Internal Analysis Of Harley Davidson
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Nonprofit America is being pressured to be more accountable to its principals. Donors, taxpayers, regulators, and legislators are demanding greater transparency from nonprofits, in both finances and operations. Donors increasingly want to know how much value their contributions are creating. Non-profit sector is also under pressure from the Sarbanes-Oxley Act of 2002. Although most Sarbanes-Oxley rules apply only to for-profit firms, but the law in practicality clearly applies to all enterprises. Nonprofit directors drawn from the corporate world are now asking why the laws reforms shouldnt apply to nonprofits as well.
Fraud, ineffectiveness, and abuse are common in the charitable sector over the years, and nonprofit executives have also taken advantage of donors by using donations without providing the actual purpose. The non-profit executives have also failed to fully disclose their compensation. Three factors are drawing attention to the nonprofit sector:
questionable growth of not-for-profit organizations
tax issues
trust issues
According to the article in the last five years, the ranks of registered nonprofits have swelled from 1.2 million to 1.4 million, up 17 percent. Revenues have increased by 50% where as assets have gone up by 9%. An increase in service revenue that fast is creating suspicion that how these non-profit agencies are operating.
The not-for-profit sector has tax benefits. According to IRS certain operations in a nonprofit agency are tax free which gives rise to tax abuse. Nonprofit businesses tried to manipulate information in order to avoid any type of applicable tax. Tax abuse creates a problem for government and for the economy.
The time has passed when donors took for granted the good intentions of nonprofit CFOs and audit committees. Citizens are questioning practices of nonprofit