Financial Contingency Planning: Sources of Funding - Research Paper Example

?Financial Contingency Planning Public private partnership Funding the contingency financial plan in America needs an adequate development of the partnership between the public and the private partnerships to achieve the required amount of revenue necessary in the project. Collection of the required revenues can be achieved by the development of sponsorships and the use of private firms to contribute funds and to manage programs (Forman, 2006). Another form of public and private partnership involves the cooperative arrangement between the government and the various companies to assist in increasing the funds needed in the defense budget. However, the defense department will have to reduce its budget. Companies and the voters have understood that the current budget for the defense department is too high to be sponsored by the private and public partnerships. The cutback of the amount of money in the defense department’s budget would help in creating other programs that can save lives of the citizens, create employment, and bring about technological advancement in other sectors of the economy. One very important private-public partnership involving the national Geospatial-Intelligence Agency (NGA) and the government to improve the satellite imaging capacity is facing problems of inadequate funding. It is crucial to note that public and private collaborations are very important in financing any sector of the economy. Expensive budgets would, however, affect other spheres of life such as the socio-economic welfare of the voters. The budget needs to be cut down in the present situation of economic downfall (Forman, 2006). Bond issuance Bonds are issued by the government to its citizens to ensure that funds necessary in carrying out war activities are available. The bonds make the citizens feel to be part of the process in restoring peace around the world as well as putting in policies that will ensure that there are no terrorist activities in and outside the United States. Furthermore, bond issuance is beneficial, since it can help in the management of inflation in an over stimulated American economy. The money in circulation around the country is removed from the time the war began until the closing stages of the war. After the war, the funds may be liquidated to ensure that American citizens engage in consumer spending in their economy after the war. Bond issuance procedure is always accompanied by the call for patriotism and accountability in the American security system. Government war bonds are always below the normal value, since the government needs to make them affordable to all American citizens. However, the American citizens have shown lack of commitment in buying bonds, since they consider it an uncertain form of investment. War bonds have also failed to get major public support, since the economic situation in America is not suitable for the huge spending in the defense budget (Jensen & Guthrie, 2006). Non-profits Nonprofit organizations such as the defense department are in great risk, since they have limited sources of revenue. They majorly rely on charity and on government grants to finance their budget. Furthermore, nonprofit organizations face overreliance on few sources of revenue that may affect their operations. With the current state of economy, the high budget for the defense department, and the lack of willingness of the public to contribute to their budget, the defense department must cut down its budget estimates (Salamon, 2003). The defense department has developed a habit of coming up with alternative sources of income without assessing their effects on the long-standing productivity of the organization. Their actions often lead to programs that are not suitable for the stakeholder’s priorities in this time of economic challenges. The department has been forced to rely on projects that cannot contribute significantly to their budget estimates and become unable to deliver services as expected by the citizens. The best sources of revenue of the defense department are donations and gifts. Philanthropic organizations and patriotic individuals normally contribute to the service of the defense department’s budget. They often give money or property to be used by the defense department officials. In their long term plans, the department of defense should consider this source of financial assistance in their system, since it can be able to contribute resources necessary in financing the budget (Salamon, 2003). Grants The defense department issues grants to the public in order to finance its projects. Grants are often issued to help in the funding of a particular project, crucial to the operation of the organization. The United States’ defense department has about 52 grants that are issued to the public to ensure that matters of security and military are managed effectively according to the expectations of the citizens. However, those in need of the grants should be able to meet the regulations put in place by the defense market as the necessary requirements. Grants are important, because they help nonprofit organization such as the defense department to achieve financial freedom (Jensen & Guthrie, 2006). Multi-level government financing Different government levels must be administered successfully to ensure that there is effective revenue collection in this time of economic difficulties. The government should ensure that these levels work in achieving common goals such as the implementation of stimulus packages. In most developed countries, multilevel government agencies are responsible for the contribution of revenues. However, the financial situation for most of these organizations is always strained. Since there has been a decline in economic plans and revenues in the United States, there is a constant need to progress the social welfare of the citizens. The budgets of the defense department and those of other government departments must be reduced. The high budget figures might affect the delivery of services to the citizens as well as lead to long term economic growth due to the usage of more resources in war than in economic recovery (Rodlauer & Schipke, 2005). There are various problems that can affect the effective management of multilevel organizations that contribute significantly to the revenues in the United States. Such problems include information, capacity, fiscal, administrative, and policy gaps. Problems of information can occur when different organizations do not operate at the same level quality and quantity of information when coming up with various policies. In addition, capacity gaps occur when individuals lack skills or infrastructural facilities to perform their duties. The government should ensure that various human resources in the multilevel organizations receive necessary training to enable them perform effectively and efficiently in their duties. Further, fiscal gaps happen when the national income is insufficient to help in the financing of the various departments’ budgets. This leads to the high dependence on the government to fund most of the obligations of the defense departments’ budget. The United States government can achieve effective multilevel financing through the promotion of cooperation and capacity-building between the national and sub regional organizations (Rodlauer & Schipke, 2005). Effects of taxation High taxation can lead to far reaching implications to the United States’ economy. Citizens will experience inadequate incomes due to the high level of taxation needed for the budget of various departments such as the defense department. The wealth of a nation is dependent on the efforts of its workers, and they feel the burden of heavy taxation more than any other members of the society. Due to high taxation, the workers cannot depend on their incomes (Pratt & Kulsrud, 2011). Further, taxation leads to low wages. Entrepreneurs who pay high taxes cannot afford to pay their employees high wages. Tax ensures that the money that would otherwise be used in the payment of workers is given to the government. In addition, high taxation leads to high prices of commodities. Inadequate incomes, low wages, and high prices of essential commodities lead to a state of hopelessness among the tax payers. Most people become depressed and cannot contribute significantly to the economic growth of the nation (Pratt & Kulsrud, 2011). High taxation has been linked to the increasing high level of poverty and crime. This is due to the inability of most citizens to afford their basic needs due to high taxation on their incomes. In addition, high taxation also leads to poor functioning of governments’ social programs. The implication is that poor citizens are not able to obtain basic human needs for their survival. Several other citizens cannot also find employment, so they engage in criminal activities so as to support their families. High taxation leads to low tax revenues. The constant recession and the loss of jobs lead to a decrease in government revenues, and this leads to the economic drop. Taxation should be reasonable to allow as many individuals as possible to take dynamic involvement in the growth of the economy (Pratt & Kulsrud, 2011). The role of financial efficiency Financial efficiency will ensure that funds are used effectively in their intended destinations. Funds must always be used in a socially useful manner to help the citizens overcome the daily economic challenges affecting them. Cut-offs in the defense department’s budget are necessary to ensure that huge resources are not wasted on non profitable activities such as wars but are instead invested in the improvement of the economy. The government’s mandatory spending has continued to rise each New Year. The government spends huge amounts of money on Medicare and social security among other mandatory programs. These expenses consume most of the government’s revenues. In the end, the government has little remaining to run all its programs adequately with great need to reduce budgetary allocations; financial efficiency measures will, therefore, reduce the government’s spending in military services and increase investments in important social service sectors such as medical care and the creation of employment opportunities (Pratt & Kulsrud, 2011). Sources of funds to the project can be generated from sponsors, stakeholders, financial institutions, and the government. The major contributor of the funds must be the government, since national security is important in safeguarding the United States economy from terrorist attracts. Well-wishers and other sponsor who feel patriotic enough can also be contacted through various bond campaigns aimed at reaching as many citizens as possible. While identifying their sources of funds, organizations should know that funds can originate from both the external and internal environments. Funds that are derived from internal sources come from personal savings, profits, capital, and the sale of fixed assets. These are the most important sources of funds to any organization, since they ensure that organizations have working capital to begin their projects. External sources of funds exist outside organizations. They may include loans from financial institutions or government grants. Identifying sources of funds for a given project is very important, since it ensures that the project is managed effectively to the end (Pratt & Kulsrud, 2011). References Forman, J. (2006). Making America Work. New York: The Urban Institute. Jensen, C. & Guthrie, S. (2006). Outdoor Recreation in America. New York: Human Kinetics. Pratt, J., & Kulsrud, W. (2011). Individual Taxation. New York: Cengage Learning. Rodlauer, M. & Schipke, A. (2005). Central America: Global integration and regional cooperation. New York: International Monetary Fund. Salamon, L. (2003). The State of Nonprofit America. New York: Brookings Institution press. Read More