The management of working capital in non-profit organizations.
Mohanlal, R. M.
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This report aims primarily at analyzing working capital management in non-profit organizations. Since most non-profit organizations experience financial difficulty in the short-term, an evaluation is conducted with regard to the components that make up working capital. Five organizations were analyzed, in order to identify if these problems are uniform, cyclical or unrelated occurrences. To prevent inconsistencies the organizations that were analyzed operate in similar environments and provide similar services. This study was prompted by the ever-changing economic conditions in the country and the effect that they have on non-profit organizations' survival. Based on this, a short-term financial perspective was undertaken and the effects of working capital management were analyzed. This was further elaborated by the fact that non-profit organizations are finding it difficult to bridge the discrepancies between revenue and expenditure, which was substantiated by Braswel et. al, (1984). A case study methodology approach was adopted which identified financial theory as a base; thereafter, an analysis was conducted of the organizations' financial statements. Once this was completed, a survey was undertaken with all financial decision-makers. Thereafter, an interview was conducted with financial managers to establish the effective management of working capital. Based on these methods, conclusions were drawn and recommendations made, so that corrective action could be taken to eliminate or reduce the recurrence of these problems. The aim of this study is to provide non-profit organizations with greater understanding of financial planning models and techniques, which would aid them in their management of working capital.