Financial Management for Nonprofit Organizations, 3rd Edition

APPENDIX 1ATHE LILLY STUDY FINDINGS

THE LILLY STUDY

We have seen much hyperbole about the true state of financial management in nonprofit organizations. This is especially the case regarding perceptions of social services charities, religious, and art organizations – really all nonprofits outside the health and education sectors. A large group of these donative organizations, which depend on gifts for 60 to 100 percent of their annual operating revenues, was the focus of a two-phase study completed in the early 1990s. This study was funded by the Lilly Endowment, Inc. as part of a project entitled “Organizational Goals and Financial Management in Donative Nonprofit Organizations” conducted by John Zietlow.

More than 1,000 religious or religiously based organizations in four categories were selected for study: denominational headquarters, denominational foreign missions (where the headquarters was separate), independent foreign mission agencies, and localized rescue missions. The latter are often called homeless shelters, but their work goes beyond sheltering.

Treasury management topics were studied in detail in Phase 1 of the project. Questions were asked on a 12-page mail survey about organizational and financial goals and all “short-term financial management” (STFM) or treasury management areas: cash management, cash forecasting, inventory management, accounts receivable and accounts payable management, bank selection and relations, fundraising evaluation, short-term investing, ...