 1A.1 for more on this study and its results.)
Subsequent to that study, the Lilly survey instrument was revised to include more objectives from which to choose as the organization's primary financial objective. A fax-back survey was administered in 2002 to member organizations of a group of faith-based international outreach organizations, now part of a larger group called Missio Nexus. The results are fascinating. Respondents were asked first to select their organization's primary financial objective. The results are shown here:
| Percentage of Respondents | Primary Financial Objective |
| 35.7% | Break even financially |
| 21.4% | Maintain a targeted level of cash reserves and financial flexibility |
| 14.3% | Maximize cash flow |
| 7.1% | Minimize costs |
| 7.1% | Maximize net revenue |
| 7.1% | Maximize net donations |
| 7.1% | Make a small surplus |
| 0.0% | Avoid financial risk |
The key point to note is that ten years after the original survey 35.7 percent (21.4% + 14.3%) of a similar group of nonprofit organizations were focusing much more on cash flow and cash position – or “liquidity management” (just as many as were following the “received wisdom” that has been recommended by various sources to nonprofits: of not making a profit but covering costs).
More recent evidence we have comes from a 2011 survey of 514 mid-sized nonprofits conducted by Indiana University and conference surveys from a Rice University development-finance annual symposium. The Indiana University survey finds that “striving to meet an appropriate liquidity target over time – that is, “maintaining a targeted level of cash reserves and financial flexibility” (37.6 percent) and “assuring an annual surplus so the mission can be achieved in down years” (26.6 percent) – are the top two primary financial objectives for organizations. An additional 23.7 percent reported that breaking even financially was a primary financial objective for organizations.”11
Three preconference surveys administered to attendees of the Rice Development & Finance Symposium in 2014–2016 found that between 33 percent and 45 percent of the respondents selected “achieving and maintaining a targeted level of cash reserves and back-up liquidity” as their organization's primary financial objective.12 Clearly, targeting liquidity and achieving financial flexibility while doing so constitute the financial objective that is primary in the minds of nonprofit financial managers. Simply “balancing the budget” no longer suffices, as surpluses are necessary to build and sustain the cash flow needed for a thriving organization.
Cash flow refers to the difference between cash inflows and cash outflows in a given period. Cash position is the amount of cash and near-cash investments held by the organization. Liquidity management includes forecasting, and managing cash flow and the cash position, and ideally should include setting and managing toward a preferred cash position, or liquidity target. A liquidity target includes the elements of the cash position, along with unused short-term borrowing capacity. Your organization may have a pre-approved line of credit with a bank, some of which has not been borrowed or “taken down” at present.
Also important to note here is that the majority of respondents in each of the surveys chose an objective other than financial break-even as best describing their organization's primary financial objective. Apparently an increasing number of CFOs have concluded that striving for financial break-even cannot suffice as a nonprofit's primary financial objective. We elaborate on liquidity targeting in the next sections.
(c) FINANCIAL OBJECTIVE FOR PURELY FINANCIAL DECISIONS. Richard Wacht, an academic who has written on nonprofits, proposes that a nonprofit's financial objective be limited to “purely financial decisions” and is best stated as “cost minimization, subject to the absolute constraint of maintaining organizational liquidity and solvency over time.”13 He arrives at this objective by assuming that the financial objective must be largely divorced from the programmatic, mission-related objectives. While we see this as true up to a point, we believe that the program and financial objectives are more closely and holistically linked in most organizations' decision-making and in most major spending and service-level decisions.
(d) RECOMMENDED PRIMARY FINANCIAL OBJECTIVE: APPROPRIATE LIQUIDITY TARGET. Our view, based on field evidence we have gathered, survey evidence, and the environmental and management constraints nonprofits face, is that the primary financial objective of organizations is to strive to meet an “appropriate liquidity target” over time. Managing cash flow, the cash position, and back-up sources of cash are the keys to accomplishing this. Implementation of this objective requires marshaling (a) enough cash, (b) at the right time, and (c) not overpaying to have that cash available, while (d) protecting that cash from impairment, and then (e) spending that cash in support of the mission while adhering to donor stipulations. We develop the basis for this conclusion in Appendix 1A and in Chapter 2.
When this primary objective is described to clients and our college-level financial management students, the response is often that this seems obvious when stated. It seems to make sense to them because of its intuition but is not generally thought of as being normative.
For those uncomfortable with a single objective, consider the financial objectives articulated by William Hopkins, former treasurer of ChildFund:14
Were we to implement these objectives in our organizations, we would order them in terms of importance:
No doubt some readers will express surprise that we placed financial accountability last. An important first step toward financial health and sustainability is maintaining the necessary amount of liquidity. At a minimum, this entails setting up an operating reserve.15 Formally, an operating reserve is:
…an unrestricted fund balance set aside to stability a nonprofit's finances by providing a “rainy day savings account” for unexpected cash flow shortages, expenses or losses. These might be caused by delayed income payments, unexpected building repairs, or economic conditions.
While championing accountability, we prioritize liquidity for two pragmatic reasons:
We have seen a small number of organizations that are not as careful in being accountable as we would hope.
The nonprofit environment is a challenging one for financial managers. Multiple stakeholders, confusion about what financial objective to pursue, limited staff, funding, and technology resources, and inattention to cash and treasury management are all factors contributing to the difficulty of the nonprofit financial management.
We have presented the main structural components, the key policy areas, and the primary financial objective in this chapter. We profiled the survey evidence regarding the objective that the chief financial officers of charities say that they pursue, and found that cash position and cash flow management are becoming more prominent. We then recommended as a primary financial objective striving to meet an “appropriate liquidity target” over time. This entails running surpluses in some years, possibly deficits in a few years. We develop the idea of liquidity management, including monitoring the cash position and managing cash flow, in greater detail in Appendix 1A and in Chapter 2.
In the remainder of this book, we provide guidance on how this cash position and cash flow management focus translates into financial policy and practices. In our next chapter we turn to a fuller investigation of why these concerns should be at the top of a nonprofit organization's financial concern list.