Non-profit ( NPO ) organizations, also known as non-business entities or non-profit agencies , are dedicated to furthering the cause social or advocate a common point of view. In economic terms, this is an organization that uses its income surplus to achieve its ultimate goal, rather than distributing its earnings to shareholders, leaders, or members of the organization. Nonprofits are tax-exempt or charitable, meaning they do not pay income tax on the money they receive for their organization. They can operate in a religious, scientific, research, or educational setting.
A key aspect of nonprofit organizations is accountability, trust, honesty, and openness to everyone who has invested time, money, and faith into the organization. Nonprofit organizations are responsible to donors, funders, volunteers, program beneficiaries, and the general public. Public trust is a factor in the amount of money a non-profit organization can generate. The more nonprofit focuses on their mission, the more public confidence they will have, and as a result, more money for the organization. Activities undertaken by nonprofits can help build public confidence in nonprofits, as well as how ethical standards and practices are.
Video Nonprofit organization
Statistics in the United States
According to the National Center for Charitable Statistics (NCCS), there are more than 1.5 million registered non-profit organizations in the United States, including public charities, private foundations, and other nonprofits. Contributions to various charities reached $ 358.38 billion in 2014, representing a 7.1% increase from the forecast for 2013. Of this contribution, religious organizations receive 32%, educational institutions receive 15%, and human services organizations receive 12%. Between September 2010 and September 2014, approximately 25.3% of Americans over the age of 16 are volunteering for nonprofits
Maps Nonprofit organization
Money raising mechanism
Nonprofits are not driven by generating profits, but they must generate enough revenue to pursue their social tasks. Nonprofits can raise money in different ways. This includes income from donations from individual donors or foundations, corporate sponsorships, revenues from government funding, revenues from programs, services or sales of goods, and income from investments. Each NPO is unique in that the source of income works best for them. With the increase of NPOs in the past decade, organizations have adopted a competitive advantage to create income for them to remain financially stable. Donations from individuals or personal organizations may change every year and government grants have been reduced. With changes in funding from year to year, many nonprofit organizations have moved towards increasing the diversity of their funding sources. For example, many nonprofits relying on government grants have initiated fund-raising efforts to appeal to individual donors.
Challenges
The NPO challenge comes primarily from a lack of funding. Funding can come from within the organization, fundraising, donations, or from the federal government. When the reduction was made from the federal government, the organization suffered devolution. This term explains when there is a shift of responsibility from the central government to the local, subnational authority. This shift is due to loss of funds; therefore, result in a change of responsibility in running the program. Because of these frequent challenges, management must be innovative and effective in the pursuit of success.
Nonprofit vs. not-for-profit
Nonprofit and not-for-profit are terms used the same, but not necessarily the same thing. Both are organizations that do not generate profits, but can receive income to maintain their mission. Revenues generated by non-profit and nonprofit organizations are used differently. Nonprofit organizations return their earnings back to the organization if they generate additional revenue. No-for-profit uses their excess money to pay their members who work for them. Another difference between nonprofits and nonprofits is their membership. Nonprofits have volunteers or employees who do not receive money from organizational fundraising efforts. They can earn a salary for their work that is independent of the money that has been funded by the organization. Nonprofit members have the opportunity to benefit from organizational fundraising efforts. Both nonprofits and nonprofits are tax-exempt based on IRS 557 publications. Although both are tax exempt, each organization faces different tax code requirements. A nonprofit is a tax exemption under 501 (c) (3) requirement if it is a religious, charitable, or educational organization. No-for-profit is a tax exemption under 501 (c) (7) terms if they are an organization for leisure, recreation or other non-profit purposes.
Nonprofit is serving members or serving the community. Non-profit organizations that serve members create benefits for members of their organizations and may include but are not limited to credit unions, sports clubs, and advocacy groups. Nonprofit organizations serving the public focus on providing services to communities both globally and locally. Nonprofits serving the community include organizations that provide assistance and development programs, medical research, education, and health services. It is possible for a non-profit to serve members and serve the community.
Management
The common nonprofit assumption is that they are run entirely by volunteers. This is not the case. Most nonprofit organizations have staff working for the company, with many who then bring volunteers to do work led by staff. The money to pay for staff comes from state law allowing nonprofits to pay a reasonable salary to their employees. NPOs have to be careful that their staff does not make too much money. In that case, the IRS has the right to penalize non-profit organizations.
The extent to which nonprofit organizations are considered like a business, for example how they manage their resources and complete their mission, is something that non-profit organizations must balance. Although the goal of a nonprofit is not to make a profit, they still have to operate as a business. Nonprofits have the responsibility to focus on being professional, financially responsible, replacing personal interests and profit motives with mission motives, and have the ability to speak both languages ​​from nonprofits, which are business and nonprofit languages. Business languages ​​provide the ability to work with money, such as applying for a grant, which is very important for nonprofits, while the nonprofit provides the ability to speak to the community. Nonprofits need to balance both in order to have a successful organization.
Function
NPOs have a wide diversity of structures and objectives. For legal classification, however, there are several important elements:
- Management terms
- Accountability and auditing terms
- Provisory for amendments to laws or merger articles
- Provisions for the dissolution of entities
- The tax status of corporate and personal donors
- The tax status of the founder.
Some of the above should (in most jurisdictions in the US at least) be stated in the charter of incorporation or constitution of the organization. Others may be provided by the supervising authority in any particular jurisdiction.
While affiliates will not affect the legal status, they may be considered by the legal process as an indication of purpose. Most countries have laws governing the establishment and management of NPOs and which require compliance with corporate governance regimes. Most large organizations are required to publish their financial statements detailing their revenues and expenses publicly.
In many aspects, they are similar to corporate business entities although there are often significant differences. Nonprofit and nonprofit entities must have board members, steering committee members, or guardians owed fiduciary liability and loyalty to the organization. An important exception to this involves churches, which are often not required to disclose finances to anyone, including church members.
Formation and structure
In the United States, nonprofit organizations are formed by proposing rules or articles of establishment or both in the countries in which they expect to operate. Combination actions create a legal entity that allows organizations to be treated as different bodies (corporations) by law and to enter into business dealings, establish contracts, and own property as individuals or nonprofit enterprises.
Nonprofits can have members, but many do not. Nonprofits may also be trust or member associations. The organization can be controlled by its members who elect the board of directors, the board of governors or the supervisory board. Nonprofits may have a delegation structure to allow representation of groups or companies as members. Or, perhaps a non-membership organization and a board of directors may choose their own successor.
The two main types of nonprofit organizations are membership and board only. Membership organizations choose councils and hold regular meetings and the power to change the rules. A board-only organization usually has a self-chosen council and a membership whose powers are limited to those delegated to him by the council. A board organizational ordinance alone may even state that the organization does not have any membership, although the organizational literature may refer to donors or service recipients as 'members'; examples of such organizations are FairVote and the National Organization for Marijuana Law Reform. The Nonprofit Corporation Corporation model imposes a lot of complexity and requirements in membership decisions. Therefore, many organizations, such as the Wikimedia Foundation, have established a special structure of councils. The National Association of Parliamentarians has raised concerns about the implications of this trend for the future of openness, accountability, and an understanding of public concerns in nonprofit organizations. In particular, they note that non-profit organizations, unlike business firms, are not subject to market discipline for products and shareholder discipline of their capital; therefore, without the control of membership of major decisions such as the election of councils, there is some inherent protection against abuse. Disclaimer for this may be that as the nonprofit organization grows and seeks greater donations, the inspection rate increases, including the expectations of the audited financial statements. Further argument may be that NPOs are limited by their choice of legal structure, from financial gains to the extent of profit distribution to members and directors.
Tax exemption
In many countries, nonprofits may apply to tax-exempt status, so the organization itself may be exempt from other income and taxes. In the United States, in order to be exempt from federal income tax, the organization must meet the requirements set forth in the Internal Revenue Code. The granting of nonprofit status is done by the state, while the application for tax-exempt (such as 501 (c) (3), charity tax exemption) is provided by the federal government in the form of the IRS.... This means that not all nonprofits qualify for tax-exempt. NPOs using a dual underline model deepening the causes are more important than generating profits, although both are necessary to ensure organizational sustainability.
Based on the jurisdiction
Australia
In Australia, non-profit organizations include unions, charities, co-operatives, universities and hospitals, collective communities, grassroots and support groups, political parties, religious groups, associated associations, nonprofits, trusts and more. In addition, they operate in many domains and industries, from health, employment, disability and other human services to local sports clubs, credit unions, and research institutions. Non-profit organizations in Australia may choose from a number of legal forms depending on the needs and activities of the organization: cooperative, enterprise limited by warranties, unrelated associations, associated associations (by the Association of Incorporation Act 1985) or association or council incorporated (by the Commonwealth Aboriginal Council and Associations Act 1976). From an academic perspective, social enterprises, for the most part, are considered a sub-set of nonprofit sectors as they are usually also concerned with goals related to public goods. However, this is not bound to comply with the legal structure of nonprofits, and many combine and operate as nonprofit entities.
In Australia, non-profit organizations are primarily founded in one of three ways: companies are limited by collateral, trust, and associated associations. However, the associated form of association is usually used by organizations that intend to operate within just one jurisdiction of the Australian state. Nonprofits seeking to establish a presence across Australia usually consider joining as a company or as a trust.
Belgium
Under Belgian law, there are several types of nonprofit organizations:
- Vereniging zonder winstoogmerk (Dutch, abbreviated vzw ), Vereinigung ohne Gewinnerzielungsabsicht (Germany) or Sans association but lucrative (French, abbreviated asbl ).
- Internationale vereniging zonder winstoogmerk (Dutch, often abbreviated ivzw ) or Association internationale sans but lucratif (French, often abbreviated > aisbl ) for international nonprofits.
- Stichting van openbaar nut (Dutch, abbreviated child ) or Fondation d'utilitÃÆ' Â © s publique (in French, abbreviated to < i> fup ).
These three types of nonprofits differ from the fourth:
- Feitelijke vereniging (Dutch) or Association de fait (French), informal organization, often starting for short-term projects, or managed jointly with others NPO that has no status in law so can not buy property etc (sans personnalitÃÆ'Â| moral association).
Canada
Canada allows non-profit organizations to be included or unrelated. They may incorporate either federally, under Part II of the Canadian Business Corporations Act, or under provincial law. Many of the laws that govern for non-profit Canada date to the early 1900s, which means that nonprofit laws are not in line with the laws governing non-profit corporations, especially those relating to corporate governance. Federal, and in some provinces (including Ontario), merging is by way of Patent Letters, and any amendments to the Patent Letters (even simple name changes) require official approval by the appropriate government, as do the law changes. Other provinces (including Alberta) allow the incorporation of as rights , by the submission of the Articles of Association or the Articles of Association.
During 2009, the federal government enacted a new law that overturned the Canadian Corporations Act, Part II - The Canadian Profit Can Not Profit Law. This law was last modified on October 10, 2011, and the action is valid until March 4, 2013. This allows for the merger of as rights , by the Articles of Association; away with the ultra vires doctrine for nonprofits; establishing them as legal persons; and substantially updating governance provisions for nonprofits. Ontario also reorganized its laws, adopting the Ontario Not-for-Profit Corporations Act during 2010; The new law is expected to take effect from 1 July 2013.
Canada also allows various charities (including public and private foundations). The charity status is granted by the Canadian Income Agency (CRA) at the time of the request by a nonprofit; charities are allowed to issue income tax revenues to donors, have to spend a certain percentage of their assets (including cash, investments, and fixed assets) and submit annual reports to maintain their charitable status. In determining whether an organization can become a charity, CRA applies general judicial tests to objects and activities declared. This should be:
- Poverty relief
- Educational progress
- Religious progress, or
- Other specific goals that benefit the community in the way the court says is a charity
Charity is not allowed to engage in partisan political activities; this may result in the removal of a charitable status. However, a charity can perform a small amount of non-partisan political activity, further aid the charitable aims, and be subject to charitable purposes.
French
In France, non-profit organizations are called associates . They are based on the law of July 1, 1901. As a result, non-profit organizations are also called association loi 1901 .
Nonprofits can be created by two people to achieve common goals. Associations can have industrial or commercial activities or both, but members can not profit from the activity. Thus, trade unions and political parties may be governed by this law.
In 2008, the National Institute of Statistics and Economic Studies (INSEE) counted more than one million of these associates in the country, and about 16 million people older than 16 were members of a non-profit in France (an third or population above 16 years). The nonprofit employs 1.6 million people, and 8 million volunteers for them.
This law is also relevant in many former French colonies, especially in Africa.
Hong Kong
The Hong Kong Company Registry provides a memorandum of procedure for applying to the Registrar of Companies for License under Article 21 of the Company Law (Cap.32) for a limited company for the purpose of promoting trade, art, science, religion, charity, or useful objects others.
India
In India, non-governmental organizations are the most common type of public institution that has no commercial interest. However, they are not the only category of non-commercial organizations that can obtain official recognition. For example, memorial trusts, which honor well-known individuals through social work, can not be considered NGOs.
They can be listed in four ways:
- Trust me
- Society
- Part-25 companies (Section 8 under the new Companies Act, 2013)
- Custom licenses
- School
- Sports.
Registration can be done with the Registrar of Companies (RoC) or the Registrar of Societies (RoS).
The following laws or Article of the Constitution of the Republic of India are relevant to NGOs:
- Article 19 (1) (c) and 30 of the Indian Constitution
- Income Tax Act, 1961
- Public Beliefs Acts of different countries
- Community Register Act, 1860
- Section 25 of the Indian Companies Act, 1956 (Section 8 pursuant to the new Company Law, 2013)
- Foreign Contributions Act (Regulation), 1976.
Republic of Ireland
The Irish Nonprofit Database is created by the Irish Nonprofits Knowledge Exchange (INKEx) to act as the official and voluntary regulatory storage of informed public nonprofits about Ireland. A database of over 10,000 non-profit organizations in Ireland. In 2012 INKEx ceased operations due to lack of funding.
Japanese
In Japan, NPOs are a group of citizens who serve the public interest and do not generate profits for its members. NPOs are given company status to assist them in conducting business transactions. As of February 2011, there were 41,600 NPOs in Japan. Two hundred NPOs were awarded tax-deductible status by the government, meaning that only contributions to those organizations could be tax deductible for contributors.
New Zealand
In New Zealand, nonprofit organizations are usually established as an affiliated community or charity. The affiliated community requires membership of at least 15 people.
Russian
Russian law contains many legal forms from non-commercial organizations (NCOs), resulting in complex, often contradictory, and limiting regulatory frameworks. The main requirement is that the NCO, whatever its type, does not have profit generation as their primary goal and does not distribute such profits among their participants (Article 50 (1), Civil Code). Most often there are five forms of NCO:
- Public association - Public association is the most comparable form of "association" as used in international languages. A public association is a membership-based organization of individuals who are united on the basis of common interests and objectives set forth in the charter of the organization.
- Yayasan - Foundation is a property-based, non-membership organization created by individuals or legal entities (or both) to pursue social, charitable, cultural, educational or other public goals.
- Institutions (uchrezhdeniye) are forms that exist in Russia and some other countries in the former Soviet Union. Like foundations, agencies have no members. However, unlike foundations, agencies are not entitled to property rights on property submitted to them (Article 120, Civil Code, and Article 20, NCO Law). In addition, the founders are responsible for the obligations of institutions that can not be found alone.
- Non-commercial partnerships - Non-commercial partnerships (NPs) (Article 8, NCO Act) is a membership organization that pursues activities for the mutual benefit of members. Therefore, assets that have been transferred to the NP as a donation can be used for purposes other than those that have public benefits.
- Autonomous non-commercial organizations - Autonomous non-commercial organizations (Article 10, NCO Law) are non-membership organizations that run services in education, social policy, culture, etc., which in practice often generate income by providing its services for a fee.
South Africa
In South Africa, certain types of charities may issue tax certificates when required, which can be used by donors to apply for tax deductions. A charity/NGO can be formed as a voluntary, trust or nonprofit association (NPC). Voluntary associations are formed under an agreement under general law, and trusts are registered by the Master of the High Court.
The non-profit company (NPC) is registered by the Company and the Intellectual Property Commission. All of these may voluntarily register with the Directorate for Nonprofit Organizations and may apply to tax-exempt status to South African Revenue Service (SARS).
Ukraine
In Ukraine, non-profit organizations include non-governmental organizations, cooperatives (including housing cooperatives), charitable organizations, religious organizations, political parties, commodity exchanges (that's weird, but in Ukrainian commodity exchanges can not be arranged for profit) and more. Nonprofit organizations must obtain nonprofit status from tax authorities. The state fiscal service is the primary registration authority for nonprofit status.
United Kingdom
- In the UK, many nonprofit companies are incorporated as a limited warranted company. This means that the company has no share or shareholder, but it has the benefit of its status. This includes limited liability for its members and may enter into contracts and purchase property on its own behalf. Corporate profits (also referred to as trade surpluses) should be invested in achieving these objectives and not being distributed to company members.
Since the Companies Act 2006, nonprofit companies may be formed as Public Interest Companies (CIC). This is a form of company limited by a guarantee or company limited by shares but under special conditions and is intended specifically to ensure that the profits and assets of the enterprise are used for the public benefit, even when administered for (limited) profits.
Charity is a nonprofit organization that meets strict criteria regarding the goals and methods in which it makes its decisions and reports its finances. For example, charities are generally not allowed to pay their trustees. In England and Wales, charities can be registered with the Charity Commission. In Scotland, the Scottish Charity Registry Office serves the same function. Other organizations classified as non-profit organizations elsewhere, such as unions, are subject to separate regulations and are not considered 'charities' in the technical sense.
United States
Once a nonprofit organization is established at the state level, an organization may request recognition of tax-exempt status in respect of US federal income tax. This is usually done by applying to the Internal Revenue Service (IRS), although statutory exceptions exist for a limited type of nonprofit organization. The IRS, after reviewing the application to ensure that the organization meets the requirements to be recognized as a tax-exempt organization (such as destination, spending restrictions, and internal protection for charity), may issue a letter of authorization to a nonprofit giving it a tax exempt status for income tax payments, purpose of deduction. Exclusions do not apply to other federal taxes such as labor taxes. In addition, tax-exempt organizations must pay federal taxes on income not related to the purpose of their exclusion. Failure to maintain operations in accordance with the law may result in a loss of tax-exempt status.
Individual states and locality offer nonprofit institutions exclusion from other taxes such as sales tax or property taxes. Federal tax-free status does not guarantee exemption from state and local taxes and vice versa. These exceptions generally have separate applications, and the terms may differ from the IRS requirements. In addition, even tax-exempt organizations may be required to submit an annual financial report (IRS Form 990) at the state and federal level. Form 990 tax-exempt organizations shall be available for public scrutiny.
Government
Board directors have full control over the organization, but usually the executive director is employed. In some cases, councils are elected by membership, but generally boards of directors are self-actualizing. In this 'just-board' organization, board members nominate new members and vote on their fellow director nominations. Part VI, section A, Question 7a of Form 990 asks 'members, shareholders, or others who have the power to elect or appoint one or more of the governing members'?
Accreditation
Nonprofits in the United States may receive accreditation by undergoing a third party review of the Standards for Excellence Institute to ensure efficient use of resources.
Problem
Founder Syndrome
Founder syndrome is a problem that organizations experience as they develop. The dynamic founder, who has a strong vision of how to operate the project, tries to maintain organizational control, even when new employees or volunteers want to expand the scope of the project or change policy.
Incorrect resource management
Mismanagement of resources is a special issue with NPOs because employees are not accountable to anyone who has direct shares in the organization. For example, an employee may start a new program without disclosing its full liability. Employees can be rewarded for enhancing NPO's reputation, making other employees happy, and attracting new donors. The obligation promised on full confidence and credit to the organization but not recorded anywhere is an accounting fraud. But even indirect liabilities negatively affect NPO's financial sustainability, and NPOs will have financial problems unless strict controls are put in place. Some commentators have argued that significant funding receipts from large corporations for profit can ultimately alter the functioning of NPOs. A common measure of NPO efficiency is the cost ratio (ie expenditure for things other than the program, divided by total expenditures).
Competition for talent
Competition for employees with the public and private sectors is another problem facing nonprofit organizations, especially for management positions. There are reports of major talent shortages in the nonprofit sector today regarding newly graduated workers, and NPOs have been too long degraded to gain secondary priority, which may be why they find themselves in a much-held position. While many well-established NPOs are well funded and compared to their public sector competitors, many are independent and must be creative with the incentives they use to attract and retain a vibrant personality. Initial interest for many is a remuneration package, although many who have been questioned after leaving the NPO have reported that it is a stressful and hard-working work environment that drives them out.
Public and private sector work has been largely capable of offering more to its employees than most nonprofits throughout history. Whether in the form of higher wages, more comprehensive benefits packages, or less boring jobs, the public and private sectors have benefited from NPOs in attracting employees. Traditionally, NPOs have attracted individuals driven by missions that want to help their chosen goals. The problem is that some NPOs do not operate in a way that is similar to most businesses, or just seasonally. This has caused many young employees and is compelled to ignore NPOs that support more stable jobs. Today, however, nonprofit organizations adopt the methods used by their competitors and find new ways to retain their employees and attract the best of the newly printed workforce.
It has been mentioned that most nonprofit organizations will never be able to match private sector payments and should therefore focus their attention on benefits packages, incentives, and the application of a pleasant work environment. A good environment is ranked higher than salary and work pressure. NPOs are encouraged to pay as much as they can afford and offer a low stress work environment that employees can associate themselves with positively. Other incentives that should be applied are generous vacation allowances or flexible working hours.
Online presence
Many NPOs often use.org or.us (or CCTLD from their respective countries) or top-level domains (TLD) when choosing a domain name to distinguish themselves from commercial entities, which typically use.com space.
In the traditional domain listed in RFC 1591,.org is for 'unsuitable organizations elsewhere' in the naming system, which implies that it is the right category for non-commercial organizations if they are not government, education, or any of another type with a specific TLD. It is not intended specifically for charitable organizations or certain organizational or taxation statuses; However, it includes anything that can not be classified as another category. Currently, no restrictions apply at enrollment.com or.org, so one can find a wide variety of organizations in one of these domains, as well as other top level domains including newer, more specific ones that may apply to certain types of organizations including.museum for museum and.coop for cooperatives. Organizations may also register under the country-level top-level domains that are appropriate for their country.
Alternate name
Instead of being determined by the words 'non', some organizations suggest new, positive-sounding terminology to describe this sector. The term 'civil society organization' (CSO) has been used by a growing number of organizations, including the Global Governance Study Center. The term 'citizen sector organization' (CSO) has also suggested to describe the sector - as one citizen, for citizens - by organizations including Ashoka: Innovator for Public. Advocates argue that these terms describe the sector in its own terms, irrespective of the terminology used for government or the business sector. However, the use of terminology by nonprofit organizations of self-descriptive language that does not legally meet the risk of confusing the public about the abilities, abilities, and nonprofit limitations.
In some Spanish-speaking jurisdictions, non-profit organizations are called "civil associations".
See also
References
Further reading
- Snyder, Gary R., Nonprofits: In Brink: How Nonprofits lost their way and some important things to bring them back, 2006.
- P. Hartigan, 2006, 'It's about people, not profit', Business Strategy Review , Winter 2006
External links
- Non-profit Resources on Curlie (based on DMOZ)
- Nonprofits & amp; Philanthropy Research in IssueLab
- Nonprofit Organization Benefits
Source of the article : Wikipedia
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