- May 3, 2014
- Posted by: essay
- Category: Term paper writing
Today it has become obvious that the need for implementation of the strategy is important not only for businesses but also for the Non-profit organizations. Especially because in the world there are many positive examples of the use balanced scorecard in public management. A brief analysis of the management problems shows that the requirement that gave rise to the development of a balanced scorecard (BSC) in private business, are highly relevant for the Non-profit organizations. This means that the tools used to solve the problems of private businesses are likely to be applied to address problems of Non-profit organizations. In this area, financial goals are not considered as primary, which means a balanced approach to the management of the organization (which is the basis of BSC) has a better chance to be realized in practice.
It is obvious that, given the specific nature and adapting the basic model of the BSC will be an important tool to facilitate the development and improve the effectiveness of nonprofit organizations. For example, using the balanced scorecard it is possible to combine two important and frequently used concepts for NGO – the mission of the organization and its products (services).
In this paper it is necessary to consider the main characteristics of BSC and the use of BSC in the non-profit public organization on the example of higher education institution in Saudi Arabia.
FINANCES AND BUDGETING IN NON-PROFIT ORGANIZATIONS
NGO financial management includes the process of planning decisions aimed at strengthening the stability and financial independence of the organization. It also includes controls for cash management, acquisition of funds, resource mobilization and balance between income and risk. The particular risk of a nonprofit organization is mismatch organization’s strategic objectives to the current needs of society and donor policies. Financial problems may affect the financial position of the organization and its sustainability. Typical forms of risk are economic risk and political instability.
The fundamental process of building a system of financial management in NPOs is budgeting. (Blazek, 1996) Traditionally, budgets were used since the beginning of 1930, when it was fully consistent with the then existing system of economic relations based on the cost estimates. In connection with the transition to an independent control system was necessary the formation of the corresponding budgetary relations and new approaches to planning budgets. In this case, budgeting serves as an important tool for the implementation of certain policies of the organization. (Blazek, 1996)
Therefore, the main feature of the full budget (financial plan) is the possibility of using it as a tool of well-defined policies and implementation of the strategic goals of NGOs.
The main disadvantage of the indicators used in the practice of management of NGO is their monetary value, which does not reveal some important aspects of the work. In this regard, the American scientists R. Kaplan and David Norton in 1990 investigated the effect of measurement systems, the economic performance of 12 large companies. These companies want to expand their measurement systems to include non-monetary indicators of the nature that would increase the informative features. The research results have led to the formation of the concept of balanced scorecard.