Pros And Cons Of Nonprofit Expansion - 1567 Words

Abstract The author explores the idea of nonprofit organizations expanding to more than one location. To nonprofit organization owners, expansion can pose a difficult challenge financially, but also a necessary step to improve their outreach. Defining financial variables necessary for nonprofit organizational growth, then using those variables to look directly at physical capital (facility) expansion, and finally examining case studies on nonprofit organization expansion, the information the author gathers will directly impact a critical analysis on the research reviewed and any questions left unanswered. Keywords: nonprofit organization, financial vulnerability, facility expansion Pros and Cons of Nonprofit Expansion and its Effects on†¦show more content†¦Each variable directly independently plays an impact on financial vulnerability. Net assets are defined as â€Å"the difference between an organization’s assets and liabilities.† For nonprofit organizations, net assets are related to an organization’s ability to borrow funds. Tuckman and Chang (1991) found nonprofit organizations less likely to alter their programs and mission, following a financial shock, if they can leverage their net assets. An operating margin, or surplus, is â€Å"the difference between an organization’s revenue and expenses, divided by its total revenue.† A Nonprofit organization holding a great surplus can readily operate at a reduced surplus following a financial shock – allowing it not to alter any programs. The third factor for nonprofit financial vulnera bility is revenue concentration. Revenue concentration is â€Å"the proportion of income an organization receives from its various sources of revenue.† Nonprofit organizations who receive many sources of revenue can better withstand the impact of a financial shock than those with little sources of revenue. After a financial shock, nonprofit organizations, along with all businesses, will try to cut down expenses. Woronkowicz (2016) states â€Å"administrative costs are preferred to those to programShow MoreRelatedHarper Reiman Inc.1683 Words   |  7 Pagesthe organizations is a nonprofit consulting firm. The main headquartered of the company is Dallas, TX and grew all the way to Harper town at Amarillo, TX. In 2000 both of them were the founder of the business; both studied in entrepreneurship class and followed their dream to developing in the nonprofit business. After working together at JP Morgan they both decided to start their own consulting firm which is called Ha rper Reiman, LLC. 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