University of North Carolina at Chapel Hill
School of Social Work
Course Number:
Course Title:
Semester:
Day/Time:
SOWO 885 / PUBA 757
Financial Management for Nonprofits
Spring 2008
Tuesdays, 5:00 – 7:50pm
Instructor:
Mat Despard, MSW
Tate-Turner-Kuralt Building—Room 402-E
Office: 962.6467 Home: 419.1390 Cell: 358-7162
despard@email.unc.edu
Website:
Blackboard.unc.edu (see SOWO885.001.SPRING2008)
Office Hours:
Mondays 11am – 2pm; Tuesdays 11am -2pm; and by appointment;
Goal:
To provide participants with the knowledge and skills they need to guide
nonprofit organizations through a variety of important financial decisions and
tasks.
Objectives:
The objectives of the course are as follows:
1. Examine the size, scope, role, subsectors, and distinctive characteristics of the
nonprofit sector.
2. Define financial leadership and examine some of the critical management tasks
related to building organizational capacity.
3. Examine accounting systems and practices to ensure trust in financial data.
4. Evaluate and assess the organizations financial health.
5. Prepare the annual budget.
6. Communicate progress to your audience in an effective manner.
Course Description: This course will help prepare students to provide financial leadership to
nonprofit health, human service and community development organizations. The focus is on
understanding and helping to produce key financial documents, ensuring that organizations
follow sound financial management practices, facilitating financial planning and decisionmaking and communicating about financial matters with staff, board members, volunteers
and other stakeholders. Prior bookkeeping and/or accounting knowledge and skills are not
required nor will the course required more than basic math skills.
Teaching Approach & Course Format: In addition to completing the assigned readings,
students should review powerpoint presentations posted on Blackboard prior to class. Key
points and concepts from these presentations will be reviewed and discussed at the
beginning of class, while the remainder of class time will be devoted to small and large
group learning exercises.
SOWO 885 / PUBA 757 Syllabus
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Communicating with the Instructor: I am committed to responding to emails from students
in a timely manner. However, I make no guarantee that I will read and respond to emails
after 5pm or on weekends. If you wish to ask me questions concerning an assignment,
whether in person or by phone or email, please read the assignment instructions and
grading guide first.
Policy on Accommodations for Students with Disabilities: Students with disabilities that
affect their participation in the course should notify the instructor if they wish to have special
accommodations in instructional format or other factors considered.
Required Text:
Peters, Jeanne Bell, & Schaffer, Elizabeth. Financial Leadership for Nonprofit Executives.
Amherst H. Wilder Foundation: Saint Paul, MN, 2005.
Writing Guidelines
For all written assignments, except where specified, APA style must be used and students
are expected to apply concepts, theory and practice skills from the literature listed in this
syllabus and other scholarly sources, which include academic journals, books, nonprofit
consulting firms or centers, and foundation and government reports. If unsure about what
comprises a scholarly source, please consult the instructor.
To be acceptable, written work must be at a level of professionalism expected of
professional managers. If the instructor deems an assignment does not meet such
professional standards, the student will have one opportunity to revise and resubmit the
assignment.
Please refer to the APA Style Guide and the SSW Writing Guide for information on in-text and
bibliographic citations, attribution of quotes, plagiarism, and appropriate use of assistance
in preparing assignments.
The following web sites provide additional information:
• http://www.apastyle.org/elecref.html (APA Style for material in electronic formats,
5th Ed.)
• http://owl.english.purdue.edu/handouts/research/r_apa.html (general information
about documentation using APA style, 5th Ed.)
• http://www.bartleby.com/141 (e-version of Strunk's The Elements of Style, a
valuable writing resource)
• http://www.unc.edu/depts/wcweb UNC-CH Writing Center, (On line and personal
tutoring available at Phillips Annex, 919- 962-7710)
• http://www.fas.harvard.edu/~wricntr/html/tools.htm The Writing Center (Links to
on-line reference material and many other useful sites for authors)
Honor Code
It is the responsibility of every student to obey and to support the enforcement of the Honor
Code, which prohibits lying, cheating, or stealing in actions involving the academic processes
of this class. Students will properly attribute sources used in preparing written work and will
sign a pledge on all graded coursework certifying that no unauthorized assistance has been
SOWO 885 / PUBA 757 Syllabus
Despard – Spring 2008
2
received or given in the completion of the work. All written assignments must contain a
signed pledge from you stating that, “I have not given or received aid in preparing this
written work.” Credit will not be awarded for work that does not contain this pledge.
Course Requirements & Grading
Students will be evaluated based on the following:
Class Attendance and Participation
Assignment 1: Financial Leadership Analysis
Assignment 2: Exercises:
A) Financial Management Analysis
B) Program Budget
Assignment 3: Nonprofit Financial Health Assessment
15%
20%
25%
40%
The School of Social Work operates on an evaluation system of Honors (H), Pass (P), Low
Pass (L), and Fail (F). A grade of Pass is considered entirely satisfactory. The grade of
Honors—which only a limited percentage of students typically attain--signifies that the work
demonstrates excellence in the development of ideas, application of practice strategies and
critical analysis of issues that affect the ability of nonprofit organizations to fulfill their
missions. The assignments are described below and will be discussed more thoroughly in
class sessions:
Class Attendance and Participation
Students are expected to come prepared for class having done the readings and able and
willing to contribute to our learning experience through active participation in class
discussions and small group exercises and other learning activities. Because this course is
very applied, participation will be evaluated based on active engagement in hands-on,
practical exercises in class. Students will be expected to work through and explain financial
concepts and documents in class.
Any unexcused absences will hurt this part of the grade. If a student has an extenuating
circumstance that prevents them from attending class, it is their responsibility to notify the
instructor before the class by phone or email.
Assignment 1: Financial Leadership Analysis
Objectives:
1) To assess the extent to which nonprofit organizational behaviors
indicate sound financial leadership.
2) To analyze factors that facilitate or inhibit sound financial
leadership in a nonprofit organization.
Due Date:
February 19, 2008
SOWO 885 / PUBA 757 Syllabus
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Requirements:
Students will analyze a nonprofit organization case illustration using
the five principles of financial leadership for nonprofit organizations
indicated in the course text. A paper not to exceed 8 double-spaced
pages should be organized as follows:
Part 1:
Assessment of the five principles (please use headings
for each principle).
Part 2:
Analysis. Identify and discuss facilitative and inhibiting
factors.
Assignment 2: Exercises
Objectives:
1) To identify and articulate sound financial management behaviors of
nonprofit organizations.
2) To demonstrate skill in producing a budget and justification for a
foundation proposal.
Due Date:
A)
B)
Financial Management Analysis: March 4, 2008
Program Budget: March 25, 2008
Requirements:
For each brief written assignment, students will receive a case
illustration of a nonprofit organization and will submit the specific
product in response as follows:
Financial Management Analysis: Based on a case illustration, students
will assess the financial management practices of the organization
based on adherence to commonly accepted accounting practices and
standards that are discussed in course readings and class discussion.
Product is a 4 to 6 page double-spaced paper.
Program Budget: Based on a case illustration of a human service
organization that wishes to apply for a foundation grant, students will
develop a program budget that corresponds to information concerning
the program that the organization intends to implement. This will
require students to research and understand both personnel and nonpersonnel costs associated with the described program. Product is a
program budget presented in a tabular or spreadsheet format and
budget justification appropriate for a foundation grant proposal.
SOWO 885 / PUBA 757 Syllabus
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Assignment 3: Nonprofit Financial Health Assessment
Objectives:
1) To analyze and comprehend various financial documents of a
nonprofit organization.
2) To assess the financial health of a nonprofit organization.
3) To articulate and justify strategies and tactics a nonprofit
organization can adopt to improve its financial health.
Due Date:
April 15 or 22 (presentations)
April 22, 2008 (paper)
Requirements:
Students will work individually or in teams of two or three (depending
on the number of available and willing nonprofit organizations) and choose a nonprofit
organization or have one assigned to them to study concerning its financial health and
contributing factors. Students are free to choose any nonprofit organization from which they
can secure the necessary information to complete the assignment. The actual identity of
the organization should be kept confidential as the Board of Directors and staff may not
wish for details of its financial condition to be disclosed in the classroom. To do so, students
may alter certain information about the organization that might reveal its identity.
The paper should be comprised of three parts:
1) Assessment of Financial Health: The assessment of financial health should be made
using the Financial Health Assessment in the back of the required text. To complete
this assessment, students will need to secure, examine and comprehend certain
financial documents such as balance sheets, 990s and statements of functional
expenses and may also need to obtain data by interviewing executive staff members.
2) Analysis: Internal and external factors related to key findings of the assessment
should be identified and described. Internal factors are things within the
organization’s control, such as its resource development strategy and tactics, while
external factors are phenomenon beyond the organization’s control such as the
changed funding priorities of the local United Way.
3) Recommendations: Based on course readings and class discussions,
recommendations for how the organization can improve its financial health should be
made. For example, a recommendation could outline the steps an organization could
take to improve its internal control mechanisms.
Student groups will make presentations during class on April 15 & 22 as part of this
assignment. Class presentation dates will be randomly assigned. Presentations should be
in the format of a presentation before the Board of Directors (the class) of the organization
you chose for the assignment. Because you have limited time to present, you should be very
concise and ensure that you hit your key points in the three sections described above. You
may use handouts for your presentation if you wish. A written paper (no page requirement
or limit) is due on April 22, 2008, the last class session.
SOWO 885 / PUBA 757 Syllabus
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CLASS SCHEDULE
Note: “TEXT” refers to readings from the required text for this course; BB = Blackboard; UL =
University Libraries (online).
Class 1
January 15
Objectives
Introduction, Nonprofit Sector Overview
•
•
•
Understand the size and scope of the nonprofit sector
Identify key trends concerning the development of nonprofit
organizations
Appreciate the importance of sound financial management in
sustaining the missions of nonprofit organizations
Readings:
None
Class 2
January 22
Objectives
Financial Leadership in Nonprofits
•
•
•
Readings:
Describe the responsibilities of providing financial leadership
Identify the respective roles of CEO, CFO, Treasurer, Finance
Committee and Board of Directors
Explain conflict of interest
TEXT: Introduction (pp. 1-5)
Chapter 1: Defining Financial Leadership (pp. 7-15).
Internal Revenue Service (2006). Instructions for Form 1023 (read
Appendix A - Sample Conflict of Interest Policy, pp. 25-26), found at:
http://www.irs.gov/pub/irs-pdf/i1023.pdf
Jennings, D. (2006). Necessary evil: The business of nonprofits. Independent
Weekly (September 13, 2006). Found at:
http://www.indyweek.com/gyrobase/Content?oid=oid%3A36745
Thomas, M.S. (2006). Managing the finances of nonprofit organizations,
Chapter 12. in R.L. Edwards & J.A. Yankey (Eds.), Effectively
managing nonprofit organizations, (read pp. 255-257). (BB)
Class 3
January 29
Objectives
Financial Management Systems, Part 1
•
•
•
•
Describe financial-related legal obligations of tax exempt status
Identify elements of nonprofit accounting systems and key practices
Articulate the difference between cash and accrual based accounting
Define major accounting standards (FASB 116, 117)
SOWO 885 / PUBA 757 Syllabus
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Readings:
TEXT: Chapter 2: Getting Financial Data You Can Trust (pp. 19-35).
Alliance for Nonprofit Management. (2003-2004). What are the elements of
an accounting system? Found at:
http://www.allianceonline.org/FAQ/financial_management/
Anthony, R.N. & Young, D.W. (2005).Financial accounting and financial
management (Chapter 19). In R.D. Herman & Associates (Eds.)
(2005). The Jossey-Bass handbook of nonprofit leadership and
management (2nd edition). San Francisco: Jossey-Bass. (BB) (* read
pp. 466-477)
Young, D.W. (2005). Management accounting (Chapter 20). In R.D. Herman
& Associates (Eds.) (2005). The Jossey-Bass handbook of nonprofit
leadership and management (2nd edition). San Francisco: Jossey-Bass.
(BB) (* read pp. 513-528)
Class 4
February 5
Objectives
Financial Management Systems, Part 2
•
•
•
Readings:
Describe financial management policies and procedures, including
internal control processes
Understand the audit process including federal A-133 audits
Identify principles of Sarbanes Oxley Act applicable to nonprofit
organizations
Alliance for Nonprofit Management. (2003-2004). Please read:
What should our chart of accounts include?
What is an audit? Should we get an audit?
What is an A-133 audit? How do we prepare for an audit?
http://www.allianceonline.org/FAQ/financial_management/
Board Source & Independent Sector. (2006). The Sarbanes-Oxley Act and
implications for nonprofit organizations. Retrieved on January 2, 2007
from: http://www.boardsource.org/clientfiles/Sarbanes-Oxley.pdf
(BB)
Nonprofit Financial Center. (2000). Sample financial policies and
procedures handbook. (BB)
Thomas, M.S. (2006). Managing the finances of nonprofit organizations,
Chapter 12. in R.L. Edwards & J.A. Yankey (Eds.), Effectively
managing nonprofit organizations, (read pp. 269-273). (BB)
SOWO 885 / PUBA 757 Syllabus
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Classes 5-7
Feb. 12, 19,
26
Objectives
Assessing Financial Health, Part 1
* Assignment 1 – Financial Leadership Analysis Due Feb. 19*
•
•
Readings:
Understand and explain statements of financial position, activities,
functional expenses, and cash flows
Understand and calculate key measures of nonprofit financial
performance
TEXT: Chapter 3: Assessing Your Organization’s Financial Health
Compass Point Nonprofit Services. (2006). How do we interpret our
financial statements? Found at:
http://www.compasspoint.org/askgenie/details.php?id=62 OR
http://www.allianceonline.org/FAQ/financial_management/
Froelich, K. (1998). To profit, or not to profit? Nonprofit Management and
Leadership, 9(2): 201-204. (BB)
Thomas, M.S. (2006). Managing the finances of nonprofit organizations,
Chapter 12. in R.L. Edwards & J.A. Yankey (Eds.), Effectively
managing nonprofit organizations, (read pp. 257-265). (BB)
Class 8
March 4
Objectives
Financial Planning, Part 1
* Assignment 2A: Financial Management Analysis Due *
• Draft organization and program annual operating budgets
• Draft a capital budget
• Describe the budgeting process within a nonprofit organization
Readings:
TEXT: Chapter 4: Financial Planning
Alliance for Nonprofit Management. (2003-2004). How do we prepare a
budget? Found at:
http://www.allianceonline.org/FAQ/financial_management/
CompassPoint Nonprofit Services (2006). How can we allocate indirect costs
to programs? Retrieved on January 10, 2008 from:
http://www.compasspoint.org/askgenie/details.php?id=60
Little, B. (2001). Analyze your finances to ensure your mission. Nonprofit
World, 19(5): 31-32. (UL)
Rotondi, A. (1997). Create a budget that works for you. Nonprofit World,
15(4): 46-51. (UL)
Thomas, M.S. (2006). Managing the finances of nonprofit organizations,
Chapter 12. in R.L. Edwards & J.A. Yankey (Eds.), Effectively
SOWO 885 / PUBA 757 Syllabus
Despard – Spring 2008
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managing nonprofit organizations, (read pp. 266-269). (BB)
*** NO CLASS ON MARCH 11 – SPRING BREAK ***
Class 9
March 18
Objectives
Financial Planning, Part 2
Readings:
Alliance for Nonprofit Management. (2003-2004). What is cash flow and how
should we manage it? and How much cash should we hold in reserve?
Found at:
http://www.allianceonline.org/FAQ/financial_management/
•
•
Describe how to contain costs without subverting mission
Manage cash flow
Blackbaud. (2004). Financial management of not-for-profit organizations
(White Paper). Retrieved January 13, 2008 from:
http://www.blackbaud.com/files/resources/whitepapers/
WP_FinancialManagementForNPO.pdf
CompassPoint Nonprofit Services (2006). How should we invest our shortterm cash balances? Retrieved on January 10, 2008 from:
http://www.compasspoint.org/askgenie/details.php?id=66
Rosenberg, B. (2004). Cutting costs. The Nonprofit Times ( April 15, 2004).
Retrieved January 13, 2008 from:
http://www.nptimes.com/fme/apr04/fme_2.html
Class 10
March 25
Objectives
Resource Development Strategies, Part 1
* Assignment 2B – Program Budget Due *
• Articulate the relationship between resource development and
financial planning
• Describe the opportunities and risks associated with social enterprise
and other alternative revenue generation strategies
• Identify state solicitation laws and regulations
Readings:
Alliance for Nonprofit Management. (2003-2004). What risks are
associated with nonprofit fundraising? Found at:
http://www.allianceonline.org/FAQ/risk_management/
Massarsky, C.W. (2005). Enterprise strategies for generating revenue
(Chapter 18). In R.D. Herman & Associates (Eds.) (2005). The
Jossey-Bass handbook of nonprofit leadership and management (2nd
edition). San Francisco: Jossey-Bass. (BB)
SOWO 885 / PUBA 757 Syllabus
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Miller, C. (2004). Gift horse or Trojan horse? A thorough physical is critical.
Reprinted from the Nonprofit Quarterly, Summer 2004: 20-26. (BB)
Class 11
April 1
Objectives
Resource Development Strategies, Part 2
•
•
Readings:
Understand opportunities and challenges associated with securing
government contracts
Explain how to create and sustain endowments and other forms of
capital investment
Overholser, G. (2007). Patient capital: The next step forward? NFF Capital
Partners. Retrieved January 13, 2008 from:
http://www.nonprofitfinancefund.org/docs/Patient%20Capital%20Final.pdf
Smith, S.R. (2005). Managing the challenges of government contracts
(Chapter 15). In R.D. Herman & Associates (Eds.) (2005). The JosseyBass handbook of nonprofit leadership and management (2nd edition).
San Francisco: Jossey-Bass. (BB)
Class 12
April 8
Objectives
Communicating Financial Data
Readings:
TEXT: Chapter 5: Communicating Progress
•
•
•
Complete a Form 990
Create the financial portion of an Annual Report
Articulate strategies for communicating financial data to stakeholders
Cohen, T. (2005). Financial disclosure takes root, although some still balk.
The Nonprofit Times (July 1, 2005). Retrieved from:
http://www.nptimes.com/Jul05/npt3.html
Independent Sector (2007). IRS releases redesigned Form 990. Retrieved
January 4, 2008 from:
http://www.independentsector.org/programs/gr/Draft_Form_990.htm
Masaoka, J. (2006). Are there special things I should look for when
completing a Form 990? Compass Point Nonprofit Services. Found at:
http://www.compasspoint.org/askgenie/details.php?id=6
Swords, P., Bjorklund, V., & Small, J. (2005). How to read the IRS Form 990
& find out what it means. Nonprofit Coordinating Committee of New
York, Found at: http://www.npccny.org/Form_990/990.htm#no2
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Class 13
April 15
Readings:
Class Presentations
Class 14
April 22
Readings:
Class Presentations, Course Review and Evaluation
* Assignment 3 – Nonprofit Financial Health Assessment Due *
None
None
FINAL EXAM – April 29 4pm (if necessary – see note above in Assignment 3 description)
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