||Majority of non-profit organizations’ funding comes from public donation, so financial status suppose to be known to public, however, there are no specific taxation regulations similar to regular business entity that apply on non-profit organizations by Taiwanese Government, and these results in poor financial transparency which causes the problem of releasing insufficient financial information to the donors. Financial ratio is one of the keys in financial analysis, but limited studies are found in this field. Thus, further research and study in financial ratio could make financial analysis more completed and meaningful.|
Non-profit organizations mainly rely on public donations and government subsidiaries, however, sheltered workshops or subsidiary business units are recently established to develop its products for selling in order to generate financial funding through this commercial activity for them. Additionally, this self-sufficient model could also reduce burden for government subsidiary, as well as to use public funding efficiently. The transition of a non-profit organization into a social enterprise has been a trend so financial index of social enterprises is deserved for further studying.
After researching and studying on papers and articles, this paper generates the financial analysis on the feasibility of transiting a non-profit organization into a social enterprise through calculations and cross-references on financial ratio of eleven similar non-profit organizations upon financial perspective.
This paper concludes,
1) Financial ratios compare the numerical values that taken from balance sheet, income statement, operation statement of subsidiary business unit, cash flow and etc. to evaluate the overall operating condition and performance of a business entity. This paper compiles financial ratios and its related formulas of non-profit organizations and social enterprise, to make a completed financial statement for donors, on the basis of five aspects on liquidity, leverage, operating performance, profitability and self-sufficiency.
2) Qualified accounting auditor report improves financial transparency; establishing subsidiary business unit enhances self-sufficiency. Better financial transparency does strengthening the feasibility of transition of a non-profit organization into a social enterprise. In the evaluation of an individual case, financial analysis of “Children Are Us Foundation” shows its status is equivalent to a social enterprise so it could act as a good reference for those that consider transiting a non-profit organization into a social enterprise in Taiwan.