1. Introduction to Financial Management
Chapter One
Lecture Notes
Introduction to Financial Management

2. Public Service Organizations and Financial Management
Why should public service organizations be concerned about financial management?
Should public service organizations make a "profit"?
How can financial information be used to help managers make decisions?
What do we mean by effectiveness and efficiency?

3. What is Financial Management?
The part of the management process that focuses on financial information that can be used to improve decision making.
Includes
Finance: the management of the sources and uses of resources within an organization.
Accounting: Managerial: the generation of financial information for planning and decision making Financial: a system for tracking and reporting the resources owned and used by an organization.

4. The Focuses of Public Service and For-Profit Organizations
For-profit or proprietary organizations focus on maximizing the wealth of the owners of the organization.
Public service organizations focus on achieving "mission centered" goals while maintaining a "satisfactory financial condition."
Some organizations are both for-profit and public service -
they must balance the goals of maximizing profits with the
goals of providing public service For example: for-profit schools, prisons, hospitals

5. Not-For-Profit Organizations
Include 1.5 million-plus organizations - charitable and religious (900,000), a variety of social, fraternal organizations, and associations (500,000), and
foundations (100,000).
Not-for-profit organizations are exempt from most forms of taxation at the federal, state, and local levels.
Resource inflows come from donations, grants, contracts for service, and the sale of goods and services.
Most of the resource outflows fund operations and capital improvements.

6. Contributions to NFP Organizations by Source, 2006

7. Contributions to NFP Organizations by Type of Recipient Organization, 2006

8. The International NGO Sector
NGO (Non-Governmental Organization): “Private organizations that pursue activities to relieve suffering, promote the interests of the poor, protect the environment, provide basic social services, or undertake community development” (World Bank Operational Directive 14.70)

9. Fund Raising
Statistics show people are more likely to donate, and donate more, if they are solicited for a donation.
Contributions – come from individuals, foundations, corporations, government. May be:
Unrestricted
Restricted – temporarily or permanently
Operating versus Capital Contributions