What is strategic financing?
Strategic financing is considering the way in which different types of financing meets the wider goals and objectives of the organization. It attempts to find an optimal combination of financing that is suitable for part of the company's financing and ultimately maximizes value. The approach of strategic financing may be suitable for profitable and non -profit entities.
Organizations can usually choose between different options when financing operations. A non -profit company can use a combination of equity and debt. Group funding receives money from investors in exchange for ownership in the company. A company that uses debt financing, accepts loans or issues bonds. Both types of debt financing require periodic interest payment and principal repayment. The development of the strategy for these decisions is usually the work of the CFO (CFO). Thecfo is trying to find a combination of funding that maximizes profits. This mix can be influenced by tax benefits or breaks, current interest rateMi, the state of the economy or even the perception of the public about the suitability of one type of financing before another.
non -profit organizations approach strategic financing other than profitable companies. In the non -profit context, strategic financing is a combination of charity contributions of the organization from various sources. The possibilities include gifts from individuals, grants from private foundations, grants from corporations and grants and contracts from government agencies. The percentage of the organization's income that comes from these different sources is its combination of funding.
Executive Directors and Board of Directors of the Organization seeks to direct the charity possibilities of the organization to give its financial mix the most operating flexibility. Strategic financing of non -profit organizations is an exercise in the field of investigation of funding, which determines the types of restrictions on funds and adopts conscious decisions to monitor those whoThey put less restrictions on the use of their gifts. The portfolio of the organization of the organization is usually expressed as a cake chart. The theory of strategic financing for non -profit organizations says that the organization should strive for most of its funding to come from unlimited individual gifts that provide the greatest flexibility of use.
Another strategic decision that the non -profit organization will make is to accept and allocate gifts focused on programs rather than general operations. Every time the non -profit organization receives a program grant, it creates a contract that undertakes the organization to use the resources for this exact purpose. For some organizations, the cost of running a program that is insufficiently financed can exclude the entire non -profit organization from business. Strategic financing concerning this type of problem concerns the ability of organization to recognize program grants and contracts to create a deficit and reject these funds if necessary.