Financial statements are important to have in any transactional activities involving money. Hence, whether running a non-profit organization or a for-profit business, it’s best to prepare financial statements. Creating a financial statement works well for your accounting and accountability. It helps you keep tabs on your progress, year in and year out. The objective of this article is to compare and contrast the non-profit financial statement and statements that are for for-profit organizations.

Revenue

The revenue-related difference between a non-profit and a for-profit financial statement hinges on the “matching principle.” The matching principle applies to the financial statements of for-profit organizations. Based on this principle, for-profit organizations must report their revenue along with the associated cost in the same accounting period.

For example, granted that an organization recorded revenue for December, the cost of goods for that same month must also be inputted in the financial statement. But this is not usually the case for non-profits, where donors may make a pledge to be redeemed later. Let’s consider a scenario where a donor pledges US$2,500 to be remitted in four installments over two years — meaning US$1,250 per year.

The non-profit organization must record the whole US$2,500 in the year the pledge was made to it. This is despite not having received the cash — it must be reflected in your statement anyway. So, when the cash is eventually paid, it goes into the account without changing the financial statement.

Taxes

A major difference between the financial statement of non-profit and for-profit organizations is the tax report. It is generally expected that while the financial statement of a for-profit organization reflects its tax returns, the financial statement of a non-profit does not. Non-profits are primarily known to enjoy tax exemption, but this is after certain obligations have been fulfilled with the right quarters.

That said, there are instances where non-profits are expected to make known their tax returns in the financial statement. It should not go without saying that the financial statement of a non-profit organization may sometimes be complicated. The tax report of a non-profit is often considered in relation to what issues the non-profit is established to address.

For instance, a non-profit that provides disaster relief is not expected to pay tax on donations received for such (humanitarian) causes. However, the organization will be required to pay tax and report the same if other revenue-generation aspects are adopted. A good example of such aspects is doing a crafts workshop to raise funds during Giving Season.

Besides this, non-profit organizations are expected to remit payroll tax to the government, even as their employees have to pay income tax. All these taxes can be recorded in the financial statement of a non-profit organization.

Balance Sheet

In the case of a balance sheet — there is a variation in the name by which this very financial instrument (balance sheet) is known as far as the non-profit is concerned. At the same time, it is alright for for-profit organizations to term it a “balance sheet,” non-profit organizations would always prefer to call it a “statement of financial position.” That aside, another area of differentiation is asset distribution to shareholders.

As it were, non-profits can only have board members and not shareholders. Hence, the statement of financial position of non-profit organizations does not show assets distributed as retained earnings to shareholders. But the balance sheet of for-profit organizations does have such asset distribution declaration. It is, however, possible to have the assets of non-profits reinvested to actualize its charitable mission in subsequent (financial) years.

Income Statement

The income statement is another tool to distinguish a for-profit organization’s financial statement from a non-profit. It follows that for-profit organizations are known to record all that pertains to their expenses, revenue, profit, and loss in the income statement. However, this is different for non-profits — which are not established to make a profit.

Rather what you will see for non-profits is the statement of activities — which can be reported in the financial statement. This statement shows the changes in a non-profit’s net assets in association with the expenses and donations received during the year. With this instrument, non-profit organizations can focus on their missions for the future.

Financial Reporting

The financial statements of non-profit and for-profit organizations are prepared with a focus on specific attributes. While non-profits are more particular about accountability, for-profit organizations are more concerned about profitability. This status is well reflected in the issue of restricted and unrestricted funds. For-profit organizations are not restricted from spending funds for business processes how they deem fit for profit-making, but that is not the case with non-profits.

Occasions exist where grantors will determine how and when non-profit organizations should spend certain donations. In such scenarios, the financial statement must reflect undeniable accountability. To this end, the non-profit is expected to classify the donations that come into its coffers to ensure proper tracking. The appropriate tracking will prevent the organization from muddling things up with funds that are to be spent on the cause for which the business was set up in the first place.

The financial reporting system of a non-profit organization may be more complicated than a for-profit organization due to the multiple rounds of restricted funds being received. In view of the foregoing, it is right to say that non-profits are not usually free to draw a budget around their finances — but for-profit organizations can. Funds cannot just be allocated to a cause when restricted funds are involved.

In Conclusion

As a non-profit organization administrator or manager — your financial statement is critical to your sustainability and growth. This is particularly true if you are the type that frequently looks to grantors or companies to aid your cause. The statement will tell you how much accountability your organization has to follow. It is essential that you understand the different ways you will be accountable in your for-profit or non-profit organization, as stated above.

You also have an idea of some of the complexities that may revolve around preparing your non-profit financial statement in the future — and can be better guided on the differences between the financial statement of non-profit and for-profit organizations.

Featured Image Credit: Provided by the Author; Pexels; Thank you!

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There are many ways to raise money, but a reputable fundraising support event is one of the most well-known and engaging means to raise funds and recruit supporters. There is no doubting the careful planning and laborious work that goes into making a significant occasion, even while the outcome may astound.

Every single event requires difficult labor and planning, whether for a great purpose or some other reason. Therefore, events for fundraising events must be carefully planned if they are to succeed. Here are ten key components you should include in your event strategy, regardless of the specific fundraising goal, to help you ensure that your gathering pledges event is a success.

1. Purpose

You should decide what the purpose of your event is before moving on. The following are a few questions: Is this actually a fundraiser event? Or does it instead have other goals? Is it accurate to say that you are surrounded by a huge group of friends who have little understanding of your goal or a smaller group of trustworthy allies and reasonable givers? To have a successful event, you must first understand how success influences your relationship.

It’s crucial to calculate precisely how much money you need to make from this event because that goal will reveal a lot about your arranging procedure. You must concentrate on your larger fund-raising strategy and determine how an event might fit before choosing the appropriate cash goal.

2. Goals

After consulting with your board, association employees, and significant donors, you should decide how much money you hope to raise during the event. If this is a gathering fundraising event, everything in the event plan will be capable of raising this specific amount of money.

The amount you choose should be what you hope to net or, at the very least, what you wish to generate after expenditures are eliminated. Given the coworkers and tools at your disposal, you should cultivate an objective.

3. Financial Planning

While events for collecting pledges can be huge money-makers, it’s essential to keep in mind that you’ll need to contribute your own money to get the event started. Before you start spending, make a detailed financial plan to ensure you are in control.

Make a list of everything you’ll need and conduct research to get the most advantageous arrangements and prices of the fundraising event ticketing tool. Additionally, you should include an extra cost in your budget for unforeseen costs. Also, don’t forget to consider potential backers as well.

4. Leadership

Decide who will be in charge of the various aspects of your gathering pledges event before you get too far into the planning process. Fundraising events, typically hire a leader chief to develop various fundraising event ideas and manage the budget for various pledge drives.

A leader who is in charge of planning gives other team members someone to direct questions to and ensures that everyone is working toward the same goals. When you develop a strategy for your initiative, you’ll reduce the risk of misunderstandings and errors and ensure that every employee and volunteer knows exactly what their role will be during the project’s progress.

5. Target Audience

Who is the impartial party in your event? Is this a general fundraiser event that welcomes everyone? Or, on the other side, is this event catered to a specific group, such as local groups, guardians, retirees, or young professionals? Therefore, you should decide who to invite to your event. Ask what kind of event and what elements would be best for the objective participants.

6. Set the date

You need to know another crucial aspect, namely the date and time of the occasion, before you can start making reservations for entertainment and seeing potential locations. You should be careful while choosing a date for your donation campaign because you can’t just randomly choose one. When planning a time that will be beneficial and generally interesting for givers, you should use prudence.

7. Publicity 

When you market your event, you should have a process in place for negotiating accurate ticket prices or accepting presents for the occasion. You should decide if different levels of dedication will be required for the situation. You should determine who will sell the tickets, how they will be delivered, and who will be in charge of organizing the upcoming information. 

8. Prepare for The Big Day

The time is now to carefully review all of your preparations for the eagerly anticipated day (or evening) of your support-raising event.

Make sure to include all interested parties in creating rules for events with a broad reach. A straightforward game plan will ensure that all coworkers-from full-time pledge drives to volunteers at the event-know well what their responsibilities are and are up to it to make the event successful.

Doing a pre-trail of the big day is also a good idea. All things considered, you want all the involved parties to feel confident that the fundraising event will proceed as planned.

9. Participate in Your Fundraising Event!

You can be tempted to look at or assume that all your consistent effort has been completed when the primary night actually rolls around. Even though you can (and should!) relax a little, your work is still far from done. You should concentrate on the following tasks during your event:

• Attract customers.
• Publicize your event online.
• Enjoy yourself!

10. Follow Up

Even though the event may be over, your effort isn’t. You should immediately send cards of gratitude to everyone who participated in your event, including sponsors, guests, and volunteers.

Keep your allies informed of your progress as well. They’ll need to understand how this fundraising event impacted your objective, so be as specific as possible. Send a summary to everyone who attended the event in order to gather their feedback on it. 

Following these steps, you’ll not only be able to get a better sense of how successful your event was, but you’ll also have the option of using their responses to inform your future event planning.

Feature Image Credit: Provided by the Author; From Shutterstock; Thank you!

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If you are a Web Security Professional, Web Penetration Tester, or Web Application Developer, this article is for you. This article will help to educate and inform you about web application penetration testing (WAPT) techniques and tools of the trade; Explain how to test for vulnerabilities in your Web Applications; Provide tips on how you can improve your Web Application security with WAPT.

Web Application Pentesting

Web application penetration testing (WAPT) is a method of identifying and preventing Web Application Security Issues. WAPT involves the use and understanding of Web App vulnerabilities, tools, techniques, and procedures to identify security issues in Web Applications that might be exploitable for malicious purposes by hackers or other unauthorized individuals. Web applications are programs designed to run on web servers such as Internet Information Services (IIS), Apache Tomcat, etc. They can range from simple text-based calculators all the way up to complex eCommerce solutions like Amazon’s Marketplace Platform; which includes many different services running together at once: authentication systems, databases, websites, and more.

To perform effective Web Application Pentesting one needs in-depth knowledge about technologies used in Web Applications such as Web Servers, Web Application Frameworks, and Web Programming Languages.

What are the benefits of performing web application penetration testing:

Web Application Penetration Testing is the most effective way to detect Web App vulnerabilities and security issues. With WAPT you can find out if your Web Applications are hackable or not, that means whether they have exploitable vulnerabilities for malicious purposes by hackers or other unauthorized individuals; You can test Web Apps in a safe environment without worrying about bringing down production systems during penetration tests; It helps identify problems before attackers do, allowing you to take action before users’ data is compromised. Web Application Pentesting can help Web Security Professionals to understand how Web Applications work, what technologies are used in Web Apps, and which Web App vulnerabilities attackers exploit; It gives you a better understanding of your application’s attack surface so that appropriate countermeasures might be put into place.

How Web Application Pentesting works:

Web application penetration testing is done by web security professionals who are responsible for the security of web applications. Web security professionals use various tools and techniques to perform WAPT on Web Apps; they also develop custom test cases that mimic real-world attacks against web applications with pre-defined goals.

Web Penetration Testers usually follow these steps:

Gain an understanding of how your target application works (For example: what technologies it depends upon etc.) Scan your target application using automated or manual tools looking for vulnerabilities in client-side code such as Javascript, Flash objects, active content like cookies, etc., When you find a vulnerability exploit it to gain further information about its root cause then try to fix them if possible;

Here’s what Web Penetration Testers usually do:

• Enumerate Web Applications and Web Servers;
• Identify the target application, its technologies (servers, frameworks), and programming languages;
• Perform a manual penetration test using tools like Burp Suite or Acunetix to find vulnerabilities in client-side code such as Javascript, Flash objects, etc.;
• Use automated scanners like Netsparker or HP Web Inspect to identify known web server and framework-related vulnerabilities. Automated WAPT tools can also be used for exploiting web app vulnerabilities found during the manual testing phase of pentests;
• Perform Web Application Source Code Analysis if necessary so that you can fix security issues by implementing proper filters on input data before it reaches Web Application Web Servers;

Tools used in Web Application Pentesting:

There are many open source and commercial Web Application Security Assessment Tools available for performing Web App security assessments like

1. Acunetix WVS/WVS11;
2. Netsparker Web Scanner;
3. IBM Rational Appscan Standard Edition;
4. HP Web Inspect Professional;
5. Paros Proxy etc.,

but manual web application penetration testing is another great alternative to these automated techniques which offers more flexibility while executing tests. There are various steps involved when doing a Manual Web Application security assessment. This ranges from reconnaissance all the way up to exploitation based on your test objectives (e.g., to exploit vulnerabilities).

How to perform web app penetration testing:

Once you have identified the target of your web app security assessment, it is time for reconnaissance. You should take every effort to gather as much information about your target as possible that will assist in planning our next steps during the pentest; like identifying all public-facing systems, what software platforms are being used etc., After conducting Reconnaissance searches on Google, LinkedIn social networking sites or any other relevant sources available online using custom made keywords which match with application name or technologies being used, you should also search for downloadable Web App files which contain sensitive information like user names and passwords.

Now it’s time to find out the technologies in use at your target by going through application source code or other resources available online; this is a very important step as it will help plan our next steps during the penetration testing process, especially if you are using automated tools because they can only detect vulnerabilities based on specific Web Application Frameworks/Languages etc., We always recommend using Penetration Testing Methodology from outside-in (i.e.: from public-facing web servers) as that way one can see how attackers do their attacks and what techniques they employ to compromise Web Apps.

Tips to improve WAPT results:

Web Application Penetration Testing requires a lot of planning and preparation before starting your tests, you should also understand that Web Apps are very complex systems consisting of many technologies in use like Web Server/Application servers, Web Application Frameworks or Languages, etc., so it is important to identify which technology is being used at the target web application.

Some tools support only one type of Web App technology e.g.:

• Paros supports PHP applications but does not support ASP based apps;
• Acunetix WVS can automatically identify what type of application server (i.e.; Apache or IIS) is running on Windows OS-based machines but doesn’t do this for Linux boxes as they require manual configuration during the installation process, unlike Windows where everything gets detected automatically.

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UAE (United Arab Emirates) has one of the most flourishing economies globally, and it continues to grow.

The bustling city of Dubai provides unparalleled opportunities for PE firms to establish themselves in one of the world’s most developed cities.

We will discuss how the world sees Dubai in terms of setting up private equity firms and how the wealthy investors see UAE-based PE (Private Equity firms as their option to make investments through.

Dubai-based private equity firms and employment opportunities offer finance graduates from all over the world.

According to Statista research, the number of VC (venture capital) deals raised by UAE-based startups in 2018 amounted to an overwhelming number of 366. A whopping 893 million US dollars got raised in venture capital the same year.

The unique factor, or USP, of Dubai, is that it has been among the fastest-booming economies for many years.

By the end of this year, UAE’s GDP will grow sky high, to USD 375 billion, as per expert opinions and forecasted by the Trading Economics global macro models.

Overview — PE Market in UAE and Dubai

The legal status of pre-seed startups in MENA (the Middle East and North Africa) region in 2020. Statista

The national. ae, a reputed private English daily newspaper published in Abu Dhabi, the PE market in MENA (the Middle East & North Africa) has had struggled of late.

However, investment opportunities have increased by manifolds. The Great Recession of 2008-09 saw UAE’s private equity market surviving comfortably amid the crisis.

Excluding the disappearance of a small percentage of PE firms that could not cope with the heat brought by the recession. But, in the last few years, the public markets have overshadowed or outperformed the private equity sector.

The biggest roadblock to the growth of private equity firms in the UAE is the sudden emergence of too many firms in the PE sector of late.

Investments from Dubai’s Private Equity Firms

However, the number of investments made by Dubai’s top private equity firms has soared up in the recent past; contrary to that, some disappointments have been observed concerning PE in the said geographical region.

A few of such challenges faced by the best private equity firms based in UAE comprise a non-compatible geopolitical environment, continuous change in oil prices, and decreased federal spending.

Despite all of this, MENA’s geographical region is among the fastest-growing when it comes to gauging the median annual growth of GDP.

Services Offered by Dubai’s PE Industry

There are a limited number of services that get offered by the UAE-based private equity industry.

Compared to a wide range of services offered by its American and European counterparts, especially the US private equity firms.

Because the funds are lesser, the kind of services they offer is different than traditional funding.

You can make a private equity career in Dubai across three sub-divisions of PE.

Advisory Services

The number of funds available to private equity investment professionals in Dubai PE firms is less, but business relationships in the private equity sector matter the most.

The syndication and advisory services in the Dubai PE market are fully customizable and can solve customers’ financial issues.

Private equity firms, under advisory support — offer a significant range of services. The services include those from mezzanine and equity transactions to debt structuring. The general advisory service has all services available on demand.

Private equity professionals working in the Dubai PE market maintain healthy professional bonding with top financial institutions and investment banks globally.

Capital Advisory Assistance

Under the sub-division of Capital Advisory Assistance of PE, the services of Dubai-based firms offer major advisory services to Indian firms that seek to expand in the Middle East region.

The Capital Advisory Assistance helps as people consider Mergers and Acquisitions (M&E) deals.

Alongside offering assistance to the Indian businesses, PE firms in Dubai cater to small firms located within Dubai and the Middle East looking for expansion inorganically.

Funds Distribution

Dubai-based private equity firms are mostly MENA-region locale — but they’re regularly seeking investment growth opportunities.

The PE companies of UAE know how to make the commission or cut-it when offering advisory support. The Funds Distribution knows precisely what investors to tap onto.

The prospects PE firms of Dubai regularly seek comprise insurance firms, pension funds, large family-held assets, financial bodies under GCC (Gulf Co-operation Council), and sovereign wealth funds.

Top PE Firms of Dubai

Top Private Equity Firms based in Dubai:

• Gulf Capital
• CedarBridge Partners
• The Abraaj Capital
• NBK Capital Partners
• Ithamar Capital

Recruitment Methodology for PE in Dubai

When seeking a position with a private equity job in Dubai or UAE, there is a protocol-process to land your perfect PE job.

Cover Letter and Resume

The first step to applying to a specific PE firm:

• Go to the company website and find out as much about this company as possible.
• Are you a good fit for them?
• Find the Career section and look for HR’s email ID.
• Send your detailed resume along with a cover letter to the HR email.
• Ensure that your CV or resume is not more than two pages.
• Similarly, have a precise and to the point cover letter.
• Send these two documents to your preferred private equity firm.

Interview Shortlisting

Only 5-10 percent of all applications get shortlisted for personal interviews.

To make it to the short listings — you should give due consideration to what’s written on the “career” page of your chosen PE firm’s site.

Interview Rounds

First Round

The top-notch private equity firms in Dubai usually assign a recruitment agency for the initial round in the interview process.

The agency will conduct your first round of interviews in which your suitability for the job will be judged.

If the recruiter finds you suitable for the company, you will be sent to the next rounds of interviews for further testing.

Second Round

In the second round, you will be interviewed by the solicitor and partner of the PE firm. In the second round, you will be asked a few personality-related and technical questions.

If you qualify for this round, you will go to the next round, in which you will get to meet the HR and the MD of the firm.

Third Round

The third round is your final found. Generally, if you pass this round, you have a good chance of being hired by the firm.

PE Salaries in UAE

The Payscale of a private equity analyst in the UAE earns a median annual pay of AED 200,000.

CPEP (Chartered Private Equity Professional) Certification for those hoping to be hired as a PE Professional

CPEP by USPEC (the United States Private Equity Council).

This body of professionals is a globally-recognized accreditation body in the private equity sector. The CPEP by USPEC is one of the most valuable and industry-relevant professional certifications available to be acquired by the PE aspirants in recent times.

Founded on the world’s most powerful USPEC IFIS framework, the CPEP credential in the private equity sector has gained widespread prominence.

These professionals are among finance graduates and early-career PE professionals worldwide.

Check out applicability and candidacy for the PE certification before applying on the USPEC’s website.

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Businesses are quickly adapting to the COVID-19 reality where HR technology has made the greatest influence to do so. COVID-19 has accelerated the evaluation, training, and implementation of HR tech trends in businesses of all sizes.

The HR team is actively involved in adopting innovative technologies at all levels like – recruitment process, employee engagement practices, and management processes. An emphasis has been laid on mobile connectivity and visual communication as employees started working remotely. The traditional management approach may not address the new challenges and complexities to keep the employee cycle moving.

Also, HR professionals are turning toward more strategic roles. They are catering to business needs like structuring organizations, strengthening the workforce, and managing talent. So, the repetitive tasks are handled through tech tools paving the way to use their potential to spot trends, decision-making, and becoming the true business partners.

In the survey, we can find how HR projects are delivered on their expected business value as said by employers.

Let’s deep dive into the technical aspects of the HR domain and how best HR leaders are cruising through this storm in the ocean. Here is a quick primer on some of the popular HR tech trends that are developing at an unimaginable speed.

Popular HR Tech Trends Amid COVID-19 Crisis

There is a quick shift in HR functionalities amid the COVID-19 crisis. Here are the HR tech trends that are raising the bar and helping the team to make informed and innovative decisions for the organization.

Artificial Intelligence in HR

AI in HR is on the limelight to lessen the administrative burden on the HR team. Artificial Intelligence can be used for various purposes in HR functionalities like screening, recruiting, online and offline training of employees, managing leaves, detecting anomalies, resolving queries, reviewing performance, absenteeism, exit metrics, and initiating retirements. AI use cases include digital coaching, development planning, recognition, and wellness as per ISG reports, 2019.

In brief, AI can streamline redundant and time-heavy tasks. It can quicken the tasks like surfing hundreds of resumes and cover letters, compiling and analyzing survey data, and many more tasks. Also, it removes human bias or error while evaluating candidates. However, one has to take care that there is no built-in bias while programming the algorithms, as this will continue the issue and may not get noticed upfront.

It is essential to train the systems with the right data and algorithms that are easy and transparent to understand. AI-enabled workplace still requires human skills and that’s where leadership in HR shines.

Robotic Process Automation (RPA) in HR

RPA includes robotic skills like natural language processing (NPL), machine learning, chatbots, and Artificial Intelligence (AI). It helps the HR team to increase productivity as it can speed up communications. Many of the modern HR systems have chatbots that can provide answers to employee inquiries. 50 percent of companies will have HR chatbots by 2022, Chatbot News Daily reports.

RPA has a wide range of applications in HR processes, Deloitte reports. RPA can contribute in many aspects like strategic processes, talent management, operation, and total rewards.

• The strategic processes include workforce planning management, also, employee satisfaction, organization design, establishment, and implementation of HR policies and programs.
• Similarly, talent management processes involve recruitment, onboarding, employee development, employee training, performance, competency, global employment, career graph, and succession planning.
• Likewise, operation management involves data administration, management of payrolls, reports, employee health, employee separation, labor, and employee relations.
• And, total rewards include salary compensation and other related employee benefits.

As per Deloitte studies, RPA tools are best suitable for processes with repeatable and predictable interactions with improved efficiency and effectiveness of services.

Employee engagement tools in HR

Employers today are concerned with the employees’ financial well-being and health. As a solution, they are providing financial and employee wellness apps like budgeting apps, fitness trackers, wearable apps for health, and more. They are given access to many other apps and platforms for child care too.

Moreover, there are apps provided by healthcare providers that maintain the privacy of health data. Given the pandemic situation and raising remote work culture, there are self-service employee experience portals that facilitate employees to handle HR functions all by themselves. Likewise, remote tools like Zoom and Microsoft Teams are also used in maximum while engaging with employees, interviewing, hiring, and recruitment at the remote. This paves the way for the HR team to focus on people more than processes.

Cloud-computing in HR

Cloud computing streamlines the recruitment process and is capable of transforming the whole HR functions. To mention a few trends are omnichannel models, the Internet of Things, employee wellness, learning culture, agile workforce, and data security.

• Cloud computing ensures streamlined functions and benefits organizations that have implemented it.
• IoT acts as the perfect tool through greater connectivity. It can be used to transform data into information at a faster rate. And, storage of this humongous data will not be a hurdle due to the cloud.
• Cloud communication is much better and fills the missing links in the communication facilitating managers to review, communicate, or provide feedback and all through a single platform.
• As firms encourage e-learning and online training for employees to upgrade their skills, cloud computing enables employees to meet industrial requirements in a comfort zone.
• Cloud computing connects the workforce from various geographical locations and profiles easily and gives instant communication facilities.
• Cloud computing is more reliable for data security as the security measures protect the data to the core.

Augmented Reality and Virtual Reality in HR

Virtual Reality (VR) and Augmented Reality (AR) can be used as a tool in HR toolkit. They help in the recruiting and onboarding process by setting up a simulated environment to test candidates’ specific skills, share a virtual tour of the office, create a personalized work-space environment, improve efficiency, save costs and make engaging recruitment process that helps in branding, training employees in new techniques.

It enables the HR professionals and supervisors to identify key areas of improvement, understand elements of concern for accomplishing goals by scanning people’s faces through sentiment analysis. 49% of Gen Z employees in Singapore believed that VR would revolutionize their work, while 45 % in the US confirmed the same. AR and VR have the potential to elevate a team collaboration levels. Though it is not implemented in an appreciable strength, it is more likely to be the top trend in the near future.

Blockchain in HR

Blockchain technology is poised to manage HR capabilities in different ways. The HR industry is envisioning the use cases of blockchain in their arena vowing to its characteristic features like immutability, transparency, trust, security, and decentralization. A few of the use cases could be –

With its security capabilities, blockchain can handle sensitive employee data like their pay, healthcare, banking, performance records, and expense reimbursement. Blockchain will prevent internal and external hacks of sensitive records as there will be authorized persons only.

It is difficult to determine the employees’ work and education history with the current facilities. With blockchain, the HR team can improve recruiting processes, verify the qualifications of the prospect, and make background checks. All records of the candidate will be present in a block that will get accessed through authorization.

Further, blockchain eliminates time lags in payroll systems even when the company goes global. The blockchain ledger helps to track invoices, facilitate distribution, billing, and reporting of all kinds of transactions. Payroll processing will occur in a timely fashion. It also assists in automating taxes, reimbursement system, mitigate audit risks, and give better access to benefits and packages.

To conclude

HR technology is helping the industries to sustain amid the prolonged lockdown led by the COVID-19 crisis. In addition to these technology implementations, an increased focus toward the people aspect will drive the HR domain toward new work habits and its success.

Image Credit: pexels; pixabay

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Yes, there are many issues right now with your funds because of the COVID pandemic. But the world will right itself in the coming day, and you can prepare yourself by being informed of the direction you will pursue in finance.

Both destinations, private equity, and hedge fund jobs are highly coveted by professionals.

Both careers are considered excellent exit opportunities for investment bankers. Both jobs appeal to high-net-worth investors to deal in millions (sometimes billions). Both are classified as alternative investments.

Amid these high-level similarities, how do you differentiate between the two industries; and decide? What is best for your future? Will you choose a career in private equity or hedge funds?

Here is the information you need to help you navigate through the differences. You’ll understand the nuts and bolts of hedge funds and private equity careers – workplace environment, career growth, salary structure, and education and background to get you started.

Careers in private equity and hedge funds are toe to toe.

The BIG Difference

The biggest differences between private equity and hedge fund industries.

• Private Equity (PE) firms usually acquire entire companies (especially those failing and underperforming).
• Hedge Funds (HF) acquire smaller stakes in companies or liquid financial assets such as stocks, bonds, derivatives, among others.
• Hedge Funds (HF) investments are short-term and high-risk in nature than PE. The holding period in hedge funds ranges from three months to three years.
• Private Equity (PE) investments are usually made for three to five years.

Structure — Private Equity vs Hedge Funds

Private Equity funds are usually set up as limited partnerships. There are two types of partners.

• Limited Partners (LPs): Investors in the fund (typically institutional investors like pension funds, endowments, wealthy individuals, among others). Limited Partner liability is bound to the funds invested by them.
• General Partner (GP): In-charge of making decisions for partnerships. Their liability is unlimited. They are required to meet obligations set by the firm even if they have to invest their personal assets.

Hedge Funds are also generally set up as limited partnerships. However, they are much smaller compared to PE firms in a number of employees. Even the largest hedge funds have just over a few hundred employees, and the smallest company may have only a couple of employees.

Due to the number of employees, the work culture in hedge funds is non-bureaucratic and less rigid — with a free flow of ideas. There are fewer work politics in a hedge fund office.

Types of Job Roles in Private Equity and Hedge Funds — Who’s who?

Different funds may use different titles for hedge funds and private equity jobs. The overall composition of the company is individualized.

Private Equity Professionals will typically find these roles and sequence of career progression in Private Equity (much like investment banks).

• Analyst – An analyst is a junior-most professional. They work on basic deal support — financial modeling, and valuation of companies.
• Associates – Associates oversee analysts and keep a note of seniors’ requirements. Firms, where analysts aren’t hired, will have associates perform their work.
• Senior Associates – Senior Associates are the number two person on some deal teams. The senior associate is more involved in deal negotiations and portfolio management compared to their juniors.
• Vice President – Vice Presidents, by default, are the number two person on all deal teams. They may also lead initial negotiations on a few deals.
• Principal – Principals run day-to-day deal processes, and manage the entire investment teams. A principal almost always leads deal negotiations.
• Partner – The partner usually goes by the title of GP, Managing Director or Managing Partner. Partners are the senior-most private equity professionals at the firm.

Hedge Fund Departments are usually composed of.

• Research Analysts – The research analyst’s main task is to value stocks, companies, undertake sector analysis, and forecasting events.
• Research Associates – Research associates are senior to analysts and oversee the research analyst’s work. They work along with quantitative analysts and portfolio managers.
• Traders –All departments at the hedge funds support traders – in making trading decisions and conducting operations. Traders are the ones who eventually put investor’s capital in the market.
• Risk Managers – The risk manager will work closely with portfolio managers and usually come with over 10 years of work experience. Risk managers are also responsible for assuaging any loss concerns of potential investors.
• Portfolio Manager (also, Partner) – Portfolio managers are also usually the General Partners (GPs) in HF who hold significant equity interests. The portfolio manager also manages traders and research analysts. Portfolio managers generally take care of individual sectors. A Portfolio manager in healthcare equities may oversee healthcare, and so on.
• Chief Investment Officer (also, Partner) – The Chief Investment Officer is responsible for managing all the investment portfolios of the firm.

The rate of career progression from junior private equity professionals to a partnership is more streamlined and structured in private equity than in hedge funds.

Duties and Responsibilities – What is the job?

Researching, valuing companies, and financial modeling forms a core part of both Private equity jobs as well as hedge funds. However, quarterbacking deals and maintaining networks take up a majority of the time of private equity professionals.

Private Equity professionals can work on several types of PE funds. The distinguishing factor is the stage of a company’s life at which the fund is invested. The PE mainly focusses on mid-to-late-stage funds — including Leveraged Buyouts (LBOs) and Growth Equity funds. You can alternatively specialize in early-stage VC (Venture Capital) funds and private equity funds of funds.

Major responsibilities in private equity jobs.

• Sourcing deals via public auctions or personal relationships.
• Building relationships by meeting lenders.
• Interviewing management of the company to be acquired (a component not as prominently present in hedge funds).
• Conducting company due diligence.
• Forecasting valuation (making financial projections, developing upside/downside scenarios and calculating the rate of return).
• Drafting presentations.
• Close and coordinate deals.
• Preparing an acquired company to go public or get sold.

Research Analysts and Associates.

Typically, the research and analysts and associates are the starting positions in Hedge Funds. They perform highly research-focused functions. These professionals consider the sales, costs, expenses, tax rates, and depreciation of the company and sector. The research analyst is trained to gauge the present value and project future earnings.

Research Analysts and Associate main responsibilities.

• Building industry expertise (The deeper is your understanding in the industry — the closer you will get to the top).
• Sectorial Analysis.
• Valuing companies, stocks, and securities.
• Forecasting effect of events on the market and economy.
• Financial modeling.
• Making investment decisions.

Pay and Benefits — Let’s talk about money.

Hedge Fund and Private Equity professionals are compensated in two ways. The compensations are garnered in a management fee and a performance fee. Both fees are paid for by the investors (or LPs) from their assets in the funds.

• Management Fee: The management fees typically range from one to two percent of assets under management of the firm. The fee supports the firm’s operational expenses (office space, electricity, salaries, technology, electricity, etc.).
• Performance Fee: Also called a carried interest or carry, the performance fee is basically a percentage in the profits accrued from the investments. Usually, this fee ranges from 20 to 25 percent of returns (performance). A very select group of top funds may also take home a performance fee in the range of 30-40 percent.

Historically the divide between management and performance fee has been a two percent management fee, and a 20% performance fee. These fees are called a “2:20 model,” popularly used to describe the fee structure.

Earnings in a Hedge Fund or Private Equity job.

What will you earn in these two sectors? Don’t get ahead of yourself here. Upon initial joining in the junior role, you may not get a significant portion of the performance fee or carry. However, some funds may be filtered down to you by the managers as an incentive to pick the right investments.

In both the industries, the pay, in the beginning, is close, equivalent to that of a third-year Analyst at investment banks. After a few years, however, the difference in compensation becomes to widen.

While the base pay increases in both industries at a steady pace — the difference in bonuses vary drastically. In hedge funds, you can rake millions in bonuses within a single year, much higher than in Private Equity, depending on the growth of assets under your management.

Education and Background

Private equity careers mostly attract former investment bankers as it’s considered to be a highly sought-after exit opportunity. Hedge funds on the other hand, along with investment Bankers attract diverse talent from equity research, sales and trading, and other financial domains.

Just out of Undergrad? In both industries, hiring fresh out of undergrad candidates is somewhat rare. Large funds, however, are now providing opportunities to enter the business at the analyst level.

Landing a hedge fund job right after college won’t be easy.

Most hedge funds don’t advertise and work through either executive recruiting agencies or recommendations. Only a few of the large hedge funds are making it a practice to reach out to business schools in search of new talents. Most employees come with experience ranging from four to ten years.

Hedge Funds jobs require advanced degrees like MBA, JD or Ph.D.

Topped with some years of experience can make it easier to get your foot in the door on the positions of research analyst or credit analyst. Upon recruitment, most hedge funds will typically sponsor an employee for professional certifications (see credforce.com).

In private equity jobs, the most common entry path followed by professionals is called the 2-2-2 route.

• Spending two years in an Analyst training program at an investment bank or in consulting firms.
• Followed by two years at a Private Equity firm.
• Finally, two years of business school (MBA) to secure a career-track at a Private Equity firm.

If you didn’t land in investment banking or consulting in college, you can still secure a post-MBA position at a Private Equity firm. To get a pre-MBA position at a PE fund, though realizable, would be challenging.

Bottom Line — Which career path is right for you?

There is not a single right answer.

• Are you passionate about investing?
• Can you create tremendous financial value?
• Do you excel at deal and relationship building?

If you can answer affirmative to those three questions — then a private equity career can prove a thriving choice for your future.

Ask yourself if you are:

• Highly analytical?
• Are you a self-starter?
• Are you charged to keep up with industry trends?
• Do you love researching?
• Have you begun to build industry expertise?
• Do you value companies and making predictions? you can opt for hedge funds as a career.

If you can answer affirmative to those three questions — then a hedge fund career could prove a flourishing choice for you.

Some professionals take up investment banking or consulting at the beginning of their careers, followed by a stint at private equity, and in due course join hedge funds.

Choose what strikes a chord with your personal disposition and is the right-fit with your strengths.

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