NEW YORK UNIVERSITY ROBERT F. WAGNER GRADUATE
P11.2142 FINANCIAL MANAGEMENT FOR NONPROFIT AND
NGO ORGANIZATIONS
Instructor: David MacDougall
dmd2028@nyu.edu
Fall 2008
DESCRIPTION
This course addresses the practical challenges of managing financial risk and reporting in
nonprofit and nongovernmental organizations. Topics include all major areas of financial
management with a special focus on problem solving and decision making. Class
exercises strengthen the student’s ability to assess financial issues and to concisely
communicate risks and opportunities to stakeholders.
PREREQUISITES:
Coursework: P11.1021
Technology: The course requires effective use of Word and Excel (or similar
professional software). I expect that students are familiar with Excel
formulas (absolute and relative) and functions. I strongly recommend that
students who do not already have office software purchase the suite of
Microsoft office products at the NYU computer store where they are
available at a deeply discounted price.
Required Texts
ƒ Zietlow, Hankin, Seidner, Financial Management for Nonprofit Organization, John
Wiley & Sons Inc, New York 2007
Optional Texts
ƒ Steven A. Finkler, Financial Management for Public, Health, and Not-for-Profit
Organizations, Prentice Hall, Second Edition 2005 (used in P11.1021 core finance
course).
ƒ Dropkin and Hayden, The Cash Flow Management Book for Nonprofits Jossey Bass,
2001
ƒ Businessweek - http://www.businessweek.com/
ƒ The Economist – A wonderful news magazine with a focus on economics and
finance. https://www.economistsubscriptions.com/searchstudent/us/
Grading
• 30% group project
• 35% of your grade will be based on the homework assignments.
• 35% on the final exam.
Group Project
The group project consists of an in-depth analysis of a nonprofit or NGO. The ultimate
product of the analysis will be a memo (4,000 to 5,000 words) and a 30-minute class
presentation addressing financial challenges and policies. See the attached sheet
describing key elements of the project.
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Final Exam
• The take-home final exam will consist of a few short answer questions and an
analysis of nonprofit facing significant challenges.
• Students will be required to demonstrate a thorough mastery of financial terms.
COURSE OUTLINE AND TOPICS
Class 1 – Introduction
Introduction to the course and instructor. The class includes a discussion of standard
office software and professional communication.
Assignment:
Student Survey - submit by Sunday
Spreadsheet:
Exercise 1 (Basic formatting, formulae and functions)
Class 2 – Overview of nonprofit organizations and non-governmental organizations
With over one million nonprofits in the US, students need to understand the regulatory
landscape and legal structures. The class deals with the nature of nonprofit and nongovernmental organizations. It describes the process for creating a nonprofit and the
significance of 501(c)(3) status. The class will include a discussion of crucial role of the
board.
Reading:
Optional Reading:
Spreadsheet:
Chapter 4, 4A, 4B
Claire Gaudiani Chapter 1
Projecting financial performance and communicating implications
Class 3 – Role of the CFO (date may change depending on availability of speaker)
A chief financial officer with international and domestic expertise will discuss the
responsibilities and challenges of working effectively as a CFO.
Reading:
Assignment
Chapter 5, 5A
The Nonprofit CFO – Bridgestar (on Blackboard)
None
Class 4 - Financial Statement Analysis and the 990 (part 1)
A review of basic nonprofit financial statements and GAAP. Issues include US and
international accounting standards and the Federal form 990
Reading
Articles
Review
Optional Reading:
Assignment:
Chapter 6, 7, 7A, 7B
WSJ on Change in GAAP
WSJ on International vs. Domestic accounting Standards
Women’s World Banking 2006 Audit
Baspana 2004 Audit
Finkler, Chapters 10 and 12
Balance Sheet Ratios
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Class 5 - Financial Statement Analysis and the 990 (part 2)
Continued review of basic nonprofit financial statements and GAAP. The class will
include a discussion of benchmarking and ratio analysis.
Project
Assignment:
Submit HARD COPY of the audited financials and a brief memo
describing your chosen organizations, why you chose it and the
sources of information you have identified.
Statement of Activity Ratios
Class 6 - Liquidity
Maintaining adequate liquidity is one of the key responsibilities of a financial manager.
This class addresses the importance of liquidity management through the cash flow
budget. It will also include a discussion of the challenges of determining liquidity from
audited financial statements.
Reading:
Optional Reading:
Assignment:
Chapter 2, 11
Finkler 6
Create cash flow budget based on Exhibit 6.4 in Dropkin and
Hayden (See Blackboard)
Class 7 - Debt
Borrowing can create opportunities to improve efficiency and effectiveness. It can also
place an institution in financial jeopardy. The class will review the basics of borrowing
and associated risks.
Reading:
Assignment:
Chapter 10
Debt Burden
Class 8 – Investments and Endowment Management
Many nonprofit institutions benefit from endowments. This class will outline the issues
including endowment spending policies, investments and projecting endowment income.
Reading:
Assignment:
Chapter 12
Expansion of church operations
Class 9 - Fund Raising
With the increasing number of nonprofits in the US, competition for funding has grown
rapidly. Virtually everyone in a nonprofit, especially the CFO, must understand the
basics of the fundraising effort. The class will provide an overview of fund raising for
nonprofit organizations in the US. Topics include: annual campaign, capital campaign,
telemarketing, direct mail, special events, planned giving, foundations grant making and
the vital role of board members.
Reading:
Assignment
Seltzer 6, 15
Review you projects fund raising strategy
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Class 10 - Budgeting
The class reviews the annual budget process, cost allocation and capital budgeting.
Reading:
Assignment:
Chapter 8 , 9
TBA
Topic 11 - International Finance and Exchange Rates
An overview of risk management including fixed and floating exchange rates and ways to
manage foreign exchange risk. A guest lecturer will discuss foreign exchange hedging
techniques.
Reading:
Assignment:
TBA
TBA
Class 12- Internal Control & External control, Sarbanes Oxley
The class will track the causes of the implementation of the Sarbanes-Oxley law. We
will discuss of Sarbanes Oxley and how it might affect nonprofit organizations.
Reading:
Assignment:
Chapter 14
Reading on Enron
None
Class 13 & 14 - Group Presentations
Review of Key topics
Groups will provide 30-minute presentations on their organizations.
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Project Outline
Group Project
The group project consists of an in-depth analysis of a nonprofit or NGO. Students
interested in international issues should work with the instructor to identify an
appropriate international institution. The ultimate product of the analysis will be a memo
and a 30-minute class presentation discussing the organization, its financial challenges
and policies. Significant milestones in the group project will be:
•
•
•
•
Create groups of 3 by the 3rd class.
By the fifth class groups submit a brief memo describing their selected organization
along with a copy of the most recent audited financial statements or 990. Students
must be careful to choose an organization that will provide adequate information.
In the next week groups schedule a follow-up 1-hour meeting with me for a
preliminary discussion of the organization.
Students will submit the final report by the 10th class and will prepare a group
PowerPoint presentation in the last classes of the semester.
Please feel free to ask me about the project. I will make the answers available to all
students on Blackboard
Memo (5,000 words maximum)
The memo should provide enough information to understand the organization, its mission
and its financial challenges. Topics should include: historic and current financial
performance, budgeted and projected financial performance, mission statistics and
effectiveness. The memo should focus on your analysis and conclusions
While your memo will surely include descriptive information, your conclusions are the
key result of the project.
As a part of your analysis remember to review the organizations 990. Familiarize
yourself with the 990 by completing the tutorial. “How to Read the 990 Form”
http://www.npccny.org/Form_990/990.htm
Spreadsheet
Create a spreadsheet that analyzes the financial performance of the organization along
with its mission statistics. The spreadsheet should have 3 to 5 years of history. You may
use as many ratios as you wish. However you should use no more than 5 ratios as keys
to understanding the dynamics of the organization. You should identify appropriate
benchmarks for your ratios.
PowerPoint
No more than 15 PowerPoint slides should accompany your presentation. The slides
should highlight your opinions and conclusions. Students must show good
communication skills in the class presentation: speak clearly, be concise and stay within
the time limit. Students should practice the presentation before doing it in class.
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Distribution & Class Feedback
Your memo is due by the 10th class. I will post your report and spreadsheet in
Blackboard. Your fellow students will be required to read the documents in preparation
for your presentation. I urge all students to participate in the discussion that will follow
the presentations in class.
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Guidelines for Homework and Final Examination
In the course I try to establish a work-like environment. Consequently all written
assignments must be in memo format providing concise conclusions and practical
solutions. Students must submit all Homeworks by e-mail ON THE TUESDAY
FOLLOWING THE THURSDAY CLASS. Students must follow the following
conventions when submitting homework:
•
File Names - last name and then a concise description of the homework. For
example: Jackson – Homework 1.xls
•
Written work
o Submitted in a form easily imported to Word 2003
o Written work should:
ƒ Focus on conclusions. A simple recitation of facts is not useful
ƒ Be single-spaced and submitted in a memo style.
ƒ Use Times New-Roman 12 font
ƒ Include page numbers and your name on every page in a footer
ƒ Do not exceed the word count provided with each assignment.
ƒ Longer is not better.
ƒ Use graphs and tables.
•
Excel
o Submitted in a form easily imported to Excel 2003
o Each page must print neatly on 8.5x11 paper. Include your name, file
name and page number on each page
o All numbers must be properly formatted. Improperly formatted
spreadsheets will be returned to students and marked as late.
•
PowerPoint presentations
o Submitted in a form easily imported to PowerPoint 2003
o Presentations should be concise with appropriate use of graphs and tables.
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