May 23, 2016
There are several financial environments that various entities exist in. These include for-profit, not-for-profit, and government organizations. These environments have many similarities, as well as differences. Examples of these may include the Methodist Hospital in San Antonio, which is a for-profit organization; the American Heart Association, which is a not-for-profit organization; and the U.S. Department of Health and Human Services, which is a government organization. Each of these organizations has their own practices and policies unique to them.
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Many management practices and tactics are the same between not-for-profit and for profit (Investopedia, 2016). Opposing Views (2016) states “nonprofit hospitals tend to provide greater proportions of uncompensated care than do similarly situated for-profit hospitals. The burden of uncompensated care isn't carried by all nonprofit hospitals evenly, however. Rather, within the same geographic area the bulk of uncompensated services are provided by only a few hospitals” para. 2). NFPs are also more likely to offer services that are more expensive, but provide little profit. NFPs are also generally located in places where there is a higher income among the community and where most people are insured (Opposing Views, 2016). Assets belong to the organization itself and if the organization were to dissolve, those assets would be donated to other NFPs (Carter, 2016).
According to Riker Danzig (2009), every NFP is required to have a mission statement and those that have been granted tax exemption are required to have a written statement of purpose that complies with the law. This is the only mandatory legal requirement for NFPs; however it is recommended that each NFP also have conflict of interest, compensation review, expense reimbursement, record retention and destruction, whistleblower, and gift acceptance policies.
According to Carter (2016), a for-profit organization is usually formed for the purpose of conducting some sort of lawful business. Its primary function is to create profits for its owners. For-profits are not granted any tax exemption for either the state or federal governments. They are also required to pay property taxes and any donations made are non-tax deductible for the person making the donation. Assets belong to the owner of the organization and would be distributed as such in the case of the organization dissolving. “For-profit businesses may raise money by offering investors a percentage of ownership in the company. In the case of a for-profit corporation, investors can provide property, services and cash in exchange for shares of the company's stock. Rarely will for-profit organizations raise capital as a result of grants or other solicitations” (para. 5). For-profit organizations are able to offer more to their employee’s full time salaries, as well as other benefits. For profits may also be able to hold onto employees easier due to the more attractive salaries and the ability to offer equity in the company (Carter, 2016). For profit organizations must uphold all the regulatory policies just like the other entities. However, each organization has the ability to add their own unique policies specific to their organization.
According to Wetfeet (2012), government agencies work at the local, state, and federal levels to handle a diverse list of issues, from protecting the wilderness, to offering public health programs. Government organizations collect taxes and use them to fund program which can...