Essay About Non-Profit Organization And Charity Organization

Internal Control
Our service learning project topic is the Lyndesfarne Theatre Project (LTP). The objectives for this project are to prepare operating and cash flow budgets. This project helps us to recall the format and content of budget analysis as well as the procedures we need to follow. LTP is a non-profit and registered charity organization, so there is a difference between non-profit and for-profit in preparing budget analysis. We searched and learned the accounting and operating system for non-profit organization and did the operating and cash flow budgets based on that. Non-profit organizations set a budget based on what it will cost to run their programs for the coming year using budget categories: program, administration, donation and fundraising. The organization must engage in a variety of fundraising and donation activities to get the funds needed according to the budget such as two Gala events. Their revenues are mostly coming from ticket sales, donations, program fees and sponsorship. Their expenses are administrative, fundraising, renovation, and marketing. When we start doing budget analysis for non-profit organizations, it is better for us to understand what kinds of accounting methods they use. For LTP’s organization, the accounting method is cash basis and their financial transactions are recorded only when cash are received. They do not have accounting receivables and payables are recorded. Therefore, we should get the same net income result from both operating and cash flow budgets. The only difference is that the cash flow budget is a monthly basis and the operating budget is based on yearly numbers if they use a cash basis accounting method. The budget analysis is very important for non-profit because the secondary mission is to ensure that revenues are greater than expenses so that the services provided can be maintained.