Managerial economics make a specific clarity more effective - Essay Example

Managerial Economics and International NGOs Charity Work International NGOs Charity or the altruismis not a new term or topic in economics. However, there are numerous charity works and their managerial understandings have been addressed for centuries by both ancient and classical economics. The concept of charity is common among the non-profit organizations and companies. The charity concept is often implicit in the labor of the non-profit organizations. Therefore, this paper aims at analyzing the arguments used in justifying the existence of the International NGOs that are financed through donation from a position of finance management and economics.

The paper also aims at evaluating the significance of definition or identity as form of clarity in the International NGOs charity work. The donation capital cost concepts are usually used to provide economic interpretation of charity especially in establishing its limits. The charity concepts analyzed from economics perspective, and general overview of charity often depends on the level or amount of donation received by the International NGOs. These concepts usually concentrate in analyzing costs that are always implied in financing and billing services of donations.

Theoretical focus Economics often regard transaction cost as the cost incurred during economic exchange. There are three broad transaction cost categories including search and information cost, bargaining cost as well as policing and enforcement costs. These costs can sometimes be used in analyzing the monetary management of International NGOs (Daza 90). These International NGOs often receive financial resources to finance their charity-oriented objects or activities. The donations are from either public and or private resources.

Following the Marshall’s approach, of economics, these donations are considered as subsidies that maintain the organization that have reduced cost; therefore, these organizations often receive donation subsidies to maximize their well-being at minimum costs. Currently, Managerial economics emphasizes on electricity and other services to be characterized under decreasing costs. Most of the International NGOs and companies that are financed by charity donation often deal with social problems.

However, most of the International NGOs are currently reducing social problems so that they can minimize their operation costs. Some of the social activities that the International NGOs involve in include environmental pollution, childcare, domestic violence, peace, and human right. However, some of the non-profit organizations operate health care, education, and art that are sometimes difficult to resolve through the market. However, some schools of thought insist that International NGOs are capable of providing solutions to customers' problems (Daza 91).

As a mean of operation cost minimization, the International NGOs often benefit taxation. However, it may be argued that tax benefits cannot explain the operation and existence fully especially in executing duties in situations where the tax benefits do not have effects (Daza 93). To evade financial bankruptcy risks, some non-profit organizations have legalized separation within the organization so that the organization can provide services or labor while the other parts provide physical good such as real estate.

For instance, in the case of real estate builds rent to the non-profit society. The rent herein may lead to actual International NGOs that may lead to investment in the organization with the motive of reducing costs that might have been incurred through paying rents. Additionally, other fund obtain from these real estates may be channeled to other non-profit organization’s responsibilities including funding of schools among others. Notably, there indirect incomes are redistributed; therefore, they are never recorded in the national accounting system (Daza 92).

However, it should be noted that there is a danger in this manner of operation since the International NGOs are now fully commercialized societies, but they are enjoying tax benefits. In this sense, the International NGOs fully benefit their owners who may not necessarily be charitable or altruistic as per the description of the organization. Some dire situations often arise when several International NGOs face completion from other commercial entities or fellow International NGOs. In such situations, the affected non-profit origination or organizations often opt to venture in commercial activities (Daza 94).

This only works if the involved non-profit organization can account for the quality of services or commodities it wants to render into the market. Nonetheless, these services that these organization offers are usually in line with the donation it is likely to receive; thus, they must be clear on what donation it need. Despite the tireless work of the International NGOs working towards reducing their managerial or operation costs, most of them are acting with the economy of increasing cost due to reduced or decreased donation and subsidies, and rivalries with other non-profit organizations that are a capturing the new donations.

These circumstances often lead to external financial tensions that make these International NGOs drift their charity objectives of providing charitable and effective services and goods. Despite the underlying challenges, these organizations must remain functions; hence, they are compelled to redefine their charitable roles (Daza 95). The new definition must be precise, clear, and rigorous to the charity and must be within an economic sense with the ultimate goal of the organization. Therefore, making a successful charity depended on the definition and specification of the function of the International NGO.

The understanding developed herein is that charity work of the International NGOs must be understood at all times as a product or service that does not attract profit. Alternatively, successful charity should be a free service. However, these organizations may change their services since if an organization fails to change from its services, there is a high likelihood that it may get bankrupt or develop poor quality or products. Therefore, the charity will only be sensible and feasible if the organization receives donation and voluntary services or altruist wok towards funding its operation and investing in the non-profit society.

Work Cited Daza, Jose. Economy of Non-Profit Organizations Charities and Donations: International Research Journal of Finance and Economics - Issue 52 (2010) pg. 89 - 101