Introduction
The financial operations of nonprofit organizations differ from those of commercial enterprises. Nevertheless, the leaders of both profit and nonprofit organizations have to understand how these entities operate in order to maintain their financial sustainability. The following assessment will analyze the international organization called Médecins Sans Frontières or Doctors Without Borders (MSF). Founded in 1971, MSF continues to be one of the leading organizations working in the healthcare field and helping people in various parts of the world to recover from wars and human-made or natural disasters (“Founding,” n.d.). MSF provides its annual reports, financial statements, and 990 forms on its website. The most recent documents, such as the 2016 annual report and tax exemption forms from 2014, 2015, and 2016 are used as the basis for the following analysis.
Organization and Mission Description
The mission of MSF has stayed consistent over the years of its existence. The organization was initially created as an outcry of healthcare professionals who wanted to provide assistance to war and disaster victims located in areas where access to healthcare was limited or absent (“Founding,” n.d.). In the following years, MSF continued to follow the ideology that people’s health and well-being were more important than their race, gender, and political or religious beliefs. Currently, MSF considers itself an organization that strives to provide humanitarian help, especially healthcare, to those people who need it the most, including communities and nations suffering from military conflicts, natural disasters, and human-made issues such as famine or pollution. The core of the mission is to ensure that all people have access to healthcare regardless of their environment or personal affiliations.
MSF is an organization with offices in many countries, the main international center of which is situated in Switzerland. However, a rather significant portion of all operations is centered in the US, which is addressed in the organization’s annual report (MSF, 2016). All forms and documents investigated further are taken from the US branch of the organization because they are made easily accessible to the public by the organization. It should be noted that this nonprofit is focused on maintaining its financial independence from governmental or commercial entities in order to stay unaffected by international, regional, and societal restrictions (“Founding,” n.d.). Thus, the budget of MSF is largely based on donations and voluntary help. While the organization in question is stationed in the US, its activities span across national borders and involve a number of countries and regions.
Budget and Financial Status Overview
First of all, one can look at the financial situation of MSF using the organization’s last annual report, which covers the year 2016. During this year, MSF-USA provided assistance to 51 out of 71 countries cared for by the international MSF (MSF, 2016). These include 26 projects in South and North America, 271 projects in Africa, 27 projects in Europe, 74 projects in the Middle East, and 60 projects in Asia and the Pacific region (MSF, 2016, pp. 18-19). The total amount of money spent by the organization in 2016 exceeded $300,000,000 (MSF, 2016). According to the report, this sum included a credit that was provided by the fund that closed in 2016. These spendings were directed towards the projects mentioned above.
It is notable that the organization’s financial status heavily relies on support from other people. The multilayer donation system created by the organization includes foundations, corporations, and individuals. Interestingly, the prevalent part of all donations comes from individual supporters, who are responsible for nearly 90 percent of all support (MSF, 2016). On the other hand, foundations and businesses divide the remaining 11 percent almost equally (MSF, 2016). Aside from monetary support, MSF also receives gifts and voluntary assistance. As stated in the report, the main stable source of revenue for the organization is the system of “multiyear commitments” (MSF, 2016, p. 47). Such annual pledges become a major part of the budget because of their consistency and commitment. While analyzing the financial part of the report, one can see that the amount of donations in 2016 has increased in comparison to the previous year. Other types of revenue also changed, as noted in Table 1. Interestingly, the main part of assets was acquired in the form of cash, although some receivables and other assets were also present.
Table 1. The Comparison of MSF Revenues in 2015 and 2016 in $US. (MSF, 2016, p. 81).
The expenses of the organization in 2016 in comparison to 2015 have increased as well. This can be explained by the fact that the number of programs initiated in 2016 was higher than that in 2015. As shown in Table 2, a large part of all expenses is taken up by the program services (MSF, 2016). The analysis of 990 forms from 2014, 2015, and 2016 shows that the organization’s expenditures increased drastically between 2015 and 2016, while the change between 2014 and 2015 appears to be minor (“Form 990,” 2014; “Form 990,” 2015; “Form 990,” 2016). The main difference exists in the expansion of grants that go towards the MSF’s programs. Employees’ pay shows a minor change which does not affect the final situation significantly. The 990 forms also show that while the growth of expenses in the last documented year is substantial, the revenue change is not as visible. This development may reveal the instability of the current situation.
Table 2. The Comparison of MSF Expenses in 2015 and 2016 in $US. (MSF, 2016, p. 81).
Insights
One can see that MSF’s spending has increased drastically in the last reported years in comparison to its revenues. It is possible to assume that this difference was caused by the growing number of crises prompted by both natural and human-made disasters. This is an environmental factor affecting the financial status of the organization (Prentice, 2016). Its internal operations have not changed significantly, as can be seen in the provided reports. Moreover, the amount of public support and the effectiveness of fundraising efforts have only increased through the years. However, the uncertainty of donating funds and companies destabilized the organization and possibly led to it having a loss of income in 2015 (MSF, 2016; Zietlow, Hankin, Seidner, & O’Brien, 2018). MSF was able to improve all types of revenue the following year, showing that such incidents do not have a substantial impact on the budget.
The annual pledge that the nonprofit created for its commercial and individual supporters seems to be the most stable source of income for all operations. Finally, it can be noted that the organization manages to remain stable without governmental support. As Zietlow et al. (2018) note, the majority of New York nonprofit organizations rely on the government for more than 90 percent of all revenues. This comparison shows that MSF can sustain itself without the need to reevaluate its views on governmental restrictions.
References
Form 990 – Return of organization exempt from income tax. (2014). Web.
Form 990 – Return of organization exempt from income tax. (2015). Web.
Form 990 – Return of organization exempt from income tax. (2016). Web.
Founding. (n.d.). Web.
Médecins Sans Frontières/Doctors Without Borders [MSF]. (2016). 2016 US annual report. Web.
Prentice, C. R. (2016). Understanding nonprofit financial health: Exploring the effects of organizational and environmental variables. Nonprofit and Voluntary Sector Quarterly, 45(5), 888-909.
Zietlow, J., Hankin, J. A., Seidner, A., & O’Brien, T. (2018). Financial management for nonprofit organizations: Policies and practices (3rd ed.). Hoboken, NJ: John Wiley & Sons.