Research On The Funds Operational Management Of Non-Profit Organizations

The operational management of funds is one of the most basic and original content of corporate financial management. The so-called operational management of funds is the management of raising funds, configuration, scheduling and use through the establishment of efficient capital operating mechanism in accordance with the laws of funds operation, so as to achieve the maximum efficiency of funds. More than30years after the reform and opening up, China’s Non-Profit Organizations (NPOs) have experienced explosive growth, and the number, scope of activities, the ability to play a role are increasingly growing. Funds for NPOs engaged in the public welfare undertakings, like the blood in the human body, need to continue to update and circulation. It is said that the funding operational management has increasingly become a necessary condition for NPOs’healthy and sustainable development. And it has been widely used in the financial management of NPOs. In recent years, especially Foundation Management Ordinance promulgated and implemented after2004, NPOs’operation and management of funds received wide attention of research scholars at home and abroad.Although China’s economy has developed very quickly, there is still an economy in transition, in which the socio-economic environment has undergone great changes. It can be said that China’s NPOs face both opportunities and challenges. Currently the main problems in financing NPOs confront include:the system supply shortage, lack of funding sources and so on, which have seriously restricted the development of NPOs and their social goals. A survey conducted by the School of Public Administration of Tsinghua University a survey shows that41.4percent of China’s NPOs stress that the lack of funding is the most important issue facing them——a considerable portion of NPOs are subject to severely underfunded status and cannot involve normal activities and many of which experience "hibernation" in name only. Also for the survival and development, a number of organizations develop some unrelated business activities through a variety of channels and even illegal activities. Especially in the context of the global economy in general decline accompanied with inflationary pressures recently, NPOs in China more need to learn from NPOs’mechanism and strategy of funding operational management in developed countries, in order to invest to preserve and increase the value of the assets.This dissertation particularly studies and argues the relationship between the suffered financing difficulties and sustainable development through the analysis of the current investment and financing the status quo of China’s NPOs. Based on the analysis of the theory and practice at home and abroad, it puts forward in-depth the reform ideas and development prospects from four aspects:to improve NPOs’operation mechanism, reform the government’s regulatory system, establish and improve the talent incentive mechanism and NPOs’sustainable development measures. In addition, it in-depth studies some key and comprehensive governance problems of NPOs, not only from an academic point of view, but also from a practitioner’s point of view with cases. It introduces the funding operational management experience from NPOs in the United States, the United Kingdom and Japan. According to the analysis and learning from these cases, to further strengthen the risk management of NPOs to promote the forward healthy and rapid development of the organizational governance.The major research methods include literature analysis, comparative analysis and interdisciplinary research method.The structure is organized as follows:Chapter1is the introduction. It defines the research background and significance, relevant conceptions of NPOs. Afterwards, it demonstrates the research framework and methods, and finally introduces research innovation and shortcomings.Chapter2is relevant theories and literature review. This section starts with the theories and latest development of NPOs to provide the theoretical support and take advantage of the research progress on the topic from home and abroad.Chapter3is the financing management of NPOs. First, it analyzes the financing difficulties NPOs face and then demonstrates the main reasons. Based on that, it puts forward the relevant strategies to advance the financing capacities of NPOs.Chapter4is the investment management. Based on the analysis of current investing situations of NPOs, it demonstrates the investment strategies from five aspects:investment principles, alternative investment vehicles, strategic asset allocation, investment strategy and investment performance evaluation. After that, it puts forward the main method about investment risk management of NPOs. Chapter5is learning from the experience of funds operational management from the U.S., UK and Japan and revelation.Chapter6puts forward the relevant policies and recommendations to improve the funds operational management of China’NPOs from four aspects:to improve NPOs’ operation mechanism, reform the government’s regulatory system, establish and improve the talent incentive mechanism and NPOs’sustainable development measuresChapter7is the conclusion and forward research directions.Through the research of the capital operation management of the NPOs, the main conclusions are as follows.First, the government should improve the macroeconomic environment of NPOs. To accelerate the formulation of legislation associated with the development of NPOs is important to create a favorable legal environment for their development. To optimize the development of the institutional environment of NPOs and to accelerate the reform of the two-tier management system, the government should gradually change its role during the management process of NPOs, from "management controller" to "regulators". It is also beneficial to reduce the administrative interventions NPOs face with and to promote the self-development of NPOs. To improve the overall quality of NPOs means to introduce the competition mechanism, promote the transformation of NPOs, and through the survival of the fittest of the market mechanism. We also should optimize the policy environment for NPOs, stimulate the development of a more favorable tax policies, cancel the limit of the income tax, sales tax and VAT exemption percentage of NPOs and the relevant public welfare, and encourage more businesses and individuals to participate in social welfare undertakings.Secondly, NPOs should strengthen the internal construction; better resume the commitment to social responsibility. To improve the governance mechanism of NPOs, it is necessary to the form the relationship of the internal checks and balances, and the mechanism of endogenous development based on a clear responsibility, right as well as force. In addition, the main purpose of NPOs is to complete social responsibilities, maximize social utility. Therefore, we should take social responsibility as the starting point for all activities. The capital operation of NPOs is not for profit, but better to shoulder the social responsibility. Thirdly, to improve the operational capacity of funds is the key to the sustainable development of NPOs. Accompanied by the increasingly fierce external competition, who can grasp more efficient resources, and who is the winner. To raise the capital operation ability of NPOs is to form an independent, sustainable development mechanism, to ease the financing difficulties, to break the dependence on the government. It is also vital to improve the efficiency of the use of funds, and create more social value. We should stick to the innovative development ideas as guides, the diversification of the operations, investment and financing via a variety of channels, the implementation of the strategic investment management strategies, to explore the capital operation mode for the development of NPOsFourthly, it is imminent for the higher degree of specialization of NPOs. The development of any organization is inseparable from its managers, the quality of the members, so NPOs are in dire need of professional management, personnel operations, especially the investment and financing talent. On the one hand, we need to build the specialized lifting platform, to improve the quality of employees of NPOs. On the other hand, we can explore a variety of ways to attract talent with expertise into the public welfare.The innovations of this dissertation are the following.The first innovation is the research object. The research object is the funds operational management for NPOs. Although it’s always a hot issue of academic research at home and abroad on the governance of NPOs, the research is few from the finance perspective. It frames the management of NPOs into the financial area, not only to provide the relevant theoretical basis for the NPOs development, also to propose the relevant policies and recommendations for the improvement of NPOs’funds operational management.The second innovative is the research perspective. Based on the qualitative analysis of the investment situations during the development of NPOs, it uses the modern portfolio theory to systematically study the asset allocation, investment instruments, investment strategy, performance assessment, and risk management for NPOs. It is helpful for modern portfolio theory in the system use and development in the new financial investment field and provides the systematic and cutting-edge theoretical guidance for NPOs.In addition, because of the limited research time and space, there are mainly two shortcomings in this dissertation, which needs continued in-depth study in the future: First, because the data are not readily available in the investment income fro NPOs, it only selects the investment income data of China’s foundations from2009and2008. It cannot be fully representative of the overall size of NPOs, which causes certain deviations in the representation of the data.Secondly, it lacks the empirical analysis and test of improving measures for funds operational management for NPOs in China.