Chapter 13 learning objectives
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Chapter 13 – Learning Objectives. 2 of 32. LO1 : An understanding of the different legal forms of business ownership LO2 : An overview of the evolutionary process that firms transition through over the course of their life cycles

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Chapter 13 – Learning Objectives

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Chapter 13 learning objectives

Chapter 13 – Learning Objectives

2 of 32

  • LO1: An understanding of the different legal forms of business ownership

  • LO2: An overview of the evolutionary process that firms transition through over the course of their life cycles

  • LO3: An analytical assessment of the different sources of funds available to managers as they seek to define the capital acquisition options available to their organizations

  • LO4:A recognition of the “sources of funds” differences that exist between for-profit and not-for-profit organizations

Chapter 13 – Introduction to Capital and Financial Markets

(c) 2012 McGraw-Hill Ryerson Ltd.


Nfp source of funds

NFP Source of Funds

29 of 32

LO4

  • One of the key fundamental differences between not-for-profit (NFP) and for-profit organizations lies in their capital structure

  • NFPs can use cash available from operations as well as debt financing but not equity financing

  • However, many NFPs do not generate revenue but rely on funding totally from outside sources such as government; they are, in essence, expense-driven organizations

  • NFPs can fundraise; the concept of philanthropy and the ability to accept donations represents a core fundamental source of capital for many NFPs

  • Unlike their for-profit counterparts, NFPs in general will prefer to undertake philanthropic initiatives as a viable source of funds prior to exhausting current internal reserves or undertaking new debt

  • The achievement of its social mission and the delivery of its programs represents the NFP’s “raison d’etre” - it is the distribution of wealth and benefits through the NFP’s activities, even in the absence of generating a surplus, that must drive its management team’s decision-making focus

Chapter 13 – Introduction to Capital and Financial Markets

(c) 2012 McGraw-Hill Ryerson Ltd.


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