What is a Non-Profit Organization?
Non-Profit Organizations
Typically a for-profit organization exists to earn revenues and re-distribute those revenues amongst employees and shareholders. These revenues are taxable revenues, to which the IRS claims its share. A non-profit organization is basically the opposite in almost all senses. With a non-profit (NPO, or not for profit) organization, its sole purpose is to provided programs and services that are of self benefit. This is not to say that these programs don’t also benefit the community. By “self benefit”, I simply mean that they are their to help the organization meet its goals and needs.
Misconceptions About A Non Profit Organization
A common misconception about non-profit organizations is that they aren’t allowed to show a profit. This is not necessarily correct. They are allowed to earn a profit, though it is more accurately known as a “surplus”. These earnings, however, must be retained by the organization for its self-preservation, expansion and future plans. Earnings may not benefit the owners of the NPO or individuals in charge of the direction and management of the organization.
Non-Profit Organizations
In short, a non-profit organization is established to meet certain needs and goals. The excess “surplus” revenues that are not used in accordance with the organizations goals and needs must be either saved, used to meet new organization goals or to focus on meeting the following years goals and needs.
For more information on the definition of Non-Profit Organzizations (NPO’s), feel free to review the outstanding page on wikipedia by clicking the link below.
http://en.wikipedia.org/wiki/Non-profit_organization
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