A non profit institution can simply be defined as an organization that is not after making money but after improving the quality of the human life. Obviously, to achieve this, these organizations have to spend money which has been donated. That has brought some series of challenges that would not have otherwise been present, in a profit making firm. Unlike profit oriented organizations, where they balance their cash books at the end of the year, non-profit organizations have to check each and every aspect.
This is quite a load of work, considering that the organizations are funded by donors who often demand to know how their money is spent. On top of that, monetary policies in non-profit organizations are ever changing. For example, nowadays they are required to consider decrease in value of fixed property (Solnik, 2002 ).
One of the common ethical codes in non profit organizations is that, no single person is supposed to profit from the institution. That means for these organizations to continue running, they have to depend on volunteers and donations. People are supposed to offer their services or commodity to the organization for free.
In one way or the other, that goes against human nature. Not adhering to this principle, of free giving, has resulted to the once too often non ethical cases. Workers in the non-profit organizations are supposed to be honest. Honesty is usually easier said than observed. It is impossible to measure how honest a manager is when he is estimating the annual expenditure. If the manager under estimates the amount of funds needed, then the organization’s projects may fail. If he over estimates, he will be considered unethical.
It might be that by over estimating, the organization will always have the funds needed. In circumstances like this, being brutally honest might be wrong for the organization. Situations like this, usually poses great ethical dilemma to non profit organizations (White, 2010).
Non-profit organizations are required to reveal their dealings to the public since they use publically raised money. Disclosure regulations are meant to protect donors by convincing them that their money is well spent. Financial disclosure is the one that attracts a lot of interest from the public (Phelan & Desiderio, 2007). Non-profit organizations are required by the IRS to provide full disclosure of their finances. They display all their financial expenditure in their websites so that everyone can see.
Voluntary disclosure law allows the public to know about all the voluntary services being offered. It enables the public to know which services have been provided on voluntary basis and which have been paid for. Disclosure of the project plan and implementation helps the public to be aware of the exact operations of the organization. This way, the donors have the opportunity to monitor the organization and find out how efficient it is (Svara, 2006).
These disclosure laws have in many ways helped in monitoring the individuals in the organization, especially morally. The great transparency present in the organization leaves no room for emergence of scandals.
These laws also make it easier for the donors to trust the managers of these organizations, since the laws allow the involvement of the donors in the operations to some extent. When the managers are aware that they are under the public scrutiny, they are bound to produce impressive results at the end of the year. Disclosure laws have improved the operations of non-profit organizations, and have made them serve the public more efficiently (Silverman, 2008).
References
Phelan, M. E., & Desiderio, R. J. (2007). Non-Profit Organizations Law and Policy, (American Casebook Series) (American Casebooks). Seattle: West Group.
Silverman, M. G. (2008). Compliance Management for Public, Private, or Non-Profit Organizations . New York: McGraw-Hill.
Solnik, C. (2002 , February 1 ). Not-for-profits by the numbers. Web.
Svara, J. H. (2006). The Ethics Primer for Public Administrators in Government and Nonprofit Organizations . Chicago: Jones & Bartlett Learning.
White, D. (2010). The Nonprofit Challenge: Integrating Ethics into the Purpose and Promise of Our Nation’s Charities. New Jersy: Palgrave Macmillan.