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University of North Carolina School of Social Work
Course Number:
PUBA 757/SOWO 885
Course Title:
Financial Management for Nonprofits
Semester
Spring 2016
Tuesdays….5:30-8:30 pm
Room TTK-102
Credits:
Three (3) credit hours
Instructor:
Noel A. Mazade, Ph.D.
Professor of the Practice
Office: TTK 421-B
Phone: 919.843.0063
nmazade@email.unc.edu
Office Hours:
Mondays and Tuesdays 10am-2pm and by appointment
Course Website:
Available through http://sakai.unc.edu
COURSE DESCRIPTION:
This course will help students gain the knowledge and skills they need to guide
nonprofit organizations through a variety of important financial decisions and tasks.
COURSE OBJECTIVES:
1. Examine the size, scope, role, subsectors, and distinctive characteristics of the
nonprofit sector to understand financial management similarities and differences
among nonprofit organizations.
2. Describe financial leadership principles, roles, and responsibilities among boards
of directors and staff members in nonprofit organizations.
3. Describe the key elements and functions of financial management systems
needed by nonprofit organizations to comply with legal and regulatory standards
and requirements.
4. Evaluate and assess an organization’s financial health by reviewing and
analyzing key financial statements.
5. Describe the budgeting process within nonprofit organizations and prepare a
budget using full cost recovery principles.
6. Explain cash flow and investment management options and strategies in
nonprofit organizations.
7. Critically analyze and assess various resources development strategies in
promoting organizational sustainability.
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8. Communicate financial performance and progress to stakeholders in an effective
manner.
RESOURCES:
All course lectures, syllabus, assignment information, and external links to useful web
sites are or will be available on Sakai, at http://sakai.unc.edu
CLASS PARTICIPATION:
Class participation counts for a portion of one’s final grade and includes class
attendance, contributions to assignments, and informed participation in class
discussion. Informed participation means that you clearly demonstrate that you have
completed assigned readings and can offer analysis, synthesis and evaluation of written
material. Excellent participation also means that your comments are thoughtful, focused
and respectful. Points will be deducted from the base score if you miss class, are late,
leave early, disappear for long periods on break, or are unprepared. This course is
structured as a seminar therefore all class members are expected to share
responsibility for participating in discussions and for presenting materials needed by the
class. Some classroom time may be spent working in small task groups, experiential
activities and role plays; therefore, class attendance is crucial. The development of a
supportive learning environment is fostered by respectfully listening to the ideas of
others, being able to understand and appreciate a point of view which is different from
your own, clearly articulating your point of view, and linking experience to resource
materials.
POLICY ON ACADEMIC DISHONESTY:
Please refer to the APA Style Guide, The SSW Manual, and the SSW Writing Guide for
information on attribution of quotes, plagiarism, and appropriate use of assistance in
preparing assignments. All written assignments should contain a signed pledge from
you stating that, "I have not given or received unauthorized aid in preparing this written
work". In keeping with the UNC Honor Code, if reason exists to believe that academic
dishonesty has occurred, a referral will be made to the Office of the Student Attorney
General for investigation and further action as required. The Honor System module is
available at: studentconduct.unc.edu.
POLICY ON ACCOMMODATIONS FOR STUDENTS WITH DISABILITIES:
The University of North Carolina – Chapel Hill facilitates the implementation of
reasonable accommodations, including resources and services, for students with
disabilities, chronic medical conditions, a temporary disability or pregnancy
complications resulting in difficulties with accessing learning opportunities.
All accommodations are coordinated through the Accessibility Resources and Service
(ARS) Office. In the first instance please visit their website http://accessibility.unc.edu,
call 919-962-8300 or email accessibility@unc.edu. Please contact ARS as early in the
semester as possible.
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POLICIES ON THE USE OF ELECTRONIC DEVICES IN THE CLASSROOM:
It is to be expected that we will all be invested in creating a learning environment of
respect and engagement. Your attention is an important sign of respect to your
colleagues, and an important part of everyone’s learning. During class, cell phones
should be turned off or silenced. The use of laptops in class for the purpose of taking
notes or completing small group tasks is welcomed.
APA AND WRITTEN ASSIGNMENTS
The School of Social Work faculty has adopted APA style as the preferred format for
papers and publications. The best reference is the Publication Manual of the American
Psychological Association, Sixth Edition (2009) that is available at most bookstores. The
following web site provides additional information: http://www.apastyle.org/apa-stylehelp.aspx .
You are strongly encouraged to review the materials on the School of Social Work’s
website: http://ssw.unc.edu/students/writing . This page includes numerous helpful
writing resources such as tutorials on understanding plagiarism, quick reference guide
to APA, writing tips, and ESL materials. Students are also strongly encouraged to
review the section on plagiarism carefully. All instances of academic dishonesty will
result in disciplinary measures pre-established by the School of Social Work and the
University.
POLICY ON ASSIGNMENTS SUBMISSION, INCOMPLETES, AND LATE
ASSIGNMENTS:
A grade of “Incomplete” will be given only in extenuating circumstances and in
accordance with SSW and University policy. All assignments are to be submitted
electronically to the Drop Box in our Sakai site and are due at the beginning of class on
the dates noted on this syllabus. Ten percent will be deducted from your grade for each
day that an assignment is late. If you have a situation arise that may prohibit you from
completing the assignment on time, any request for an extension on the papers must be
done in advance of the due date (at least 24 hours) for the assignment. Approved
delays will not affect the grade.
GRADING SYSTEM
Points will be awarded for each of the major course components as follows:
Class Participation: 12 sessions @ 10 points/week = 120 points (24%)
The point scores received throughout the semester will be combined and converted to
the following scale for final grading:
470-500 Points (94% and above) = H [High Pass…Clear Excellence]
400-499 Points (80%-93%) = P [Entirely Satisfactory Graduate Work]
350-399 Points (70%-79%)= L [Low Pass-Inadequate Graduate Work]
349 Points and below (69% and lower) = F [Fail]
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Point Distribution:
 Class attendance and participation-150 points (30%)
 Financial Health Assessment and Plan Assignment-150 points (30%)
 “Final”-200 points (40%)
ASSIGNMENTS
Assignment 1: Financial Health Assessment and Sustainability Plan
There are two options for completing this assignment: In Option A, class members will
work in teams of two or more to (a) assess the financial health of a nonprofit
organization by reviewing financial statements and program and budget documents,
and interviewing the organization’s key leaders, and (b) develop and present a set of
detailed recommendations for sustained and/or improved financial health. There are no
parameters on the size of the nonprofit or on the length of time it has been in operation.
Teams can, but are not required to, interact directly with the organization. Either way,
teams must access sufficient programmatic and financial information to complete the
assignment. If a team directly interacts with an organization, permission should be
obtained to discuss the organization’s data in class.
With Option B, a class member can work independently with a case of their choosing
subject to the instructor’s approval.
Both teams and individuals will present their plans on April 12.
Assignment 2: The “Final”
[see below]
REQUIRED TEXTS & INSTRUMENTS:
There is no required text book for this course, but there are required readings, which are
available on the Sakai course site, unless otherwise noted.
Class participants who anticipate being substantively involved in actual financial
management in a nonprofit organization may wish to purchase the following publication
from the Harvard University School of Business:
Harvard Business Review Press. (2012). HBR Guide to Finance Basics for Managers.
Boston, MA: Harvard Business Review Press. ISBN-13: 978-1422187302
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COURSE OUTLINE
Session 1 – January 12
Introduction to Financial Management Class
Review class members’ nonprofit-related experiences and learning goals for course;
Review course Syllabus;
Analysis of a State Mental Health Agency Services and Financial Profile.
Handout: National Association of State Mental Health Program Directors Research
Institute, Inc. (2015). 2015 North Carolina State Mental Health Agency Profiles
Summary Report. Falls Church, VA: NASMHPD Research Institute, Inc. January 2016.
[Report posted in the “Resources” link on the Sakai course web site]
Session 2- January 19
Essential Elements of a Financial Management System for Nonprofit
Organizations
I.
Overview of Nonprofit Organizations
A. What is a nonprofit organization? Can a nonprofit organization legally earn
a “profit” or “surplus”? If so, is it taxable? Discuss unrelated business
taxable income (Form 990-T)
B. How does an organization achieve tax exempt status? Maintain this
status?
1. Legal requirements (may vary by State). Generally, the organization
incorporates and attorney assists in drafting by-laws; certain by-laws
are required by the IRS such as how the assets are disbursed if the
organization dissolves operations
2. Group of interested persons come together to form an organization
with a charitable mission
3. Internal Revenue Service Procedures-State procedures
a. Form 1023 (or Form 1023 for very small organizations)
b. Charitable Solicitation License
c. Are all tax exempt organizations charitable in nature? Are
contributions to such organization deductible by donors or
grantors?
C. Reporting requirements by the nonprofit
1. Internal Revenue Service-annually must file an information return Form
990 (Form 990-T, if required)
2. Payroll reporting requirements to IRS, State, Social Security
Information
3. Sales Tax, Property Taxes
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II.
Structure and Operations of a Nonprofit Organization
A. Board of Directors and officers-size and makeup of the Board, terms;
conflict of interest
B. Committee structure-permanent and ad-hoc committees, task forces;
noted in by-laws as drafted by the attorney.
C. Functions of various committees and how often they meet
1. Executive Committee
2. Finance Committee
3. Audit Committee (if large enough to have separate from Finance)
4. Nominating Committee
5. Development Committee
6. Program Committee
7. Others (ad-hoc committees such as project or program specific)
D. Best Practices-policies and procedures and how IRS may evaluate
III.
Relationship of the Board with Management
A. What is the function of the Board? Responsibilities? Potential liability?
B. Drafting a strategic plan to guide the operations in achieving the goals of
the organization (mission/goals/growth/funding/ collaboration)
C. Budgeting-who is responsible for preparing and approving an annual
budget? Can a budget be modified during the year? How is cash flow
evaluated?
D. Must operations be funded from current support and revenue (after Year
1)? Can prior year reserves be used for operations or must reserves be
set aside for other uses? Examples? Who determines this?
IV.
Reporting –Internal and External
A. Who is interested in seeing the financial statements of the organization?
B. Working with a CPA to set up the books of the organization and provide
ongoing guidance
C. How do you select software for bookkeeping and reporting?
D. How do you design a chart of accounts and financial statement format?
This is determined by the nature of the organization and the types of
activities, sources of revenue and support and expenses (program
expenses and support expenses which includes management and general
and fundraising)
E. Sample financial statements are available for review in your materials
F. What is the meaning of the term “net assets”? What is the difference in
unrestricted (including Board Designated), temporarily restricted and
permanently restricted? What if the organization has an Endowment?
G. What is the purpose of an Accounting Policies and Procedures manual?
H. What are internal controls and why are they necessary?
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V.
Other Financial Matters
A. Do all nonprofits need to have an audit of their financial statements
annually? Review? Compilation?
B. Is the Form 990 available for the public to view? Legal requirements and
public disclosure (Charity Navigator/Guidestar)
C. Measuring Success
1. Benchmarking/return on investment
2. Value added to beneficiaries
3. Ability to raise funds for the mission
D. Other topics of interest to the group
Guest Speaker: Lida Coleman, CPA
Manager, Coleman Huntoon and Brown, PLLC
Chapel Hill, NC
Session 3 – January 26
North Carolina Budget Process, Legislative Roles, and Medicaid/Health Choice
 Major Steps to a North Carolina Budget
 NC General Assembly Calendar
 Medicaid and Health Choice
 Medicaid Expenditures
 Medicare
 Health Choice Stakeholders
 Spending Drivers
 Recent Legislation
 Sources of Legislative Fiscal Information
Guest Speaker:
Steve Owen, Senior Analyst
Fiscal Research Division
North Carolina General Assembly
Resources: Health and Human Services Joint Legislative Oversight Committee (2015).
Overview of Medicaid Provider Payments. Power Point presentation by Steve Owen,
Fiscal Research Division. March 19,2015. [Available in the “Resources” link labeled as
Steve Owen Power point presentation on the Sakai course web site]
Session 4 – February 2
Selected Elements of Nonprofit Financial Management
 Accounting and the Organization;
 Purpose of accounting;
 Who are the accounting people and what do they do;
 Financial Statements;
 Accrual nature of accounting;
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The Balance Sheet;
Income statement (Profit and Loss);
Statement of Cash Flows;
What is and what is not in the financial statements and why;
Exercise: creating simple financial statements;
Understanding a non-profit's financial statements;
The board of directors fiduciary responsibilities;
Board members' legal responsibilities;
The finance committee;
Embezzlement and avoiding financial mismanagement.
Guest Speaker:
John Hand, MBA, Ph.D.
Robert March and Mildred Borden Hanes Distinguished Professor
of Accounting
Keenan-Flagler Business School
UNC-Chapel Hill
Preparation for Session 5:
Be acquainted with the following document:
Millonzi, K. (2011). Local Government Budget and Fiscal Control Act, Seventh Edition,
2011. Retrieve from:
https://www.sog.unc.edu/publications/books/local-government-budget-and-fiscalcontrol-act-seventh-edition-2011#!/
Session 5 - February 9
Focus: The Budgeting Process in a Large Nonprofit Behavioral Health
Organization
Objectives: Understand budget terms in a non-profit/government setting; Understand
time lines and components of budget; Be able to explain the budget process
1. North Carolina Local Government Budget and Fiscal Control Act – GS 159
2. What comprises a budget?
a. Revenue vs. expenditures
b. Cost centers, departments, programs, function, etc.
c. Administration vs. service, direct vs. indirect, fixed vs. variable
Cost allocation – different methodologies
d. Planned surplus vs. deficit
e. November-July Budget Timeline: review of reports, funding, community
needs; mid-year projections, special contract review; budget kick off
meetings, administrative and service focus, budgeting for services,
projects or special programs/services for next year, strategic plan; budget
retreat with the board, priorities, presentations from stakeholders; public
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hearing, final budget approved by board, changes implemented; cutting
budget items from the previous fiscal year.
f. Post-July activities: Allocations from the state; Amendment preparation,
and Service realignment.
Continued monitoring
g. Budget to actual
h. Expense trends
i. Contractual performance of providers
j. Administrative budget usage, by departments
k. Need for amendments
l. Cash flow
m. Internal and external reports (IRS Form 990)
3. Final differences between Nonprofits and government
Guest Speaker:
Kelly Goodfellow, MBA
Chief Financial Officer
Alliance Behavioral Healthcare
Session 6 – February 16
Focus: Instruments Utilized for Procuring Health and Human Services: RFAs,
RFIs, Task Orders, Cooperative Agreements, and RFPs
Guest Speaker:
Linda Kendall Fields, M.Ed.
Clinical Assistant Professor
Jordan Institute for Families
UNC School of Social Work
Session 7 – February 23
Financial Management Functions for Licensed Independent Practitioners,
Behavioral Health Companies, and Other Human Service Agencies
 Billing
 Patient Collections
 Monthly Reporting
 Eligibility Verification
 Electron Note Writing and Storage
 Electronic Scheduling
 Credential Paneling Assistance
 Audit Support Services.
Guest Speaker: Dan Zorn, MPA
CEO, THESPARC Network
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Session 8 – March 1
Focus: The Audit—Process, Content, and Implications.
 Selecting the audit firm;
 Functions of the audit;
 Tasks performed by the audit team;
 Internal controls: why, use, documentation roll-up, and role in financial
management;
 CFO-CEO-Board of Directors-Finance Committee, and auditor roles and
relationships;
 Documentation;
 For profit v. not-for-profit similarities and differences
Guest Speaker: Lynn Dikolli, MBA
Adjunct Assistant Professor of Accounting
UNC Keenan-Flagler Business School
Session 9 – March 8
Focus: Fiscal Resource Development; Strategic Planning; Annual and
Membership Campaigns; and Campaign Readiness and Management
Guest Speaker:
Fred Stang, MSW
Senior Associate
Moss +Ross
Chapel Hill, NC
March 15
>>>NO CLASS SPRING BREAK<<<
Session 10 – March 22
Financial Management Utilizing Internal Financial Metrics in Managed Care
 Managed Care Organizations and Functions
 Rate Structures
 Risk-Based Payment Structures
 Risk profiling
 Internal Controls
 Utilization Management
 Debriefing with Providers
Guest Speaker: Lesa Yawn, Ph.D., JD
Partners Behavioral Health Management
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Session 11 – March 29
5:45-7:30: Class will convene to participate in Macro Practice Networking Night on the
Research Triangle Institute campus. Address of the facility TBA.
Session 12 – April 5
Update on North Carolina Medicaid: Financial Management in Medicaid Managed
Care
 National Trends in Healthcare Financing;
 Improving Quality and Controlling Costs;
 Provider Reimbursement Shift to Value Based Billing;
 Medicaid Managed Care Rules;
 Rate Accountability;
 Coverage and Authorization of Billable Services;
 Proposed Medicaid Delivery System;
 Development of the new Medicaid 1115 Waiver;
 Future Roles of Managed Care Organizations in North Carolina;
 Smart Technology and Implications for Financial Management.
Guest Speaker: Tara R. Larson, MA
Cansler Collaborative Resources, Inc.
Session 13 – April 12
Class Member’s presentation of their Financial Health Assessment and
Sustainability Plans
Session 14 – April 19
Simulation of the Financial Management union-management negotiation.
Parking lot topics generated throughout the semester such as depiction of financial data
in the annual report, new models of budgeting and financial management, use of “Big
Data” for identifying financial data, Return on Investment, and visual depiction of
financial data.
Session 15 – April 26
Focus: Class Participant’s Individual Presentations of their “Final”
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OPTIONS FOR THE SEMESTER END “FINAL”
Personal Journal: Maintain a frequently periodic multi-week personal journal with a focus
on your learnings about financial management in which you are involved or one that you
can track with some reliability. Note variables that have to do with your observations about
financial management, strategies, tactics for maximizing financial management, fiscal
resource development, effectiveness, and other relevant parameters.
Questionnaire, Instrument, Research: Conduct a mini-research project related to
Financial management in nonprofit organizations using a self-created instrument or one
available from some other source. Participants’ responses might be written, forwarded to
you via Survey Monkey [tm], or verbally via individual and/or (focus) group interviews.
Conduct your project in accordance with the scientific method: hypothesis, subjects, data,
data analysis, results/conclusions, and implications for leadership styles and other relevant
variables.
Intensive Focus on Selected Variable(s): The literature, videos, and class discussions
will surface a number of interesting variables that relate to financial management. Select
one or a small set of these that appeal to you as the focus of a paper, Power Point, or
other vehicle. Locate additional references (articles via the library, on the Web, etc.),
develop abstracts of the literature, find additional materials (reports, videos), and/or other
means to more fully explicate your focus.
Field Work Venue Financial Management Profile
Based upon access to and spending significant time at your field work setting, identify
characteristics of leadership you wish to track over a multi-week period with an
emphasis on the how the organization manages finances or other parameters of
financing. Document selected aspects of the agency’s policies, operations, development
and/or execution of service programs, clientele, performance, and other related
characteristics.
Personal Intervention: Having observed, experienced, or otherwise had some aspect of
financial management that has impacted you in a manner you would like to change, albeit
even to a minimal degree, develop an intervention strategy, attempt to implement it, and
report on the outcomes. The goal of the intervention is to practice “conscious use of self”
a deliberative way on a specific aspect of financial management.
Financial Management Assessment: Conduct an assessment of factors that are related
to the genesis, evidence of, and solutions for impacting upon financial management and/or
its constructive application, and outcome. Measures of financial management and other
variables should be included. [See available instruments]
Extension of a Previous Class: It may be that in a previous class you encountered
material that is relevant to this class but that you had no opportunity to expand upon in the
previous course. Or, there may be a particular “thread” of interest you have had in financial
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management that is directly relevant to your intellectual interest, goals, or other aspect of
your professional life that relate to this course. Should that be the case, select the
topic…incorporate materials from the previous class…expand upon these…and develop a
more complete profile of the topic.
Academic Paper: Maintaining the best traditions of the academic approach, develop a
typical “term paper” on a subject of your choice. Include the usual elements: Rationale for
topic selection, main ideas, extensive literature review, discussion/presentation, and
conclusions.
Group Project: Rather than embarking on an individual “final”, you may wish to form a
intellectual cabal of some sort amongst your classmates. If you embark on a group project,
there should be a clear differentiation of roles, what each member is expected to produce,
and the rationale for using the group vs. an individual project. The final product must be in
a format that would allow the instructor to know who contributed what aspect so a grade
can be awarded to each individual.
Other Ideas: Free associate on other foci, topics, methods, formats, outcomes, and the
like that you would like to suggest. Contact the instructor to discuss or solicit others’
interest.
Financial Management for Nonprofits Spring 2016