Editing Nonprofit organization (section)

=== Financial mismanagement ===
[[Financial mismanagement]] is a particular problem with NPOs because the employees are not accountable to anyone who has a direct stake in the organization. For example, an employee may start a new program without disclosing its complete liabilities. The employee may be rewarded for improving the NPO's reputation, making other employees happy, and attracting new donors. Liabilities promised on the full faith and credit of the organization but not recorded anywhere constitute [[accounting fraud]]. But even indirect liabilities negatively affect the financial sustainability of the NPO, and the NPO will have financial problems unless strict controls are instated.<ref>{{cite book|title=Audit Guide for Small Nonprofit Organizations|url=http://www.vscpa.com/content/Visitors/Nonprofit_Resources/Audit_Guide.aspx|access-date=21 July 2010|archive-url=https://web.archive.org/web/20110104103321/http://www.vscpa.com/content/Visitors/Nonprofit_Resources/Audit_Guide.aspx|archive-date=4 January 2011|url-status=dead}}</ref> Some commenters have argued that the receipt of significant funding from large for-profit corporations can ultimately alter the NPO's functions.<ref>{{cite news|editor1-first=M. |editor1-last=Edwards |editor2-first=D. |editor2-last=Hulme |date=2002|title= NGO Performance and Accountability: Introduction and Overview (Chapter 11)|work= The Earthscan Reader on NGO Management|location= UK|publisher= Earthscan Publications Ltd.}}</ref> A frequent measure of an NPO's efficiency is its [[Expense ratio#Nonprofit organizations|expense ratio]] (i.e. expenditures on things other than its programs, divided by its total expenditures). [[Tax exempt]] status of NPOs can result in some cases, such as mismanagement, in negative value for society.<ref name="o561">{{cite journal | last=Gamble | first=Edward N. | last2=Muñoz | first2=Pablo | title=When Tax-Exempt Nonprofits Detract Value from Society | journal=Academy of Management Perspectives | volume=36 | issue=1 | date=2022 | issn=1558-9080 | doi=10.5465/amp.2018.0027 | doi-access=free | pages=50–92 | url=https://durham-repository.worktribe.com/preview/1239986/36272.pdf | access-date=5 February 2025}}</ref>