Introduction
As a nonprofit organization government by a board of directors, United Way Suncoast is dependent on economic factors to operate efficiently. A core activity of the organization is to improve people’s socioeconomic welfare by providing income and asset support and equipping them with life skill. Running these operations depends on the availability of funds (Charity Navigator par. 1). On the other hand, the organization does not sell any product as an income generating activity.
It relies on donations, grants-forms of assistance from corporate and individuals as well as investments in securities. On the other hand, it has to meet operation costs that include salaries, taxes, and employee benefits. It must also pay for supplies and other solutions or expertise that it uses to achieve its organizational objectives. These resources are affected by economic conditions. For example, cost of printing, training, and travel represent costs in services in the economy.
Economic factors affecting the organization
Changes in the major economic factors like government monetary policy, which affects the business ability to raise credit, affect the organization negatively (Powell and Steinberg 569).
Tightening of the money supply in the economy causes most companies to demand cash payment and reduce offers on credit facilities. Such conditions can also arise during periods of recession. Eventually, they present a severe business operating environment for the organization, which necessitates cutting back on its operations to cope with cash flow limitations (Aggour par. 4-5).
The organization also raises revenue by selling its property and by investing its funds. Investments are affected by economic market factors such as existing demand and the lucrativeness of investment returns in alternative investment options. Investments also have risks of a negative return, especially when investment securities lose their value. Therefore, the organization is exposed to market dynamics of demand and supply.
The dynamics that affect the value of its investments depend on government policy on taxation of investment, level of integration of the investment vehicles with other sectors of the economy and level of participation of the market in the particular investment vehicle.
High participation makes it easy to liquidate investment, and it also increase tendencies of speculation and turbulent pricing environment for the securities. On the other hand, less traditional investment vehicles can be stable, but are often hard to liquidate. This may negatively affect cash flow for the organization (Snipes and Oswald 73).
People help worthy causes by giving money and donating their time or other resources. When there are plenty of well-paying jobs, people do not have to do more than one job to meet their needs, and they get enough time to donate their time. This lowers the cost of operations for charitable organizations like United Way Suncoast.
For companies, past year’s performance determines their allocation of funds for corporate social responsibility, which includes donations and other assistance to organizations like United Way Suncoast (Trussel 1). For example, a drop in the earnings of the firms listed in Standard & Poor’s 500 coincides with variances in total charity giving. A one percent increase in last year’s index performance leads to a 0.19 percent increase in charity giving by corporates in the present year (List 160).
Inflation is the other significant economic factor affecting operations of the organization. If the organization receives the same amount of monetary assistance in successive years, but inflation in the same years rises significantly, the organization suffers an associated loss. Inflation leads to reduction in money value and forces the organization to seek additional funding.
Works Cited
Aggour, Sara. Economic Crisis Affects Charitable Organizations. 2013. Web.
Charity Navigator. “United Way Suncoast.” 2015. Web.
List, John A. “The Market for Charitable Giving.” Journal of Economic Perspectives 25.2 (2011): 157-180. Print.
Powell, Walter W., and Richard Steinberg. The Nonprofit Sector: A Research Handbook. New York: Yale University Press, 2006. Print.
Snipes, Robin L, and Sharon L Oswald. “Charitable Giving to Not-for-Profit Organizations: Factors Affecting Donations to Non-Profit Organizations.” Innovative Marketing 6.1 (2010): 73-80. Print.
Trussel, John. Financial Reporting Factors Affecting Donations to Charitable Not-for-Profit Organizations. 2003. Web.