Saturday, April 3, 2010

Week 10: Financial Documents and Social Entrepreneurs

Financial documents, such as Balance Sheets, Income statements, and cash flow are things that most business students are tired of hearing about. They are obvious subject matters when in a finance or accounting class, but they are also important for social entrepreneurs, whether for profit or non-profit.
This is because investors are necessary to help the business continue to function, especially for non-profits who do not get their money in traditional ways. An example of this is actually our non-profit project, The Barnabas Network. Investors need financial information because they relate to accountability, transparency, and they use these to make comparisons to other like organizations, etc. (James, 2010)
Social Entrepreneurs use these traditional financial documents, but refer to them in different ways. The Balance Sheet is known as the Statement of Financial Position. It assesses what the entrepreneurs' assets and liabilities are. It is a snap shot in time. The Income Statement is also known as Statement of Activities. It is called this because it reveals what each program is doing...what they are producing. The Statement of Cash Flows is king for entrepreneurs. It is the flow of money between the group and outside world. And finally, the 990 forms are the non-profit's tax forms. (James, 2010)
We have learned all of these things in class, and I am beginning to wonder what we will be able to derive from The Barnabas Network's statements. I have looked at their 990 form and they are very vague. Also, I am not sure how willing they will be to share their financial documents. It will be interesting to see what we will be able to get from them and just see from watching them operate.

Works Cited
James, C. (2010, March 29). Accounting and Financial Issues for Social Entrepreneurs. Greensboro, NC.

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