PB AF 553
Provides an understanding of the financial framework on nonprofit organizations. Focuses on the financial principles of management of nonprofits, with an emphasis on financial reporting, strategic financial planning, managerial decision-making and budgeting.
COURSE DESCRIPTION AND LEARNING OBJECTIVES • Understand the financial framework of nonprofit organizations • Apply financial concepts to real-world organizational challenges and decisions • Demonstrate understanding of the struggle to focus on the finances but maintain the mission of the organization • Integrate strategic planning with budgeting in an environment where financial resources are scarce • Use cost-based tools from the core course (PbAf 522) and apply them to decision-making in nonprofit organizations • Manage the process of applying as a 501C3 organization in the State of Washington • Integrate strategic planning and budgeting with performance measurement and management systems • Analyze a nonprofit organization’s financial statements through the lenses of donors with regard to providing financial resources
The course is designed to provide students with an understanding of the financial framework of nonprofit organizations. The course will focus on the financial principles and management of nonprofit organizations, with an emphasis on financial reporting, strategic financial planning, managerial decision-making, and performance measurement. The course will illustrate financial concepts using real world examples from case studies. While a prerequisite for this course is the core financial management and budgeting course at the Evans School (or the equivalent in another school), this is not primarily a course in accounting. Rather, its focus is on management control concepts and problems in nonprofit organizations that go beyond the concepts covered in PbAf522. However, a complete lack of background in financial accounting or knowledge about financial statements would put you at a great disadvantage.
Historically, nonprofit organizations survived on the strength of their missions and their ability to attract increasing amounts of public and private support for their activities. More recently, managers and professionals have recognized a need for stronger management skills, among them financial management and management control. Even more important in 2009 will be the ability to convince donors and others who provide resources of the ability of the organization to carry out its mission and goals.
The intent of the course is to provide a user-oriented, more advanced focus on many of the concepts first introduced in PbAf522. I will assume that all students have a basic knowledge of accrual-based financial statements, but we will review some financial accounting at the start of the course. Then, we will look at the nature and use of different costs in financial decision-making including pricing, contracting, and programming decisions. Finally, we will focus on management control systems including the management control environment, strategic planning, budgeting, measuring output, performance measurement and reporting. If you don’t have a good background in financial accounting, it might help to purchase and work through the following book prior to the start of the course: Breitner and Anthony, Essentials of Accounting, 10th Edition, Prentice-Hall, 2010. Please let me know by email if you plan to do this so that I can make suggestions about which parts you can skim or skip (firstname.lastname@example.org).
Student learning goals
Understand the financial framework of nonprofit organizations and analyze a nonprofit organization’s financial statements through the lenses of donors with regard to providing financial resources
Apply financial concepts to real-world organizational challenges and decisions
Demonstrate understanding of the struggle to focus on the finances but maintain the mission of the organization
Integrate strategic planning with budgeting in an environment where financial resources are scarce
Use cost-based tools from the core course (PbAf 522) and apply them to decision-making in nonprofit organizations
Integrate strategic planning and budgeting with performance measurement and management systems
General method of instruction
The course will be taught primarily by the case method of instruction, supplemented by readings and occasional short lectures on selected topics. As you may know, the case method works extremely well when both students and the instructor are well prepared. Otherwise, it is an extremely ineffective pedagogical tool. For this reason, you will be expected not only to read the assigned material for each class session, but also to analyze the cases fully as well. Often, this is best done in group work. I will provide templates for use when it is necessary to use spreadsheets and I will post suggested solutions to all assigned work on the course website.
Some background in financial accounting is required for the course. PbAf522, the core financial management and budgeting course, serves as the prerequisite. PLEASE DO NOT REGISTER FOR THE COURSE IF YOU HAVE NOT YET TAKEN 522 (OR THE BUSINESS SCHOOL EQUIVALENT INTRODUCTORY COURSE). Please visit the course website (https://catalysttools.washington.edu/workspace/breitner/8145/) for information on ordering the textbook well enough in advance to have it for class!!
Class assignments and grading
In addition to regular preparation of cases for discussion each week, there will be three written assignments paced throughout the course. The final assignment is in lieu of a traditional final exam and will consist of a project to be completed throughout the quarter.
The case method relies on both preparation and presentation of analysis. Hence, student performance will be rated on the quality of contributions to the case discussions as well as on the submission of the written assignments. Class contributions can come in a variety of ways: (a) a good question about the material; (b) undertaking key analyses (as opposed to restating factual points in the case); (c) helping to move the discussion ahead; or (d) making comments that bridge discussion points in a case analysis, thereby integrating the discussion and helping to make it more coherent. The weighting schema for the course is: Written assignments 75% Class contribution 25%