Finances at a state supported university: a case study

In the last 25 years, not-for-profit organizations as a whole appear to have become larger and less government subsidized. Although eleemosynary institutions represent a significant and growing sector of the U.S. economy, few would doubt that charities' special status of not being oriented towards returning profits on owners' investments (but instead being oriented towards spending the funds given to them in accordance with donors' intent) has resulted in financial management systems far less developed than those typically used by for-profit companies. For example, not-for-profit organizations are subject to fewer legal requirements for disclosing financial information to outsiders, nor has a tradition of continuous, consistent disclosure developed. An excellent example of the trends can be found in the state supported teaching university. The purpose of this paper is to illuminate the budget process at one such university in order to evoke thought on how the process works, and how it differs from the process normally found in the private sector, with an eye on triggering ideas on how to enhance non-profit financial management systems.