Abstract
To report finances and generate the financial data required to improve performance, Florida Nonprofit Alliance (FNA)implements specific economic strategies, which are the subject of this essay. First, it offers an analysis of the FNA’s financial reporting practices, funding sources, and accounting procedures. The study then examines the organization’s economic situation, including trends in revenue and expenditures, assets and liabilities, and debt. In conclusion, this section discusses how to effectively communicate these conclusions and collaborate with qualified tax, financial, and legal consultants.
Accounting Processes
According to the established rules and authorized methodology (Neumayr et al., 2015), nearly all incoming funds are recorded in the target financing account and under the balance sheet item “target financing and revenues” in the accounting of the Florida Nonprofit Alliance (FNA). The association bases its operations on estimates of income and expenses, which also serve as the framework for organizing accounting (Moritz, 2014). This document is compiled annually by The Florida Nonprofit Alliance (FNA) based on estimated amounts of receipts and spending directions for available and received funds.
Types of Funds & Financial Reports
Entrance and membership fees, targeted income from legal companies and people, including those from abroad, as well as income from non-operating operations and voluntary contributions are the sources of funding for FNA’s activities (Kearns et al., 2014). There is no unified form of income and expenditure estimates approved at the staff level and mandatory for use by all nonprofit organizations (Weikart et al., 2012). Therefore, the form of the forecast, the composition and structure of the indicators, as well as the system of grouping and detailing the data in the financial reports, were developed by FNA itself, based on the tasks set (Foster et al., 2009). At the same time, each line of the estimate in the financial report is confirmed by a corresponding calculation or an exculpatory document.
Financial Statements
FNA’s financial results are presented in a standard format approved by the Ministry of Finance. When generating data by year, FNA followed the principle that later data are considered more reliable when the figures in the reporting changed (Singh & Mofokeng, 2014). Some indicators in the FNA financial statement have been adjusted to eliminate apparent formal inconsistencies in the reporting indicators (Neumayr et al., 2015). For example, this is evidenced by the Error and Inaccuracy cell in the report, showing the percentage of discrepancy (FNA, 2021). It occurs when the sum of the lines differs from the final value due to a typo (Mayer et al., 2014). FNA applies the adjustment using a specially developed algorithm (FNA, 2023).
Fiscal Health
Revenue
To carry out its mandated operations as a non-profit organization, FNA receives the bulk (74%) of its funding from voluntary contributions and donations from individuals, businesses, and organizations (FNA, 2021). Another primary source of revenue for FNA (18%) is targeted income from individuals and legal entities that enter organizations through charitable and other trust funds to implement specific programs (FNA, 2021). Funds from the state budget account for 7% of FNA revenue and are allocated for the implementation of individual projects, programs, and activities (FNA, 2021).
Expenditure Trends
FNA’s business expenses include production and sales losses. It is not permitted to use generalized formulations in the primary confirmation of expenses in FNA accounting (Moritz, 2014). Specifying the descriptions of payments allows for quick distribution of amounts to the corresponding sub-accounts (Carroll & Stater, 2009). All expenditure trends are justified, as citizens’ appeals for assistance, orders, letters from organizational members, and requests for the distribution of funds are attached to the annual reports.
Assets
As of December 31, 2021, the organization’s total assets were $114 million. This is an increase of $17.8 million (18.6%) from the previous year (FNA, 2021). As of December 31, 2021, FNA’s net assets totaled $68 million (FNA, 2021). FNA generated a profit of $1 million as a result of its activities in 2021. This represents a 52.2% reduction from 2020 (FNA, 2021).
Liabilities
As a non-profit partnership, FNA has no obligation to pay taxes and other mandatory payments, including no taxable property. The organization has received certificates from the pension fund confirming the absence of arrears on mandatory payments (Kearns et al., 2014). Property given by a non-profit partnership’s members becomes the property of the partnership (Moritz, 2014). The non-profit partnership’s members are not responsible for any of its debts, and the non-profit partnership is not responsible for its members’ debts. The organization’s liabilities include leased buildings, for which utilities are included in the rental payment, as well as employee benefits (FNA, 2021).
Debt Trends
The amount of debt available to FNA as an economic entity is the determining criterion for assessing its financial stability. The main requirement for organizations participating in grant competitions is always the absence of overdue debts (Mayer et al., 2014). In particular, the fact that there is currently debt equivalent to four months of rent weakens the faith that the state, suppliers, consumers, and other organizations have in FNA, damaging its reputation (FNA, 2023).
Communicating Findings & Collaborating with Consultants
At this stage, FNA’s activities, in light of the implementation of national projects, undoubtedly require scientific attention and reflection. It is necessary to communicate findings in a statistical table to facilitate the development and functioning of the FNA, thereby overcoming both formal difficulties and material risks. To support the organization’s financial position, I need to consult with professional tax, economic, and legal advisors.
The services of a tax consultant are necessary to extend the documentation regarding the possibility of FNA as a non-commercial organization, thereby avoiding mandatory payments. The services of a financial consultant are required to distribute revenues and prevent an increase in debt in a proper manner. With the help of a legal consultant, it is necessary to resolve the current issues with overdue debt payments. All these measures together will help FNA continue to exist and carry out socially beneficial activities.
References
Carroll, D. A., & Stater, K. J. (2009). Revenue diversification in nonprofit organizations: Does it lead to financial stability? Journal of Public Administration Research and Theory, 19(4), 947–966.
Florida Nonprofit Alliance. December (2021). COVID-19 effects on Florida Nonprofits.
Florida Nonprofit Alliance. (2023). 501 (c3) information.
Foster, W. L., Kim, P., & Christiansen, B. (2009). Ten nonprofit funding models. Stanford Social Innovation Review, 7(2), 32–39.
Kearns, K. P., Bell, D., Deem, B., & McShane, L. (2014). How nonprofit leaders evaluate funding sources: An exploratory study of nonprofit leaders. Nonprofit and Voluntary Sector Quarterly, 43(1), 121–143.
Mayer, W. J., Wang, H. C., Egginton, J. F., & Flint, H. S. (2014). The impact of revenue diversification on expected revenue and volatility for nonprofit organizations. Nonprofit and Voluntary Sector Quarterly, 43(2), 374–392.
Moritz, B. (2014). 10 funding models for non-profits.
Neumayr, M., Schneider, U., & Meyer, M. (2015). Public funding and its impact on nonprofit advocacy. Nonprofit and Voluntary Sector Quarterly, 44(2), 297–318.
Singh, S., & Mofokeng, M-A. (2014). An analysis of what makes a nonprofit organization sustainable: Specific reference to revenue diversification. Interdisciplinary Journal on Contemporary Research in Business, 6(2), 393–424.
Weikart, L. A., Chen, G. G., & Sermier, E. M. (2012). Understanding revenues. In Budgeting and financial management for nonprofit organizations: Using money to drive mission success (1st ed., pp. 187-205). CQ Press.