The sole purpose of any organization is to make profits. But, nonprofit organizations are entirely different from this. These organizations are also known as NPOs. They do not focus on making profits but to serve a social cause. The revenue that is generated by the operations of any nonprofit organization is reinvested in the company and not distributed to the shareholders or owner. Those profits are used to achieve the new purpose and missions of the company. The main purpose is to serve the society and take steps which are in the best interest of the company. Many people think that the nonprofit organization operate through the charity fund and has a major portion of assistance by this sector. However, this is a misconception because there are many other types of these companies. Some of the problems that exist in nonprofit organizations are as follows.
Mismanagement of resources
The reason because the employees are not answerable to anyone who have an interest in the organization makes this problem prominent. In this manner, many accounting frauds can be made on account of the company. Through this, there will be timely improvement seen in the work and performance of the organization, but in the longer run, the organization will suffer. The financial stability will be affected, and losses will arise in the future. To eradicate this problem some strict rules and regulation should be made those rules will make employees responsible for every decision they make for the organization, and they will be held accountable in the end. There are also funding from the large profit organizations which make the change in the functioning of NPOs.
This syndrome occurs as the organization starts to grow gradually. There is a founder who has a strong vision for the success and growth of the organization, but he wants a strong hold on the organization. That need for control and regulations make him undesirable, and he does not listen to the employees as he should. In their desire to have control, if the employees want to make a move to expand the operations or projects of theorganization, they will not be positively welcomed. In this war of control, the ultimate suffering is caused by the organization.
Competition in the talent
The need for potential and talented employees in any organization is inevitable. There is the existing problem of competition in the private and public sector organizations. Getting a talented and experienced person is really challenging especially for the management position. There is a stressful environment in these organizations which drive the people away from the jobs. To keep them motivated, healthy packages are needed. Some of the people are motivated in their own selves to work for the welfare of society, and they work really hard to make NPOs successful. But the need for good human capital still exists.
Due to all the problems in the nonprofitorganizations,they are lacking somewhere. These companies are encouraged to pay high compensation plans to the employees as well as flexible working hours to improve performance.