Not for Profits
In this blog I am going to look at the why Not for Profits doesn’t mean Not for Business.
To clarify, businesses are typically classified as Private or Not for Profit . Above all , a Not for Profit Business includes many Art Organisations, Charities, Community Interest Companies (CICs) and Social Enterprises.
Not for Profits v Private: Some Differences
Firstly, remember NFP does not mean not for business. For instance, some of the main differences between private and NFP businesses is what their aims are and what they do with any profits made.
Secondly NFPs profits are retained within the business and used primarily to help the NFP achieve its objectives.
Thirdly, each business type has unique and distinctive characteristics but they share many experiences, challenges and values. Private and NFPs work towards specific objectives, adopt common skills, attitudes and considerations
There are many examples of NFPs adapting, modifying and using private sectors business and financial practices. However, there are lessons that the private sector can take form the NFP sector.
What private business can learn
In conclusion there are three takeaways and lessons that the private sector can take from NFPs.
Planning:
NFPs have a strong culture of planning. They constantly have to consider the future, with the landscape being more volatile and uncertain and having to do more with less. Many NFPs have a system of budgeting and planning, both short term and 3-5 year business and strategic plans.
Tracking:
Where the money goes and accounting for that. In other words, knowing what they’re spending on projects, on services, and then tightly controlling that.
Monitoring and use of KPIs:
NFPs monitor, use and report across a wide range of KPI’s, covering efficiency, economy and effectiveness.
Efficiency: is seen as the relationship between inputs (resources used) and outputs
Economy: looking at the cost of doing things
Effectiveness: being the degree to which an objective or target is met
NFPs believe in good work practices and effective management. They do not work in a vacuum.
Get in touch with us if you would like us to help you improve your private or NFP business and your accounting and tax needs. For more business and finance , news, advice and tips, don’t forget to watch our weekly broadcasts, listen to our weekly podcast I Hate Numbers.
Pro Active Resolutions
The Numbers Crew – Here to help you!