2017615 NonprofitorganizationWikipedia

Nonprofitorganization
FromWikipedia,thefreeencyclopedia

Anonprofitorganization(alsoknownasanonbusinessentity[1])isanorganizationthathasbeenformedby
agroupofpeopleinorder"topursueacommonnotforprofitgoal",thatis,topursueastatedgoalwithoutthe
intentionofdistributingexcessrevenuetomembersorleaders.[2]Anonprofitorganizationisoftendedicatedto
furtheringaparticularsocialcauseoradvocatingforaparticularpointofview.Ineconomicterms,anonprofit
organizationusesitssurplusrevenuestofurtherachieveitspurposeormission,ratherthandistributingits
surplusincometotheorganization'sshareholders(orequivalents)asprofitordividends.Thisisknownasthe
nondistributionconstraint.[3]Thedecisiontoadoptanonprofitlegalstructureisonethatwilloftenhave
taxationimplications,particularlywherethenonprofitseeksincometaxexemptionorcharitablestatus.

Contents
1 Terminologyandvariations
2 Functions
2.1 Formationandstructure
2.2 Taxexemption
3 Byjurisdiction
3.1 Australia
3.2 Belgium
3.3 Canada
3.4 France
3.5 HongKong
3.6 India
3.7 RepublicofIreland
3.8 Japan
3.9 NewZealand
3.10 Russia
3.11 SouthAfrica
3.12 Ukraine
3.13 UnitedKingdom
3.14 UnitedStates
3.14.1 Governance
3.14.2 Accreditation
4 Problems
4.1 Founder'ssyndrome
4.2 Resourcemismanagement
4.3 Competitionfortalent
5 Examples
6 Onlinepresence
7 Alternativenames
8 Seealso
9 References
10 Furtherreading
11 Externallinks

Terminologyandvariations

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Thetermsnonprofitandnotforprofitarenotconsistentlydifferentiatedacrossjurisdictions.Inlayman's
termstheyareusuallyequivalentinconcept,althoughinvariousjurisdictionsthereareaccountingandlegal
differences.

NPOsaremainlycharityorserviceorganization.Theyareorganizedasatrust,acooperative,ortheyexist
informally.Averysimilartypeoforganizationtermedasupportingorganizationoperateslikeafoundation,but
theyaremorecomplicatedtoadminister,holdmorefavorabletaxstatusandarerestrictedinthepubliccharities
theysupport.Theirgoalisnottobesuccessfulintermsofwealth,butintermsofgivingvaluetothegroupsof
peopletheyadministerto.[4]

Thenonprofitlandscapeishighlyvaried,althoughmanypeoplehavecometoassociateNPOswithcharitable
organizations.Althoughcharitiesdomakeupanoftenhighprofileorvisibleaspectofthesector,thereare
manyothertypesofnonprofitorganizations.Overall,theytendtobeeithermemberservingorcommunity
serving.Memberservingorganizationsincludemutualsocieties,cooperatives,tradeunions,creditunions,
industryassociations,sportsclubs,retiredserviceman'sclubsandadvocacygroupsorpeakbodies
organizationsthatbenefitaparticulargroupofpeople,i.e.themembersoftheorganization.Typically,
communityservingorganizationsarefocusedonprovidingservicestothecommunityingeneral,either
globallyorlocally:organizationsdeliveringhumanservicesprogramsorprojects,aidanddevelopment
programs,medicalresearch,education,healthservices,andsoon.Itcouldbearguedthatmanynonprofitssit
acrossbothcamps,atleastintermsoftheimpacttheymake.[5]Forexample,thegrassrootssupportgroupthat
providesalifelinetothosewithaparticularconditionordiseasecouldbedeemedtobeservingitsmembers(by
directlysupportingthem)andthebroadercommunity(throughtheprovisionofaserviceforfellowcitizens).

AlthoughNPOsarepermittedtogeneratesurplusrevenues,theymustberetainedbytheorganizationforits
selfpreservation,expansion,orplans.[6]NPOshavecontrollingmembersoraboardofdirectors.Manyhave
paidstaffincludingmanagement,whereasothersemployunpaidvolunteersandexecutiveswhoworkwithor
withoutcompensation(occasionallynominal).[7]Insomecountries,wherethereisatokenfee,ingeneral,itis
usedtomeetlegalrequirementsforestablishingacontractbetweentheexecutiveandtheorganization.

Designationasanonprofitdoesnotmeanthattheorganizationdoesnotintendtomakeaprofit,butratherthat
theorganizationhasno'owners'andthatthefundsrealizedintheoperationoftheorganizationwillnotbeused
tobenefitanyowners.TheextenttowhichanNPOcangeneratesurplusrevenuesmaybeconstrainedoruseof
surplusrevenuesmayberestricted.

Functions
NPOshaveawidediversityofstructuresandpurposes.Forlegalclassification,thereare,nevertheless,some
elementsofimportance:

Managementprovisionss
Accountabilityandauditingprovisions
Provisoryfortheamendmentofthestatutesorarticlesofincorporation
Provisionsforthedissolutionoftheentity
Taxstatusesofcorporateandprivatedonors
Taxstatusofthefounders.

Someoftheabovemustbe(inmostjurisdictionsintheUSAatleast)expressedintheorganization'scharterof
establishmentorconstitution.Othersmaybeprovidedbythesupervisingauthorityateachparticular
jurisdiction.

Whileaffiliationswillnotaffectalegalstatus,theymaybetakenintoconsiderationbylegalproceedingsasan
indicationofpurpose.

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MostcountrieshavelawsthatregulatetheestablishmentandmanagementofNPOsandthatrequirecompliance
withcorporategovernanceregimes.Mostlargerorganizationsarerequiredtopublishtheirfinancialreports
detailingtheirincomeandexpenditurepublicly.

Inmanyaspects,theyaresimilartocorporatebusinessentitiesthoughthereareoftensignificantdifferences.
Bothnotforprofitandforprofitcorporateentitiesmusthaveboardmembers,steeringcommitteemembers,or
trusteeswhoowetheorganizationafiduciarydutyofloyaltyandtrust.Anotableexceptiontothisinvolves
churches,whichareoftennotrequiredtodisclosefinancestoanyone,includingchurchmembers.

Formationandstructure

IntheUnitedStates,nonprofitorganizationsareformedbyfilingbylawsorarticlesofincorporationorbothin
thestateinwhichtheyexpecttooperate.Theactofincorporationcreatesalegalentityenablingthe
organizationtobetreatedasadistinctbody(corporation)bylawandtoenterintobusinessdealings,form
contracts,andownpropertyasindividualsorforprofitcorporationscan.

Nonprofitscanhavemembers,butmanydonot.Thenonprofitmayalsobeatrustorassociationofmembers.
TheorganizationmaybecontrolledbyitsmemberswhoelecttheBoardofDirectors,BoardofGovernorsor
BoardofTrustees.Anonprofitmayhaveadelegatestructuretoallowfortherepresentationofgroupsor
corporationsasmembers.Alternatively,itmaybeanonmembershiporganizationandtheboardofdirectors
mayelectitsownsuccessors.

Thetwomajortypesofnonprofitorganizationaremembershipandboardonly.Amembershiporganization
electstheboardandhasregularmeetingsandthepowertoamendthebylaws.Aboardonlyorganization
typicallyhasaselfselectedboardandamembershipwhosepowersarelimitedtothosedelegatedtoitbythe
board.Aboardonlyorganization'sbylawsmayevenstatethattheorganizationdoesnothaveanymembership,
althoughtheorganization'sliteraturemayrefertoitsdonorsorservicerecipientsas'members'examplesof
suchorganizationsareFairvote[8][9]andtheNationalOrganizationfortheReformofMarijuanaLaws.[10]The
ModelNonprofitCorporationActimposesmanycomplexitiesandrequirementsonmembershipdecision
making.[11]Accordingly,manyorganizations,suchasWikimedia,[12]haveformedboardonlystructures.The
NationalAssociationofParliamentarianshasgeneratedconcernsabouttheimplicationsofthistrendforthe
futureofopenness,accountability,andunderstandingofpublicconcernsinnonprofitorganizations.
Specifically,theynotethatnonprofitorganizations,unlikebusinesscorporations,arenotsubjecttomarket
disciplineforproductsandshareholderdisciplineoftheircapitaltherefore,withoutmembershipcontrolof
majordecisionssuchastheelectionoftheboard,therearefewinherentsafeguardsagainstabuse.[13][14]A
rebuttaltothismightbethatasnonprofitorganizationsgrowandseeklargerdonations,thedegreeofscrutiny
increases,includingexpectationsofauditedfinancialstatements.[15]AfurtherrebuttalmightbethatNPOsare
constrained,bytheirchoiceoflegalstructure,fromfinancialbenefitasfarasdistributionofprofittomembers
anddirectorsisconcerned.

Taxexemption

Inmanycountries,nonprofitsmayapplyfortaxexemptstatus,sothattheorganizationitselfmaybeexempt
fromincometaxandothertaxes.IntheUnitedStates,tobeexemptfromfederalincometaxes,theorganization
mustmeettherequirementssetforthbytheInternalRevenueService.[16]NPOsusethemodelofadouble
bottomlineinthatfurtheringtheircauseismoreimportantthanmakingaprofit,thoughbothareneededto
ensuretheorganization'ssustainability.[17][18]

Byjurisdiction
Australia

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InAustralia,nonprofitorganizationsincludetradeunions,charitableentities,cooperatives,universitiesand
hospitals,mutualsocieties,grassrootandsupportgroups,politicalparties,religiousgroups,incorporated
associations,notforprofitcompanies,trustsandmore.Furthermore,theyoperateacrossamultitudeof
domainsandindustries,fromhealth,employment,disabilityandotherhumanservicestolocalsportingclubs,
creditunions,andresearchinstitutes.[19]AnonprofitorganizationinAustraliacanchoosefromanumberof
legalformsdependingontheneedsandactivitiesoftheorganization:cooperative,companylimitedby
guarantee,unincorporatedassociation,incorporatedassociation(bytheAssociationsIncorporationAct1985)
orincorporatedassociationorcouncil(bytheCommonwealthAboriginalCouncilsandAssociationsAct
1976).[20]Fromanacademicperspective,socialenterpriseis,forthemostpart,consideredasubsetofthe
nonprofitsectorastypicallytheytooareconcernedwithapurposerelatingtoapublicgood.However,these
arenotboundtoadheretoanonprofitlegalstructure,andmanyincorporateandoperateasforprofitentities.

InAustralia,nonprofitorganizationsareprimarilyestablishedinoneofthreeways:companieslimitedby
guarantee,trusts,andincorporatedassociations.However,theincorporatedassociationformistypicallyused
byorganizationsintendingtooperateonlywithinoneAustralianstatejurisdiction.Nonprofitorganizations
seekingtoestablishapresenceacrossAustraliatypicallyconsiderincorporatingasacompanyorasatrust.[21]

Belgium

ByBelgianlaw,thereareseveralkindsofnonprofitorganization:

Verenigingzonderwinstoogmerk(Dutch,abbreviatedvzw),VereinigungohneGewinnerzielungsabsicht
(German)orAssociationsansbutlucratif(French,abbreviatedasbl).
Internationaleverenigingzonderwinstoogmerk(Dutch,oftenabbreviatedivzw)orAssociation
internationalesansbutlucratif(French,oftenabbreviatedaisbl)forinternationalnonprofit
organizations.
Stichtingvanopenbaarnut(Dutch,abbreviatedson)orFondationdutilitspublique(French,
abbreviatedfup).

Thesethreekindsofnonprofitorganizationareincontrasttoafourth:

Feitelijkevereniging(Dutch)orAssociationdefait(French),aninformalorganization,oftenstartedfora
shorttermproject,ormanagedalongsideanotherNPOthatdoesnothaveanystatusinlawsocannot
purchasepropertyetc.(associationsanspersonnalitmorale).

Canada

Canadaallowsnonprofitorganizationstobeincorporatedorunincorporated.Theymayincorporateeither
federally,underPartIIoftheCanadaBusinessCorporationsAct,orunderprovinciallegislation.Manyofthe
governingActsforCanadiannonprofitsdatetotheearly1900s,meaningthatnonprofitlegislationhasnotkept
pacewithlegislationthatgovernsforprofitcorporations,particularlywithregardstocorporategovernance.
Federal,andinsomeprovinces(includingOntario),incorporationisbywayofLettersPatent,andanychange
totheLettersPatent(evenasimplenamechange)requiresformalapprovalbytheappropriategovernment,as
dobylawchanges.Otherprovinces(includingAlberta)permitincorporationasofright,bythefilingofArticles
ofIncorporationorArticlesofAssociation.

During2009,thefederalgovernmentenactednewlegislationrepealingtheCanadaCorporationsAct,PartII
theCanadaNotforProfitCorporationsAct.ThisActwaslastamendedon10October2011,andtheactwas
currentuntil4March2013.[22]Itallowsforincorporationasofright,byArticlesofIncorporationdoesaway
withtheultraviresdoctrinefornonprofitsestablishesthemaslegalpersonsandsubstantiallyupdatesthe
governanceprovisionsfornonprofits.Ontarioalsooverhauleditslegislation,adoptingtheOntarioNotfor
ProfitCorporationsActduring2010pendingtheoutcomeofananticipatedelectionduringOctober2011,the
newActisexpectedtobeineffectasof1July2013.

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Canadaalsopermitsavarietyofcharities(includingpublicandprivatefoundations).Charitablestatusis
grantedbytheCanadaRevenueAgency(CRA)uponapplicationbyanonprofitcharitiesareallowedtoissue
incometaxreceiptstodonors,mustspendacertainpercentageoftheirassets(includingcash,investments,and
fixedassets)andfileannualreportsinordertomaintaintheircharitablestatus.Indeterminingwhetheran
organizationcanbecomeacharity,CRAappliesacommonlawtesttoitsstatedobjectsandactivities.These
mustbe:

Thereliefofpoverty
Theadvancementofeducation
Theadvancementofreligion,or
Certainotherpurposesthatbenefitthecommunityinawaythecourtshavesaidischaritable[23]

Charitiesarenotpermittedtoengageinpartisanpoliticalactivitydoingsomayresultintherevocationof
charitablestatus.However,acharitycancarryoutasmallnumberofpoliticalactivitiesthatarenonpartisan,
helpfurtherthecharities'purposes,andsubordinatetothecharity'scharitablepurposes.[24]

France

InFrance,nonprofitsarecalledassociations.Theyarebasedonalawenacted1July1901.Asaconsequence,
thenonprofitsarealsocalledassociationloi1901.

Anonprofitcanbecreatedbytwopeopletoaccomplishacommongoal.Theassociationcanhaveindustrialor
commercialactivitiesorboth,butthememberscannotmakeanyprofitfromtheactivities.Thereby,worker's
unionsandpoliticalpartiescanbeorganizedfromthislaw.

In2008,theNationalInstituteofStatisticsandEconomicStudies(INSEE)countedmorethanamillionof
theseassociationsinthecountry,andabout16millionpeopleolderthan16aremembersofanonprofitin
France(athirdorthepopulationover16yearsold).Thenonprofitsemploy1.6millionpeople,and8million
arevolunteersforthem.[25]

ThislawisalsorelevantinmanyformerFrenchcolonies,particularlyinAfrica.

HongKong

TheHongKongCompanyRegistryprovidesamemorandumofprocedureforapplyingtoRegistrarof
CompaniesforaLicenceunderSection21oftheCompaniesOrdinance(Cap.32)foralimitedcompanyforthe
purposeofpromotingcommerce,art,science,religion,charity,oranyotherusefulobject.[26][27]

India

InIndia,nongovernmentalorganizations(NGOs)arethemostcommontypeofsocietalinstitutionsthatdonot
havecommercialinterests.However,theyarenottheonlycategoryofnoncommercialorganizationsthatcan
gainofficialrecognition.Forexample,memorialtrusts,whichhonourrenownedindividualsthroughsocial
work,maynotbeconsideredasNGOs.[28]

Theycanberegisteredinfourways:

Trust
Society
Section25company(Section8asperthenewCompaniesAct,2013)
Speciallicensing
Schools
Sports.

RegistrationcanbewitheithertheRegistrarofCompanies(RoC)ortheRegistrarofSocieties(RoS).
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ThefollowinglawsorConstitutionalArticlesoftheRepublicofIndiaarerelevanttotheNGOs:

Articles19(1)(c)and30oftheConstitutionofIndia
IncomeTaxAct,1961
PublicTrustsActsofvariousstates
SocietiesRegistrationAct,1860
Section25oftheIndianCompaniesAct,1956(Section8asperthenewCompaniesAct,2013)
ForeignContribution(Regulation)Act,1976.

RepublicofIreland

TheIrishNonprofitsDatabasewascreatedbyIrishNonprofitsKnowledgeExchange(INKEx)toactasa
repositoryforregulatoryandvoluntarilydisclosedinformationaboutIrishpublicbenefitnonprofits.The
databaselistsmorethan10,000nonprofitorganizationsinIreland.In2012INKExceasedtooperateduetolack
offunding.[29]

Japan

InJapan,anNPOisanycitizen'sgroupthatservesthepublicinterestanddoesnotproduceaprofitforits
members.NPOsaregivencorporatestatustoassisttheminconductingbusinesstransactions.AsatFebruary
2011,therewere41,600NPOsinJapan.TwohundredNPOsweregiventaxdeductiblestatusbythe
government,whichmeantthatonlycontributionstothoseorganizationsweretaxdeductibleforthe
contributors.[30]

NewZealand

InNewZealand,nonprofitorganizationsusuallyareestablishedasincorporatedsocietiesorcharitabletrusts.
Anincorporatedsocietyrequiresamembershipofatleast15people.

Russia

Russianlawcontainsmanylegalformsofnoncommercialorganization(NCO),resultinginacomplex,often
contradictory,andlimitingregulatoryframework.[31]TheprimaryrequirementsarethatNCOs,whatevertheir
type,donothavethegenerationofprofitastheirmainobjectiveanddonotdistributeanysuchprofitamong
theirparticipants(Article50(1),CivilCode).MostcommonlytherearefiveformsofNCO:

PublicassociationsApublicassociationistheformmostcomparabletoan'association'asusedin
internationalparlance.Apublicassociationisamembershipbasedorganizationofindividualswho
associateonthebasisofcommoninterestsandgoalsstipulatedintheorganization'scharter.
FoundationsFoundationsarepropertybased,nonmembershiporganizationscreatedbyindividualsor
legalpersons(orboth)topursuesocial,charitable,cultural,educational,orotherpublicbenefitgoals.
InstitutionsTheinstitution(uchrezhdeniye)isaformthatexistsinRussiaandseveralothercountriesof
theformerSovietUnion.Likefoundations,institutionsdonothavemembers.Unlikefoundations,
however,institutionsdonotacquirepropertyrightsinthepropertyconveyedtothem(Article120,Civil
Code,andArticle20,NCOLaw).Moreover,thefoundersareliableforanyobligationsoftheinstitution
thatitcannotmeetonitsown.
NoncommercialpartnershipsAnoncommercialpartnership(NP)(Article8,NCOLaw)isa
membershiporganizationpursuingactivitiesforthemutualbenefitofmembers.Therefore,assetsthat
havebeentransferredtoanNPasdonationscanbeusedforpurposesotherthanthosehavingpublic
benefit.
AutonomousnoncommercialorganizationsAnautonomousnoncommercialorganization(ANO)
(Article10,NCOLaw)isanonmembershiporganizationundertakingservicesinthefieldofeducation,
socialpolicy,culture,etc.,whichinpracticeoftengeneratesincomebyprovidingitsservicesforafee.[32]

SouthAfrica
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InSouthAfrica,certaintypesofcharitymayissueataxcertificatewhenrequested,whichdonorscanuseto
applyforataxdeduction.Charities/NGOsmaybeestablishedasvoluntaryassociations,trustsornonprofit
companies(NPCs).Voluntaryassociationsareestablishedbyagreementunderthecommonlaw,andtrustsare
registeredbytheMasteroftheHighCourt.

Nonprofitcompanies(NPCs)areregisteredbytheCompaniesandIntellectualPropertyCommission.[33]All
ofthesemayvoluntarilyregisterwithTheDirectorateforNonprofitOrganisationsandmayapplyfortax
exemptstatustotheSouthAfricanRevenueService(SARS).

Ukraine

InUkraine,nonprofitorganizationsincludenongovernmentalorganizations,cooperatives(inc.housing
cooperative),charitableorganizations,religiousorganizations,politicalparties,commoditiesexchange(itis
strange,butinUkrainecommoditiesexchangecan'tbeorganizedforprofit)andmore.Nonprofitorganization
shallobtainofnonprofitstatusfromtaxauthority.Statefiscalserviceisthemainregistrationauthorityfornon
profitstatus[34].

UnitedKingdom

IntheUK,manynonprofitcompaniesareincorporatedasacompanylimitedbyguarantee.Thismeansthatthe
companydoesnothavesharesorshareholders,butithasthebenefitsofcorporatestatus.Thisincludeslimited
liabilityforitsmembersandbeingabletoenterintocontractsandpurchasepropertyinitsownname.The
profitsofthecompany(alsoreferredtoasthetradingsurplus)mustbeinvestedinachievingthesegoalsand
notdistributedtothecompany'smembers.[35]

SincetheCompaniesAct2006,nonprofitcompaniesmaybeformedasaCommunityInterestCompany(CIC).
Theseareformsofcompanylimitedbyguaranteeorcompanylimitedbysharesbutwithspecialconditionsand
areintendedspecificallytoensurethattheprofitsandassetsofthecompanyareusedforthepublicgood,even
whenmanagedfor(limited)profit.[36]

Acharityisanonprofitorganizationthatmeetsstrictercriteriaregardingitspurposeandthemethodinwhichit
makesdecisionsandreportsitsfinances.Forexample,acharityisgenerallynotallowedtopayitstrustees.In
EnglandandWales,charitiesmayberegisteredwiththeCharityCommission.[37]InScotland,theOfficeofthe
ScottishCharityRegulatorservesthesamefunction.Otherorganizationsthatareclassifiedasnonprofit
organizationselsewhere,suchastradeunions,aresubjecttoseparateregulationsandarenotregardedas
'charities'inthetechnicalsense.

UnitedStates
ForaUnitedStatesanalysisofthisissue,see501(c)andCharitableorganization(UnitedStates).

Afteranonprofitorganizationhasbeenformedatthestatelevel,theorganizationmayseekrecognitionoftax
exemptstatuswithrespecttoU.S.federalincometax.ThatisdonetypicallybyapplyingtotheInternal
RevenueService(IRS),althoughstatutoryexemptionsexistforlimitedtypesofnonprofitorganization.The
IRS,afterreviewingtheapplicationtoensuretheorganizationmeetstheconditionstoberecognizedasatax
exemptorganization(suchasthepurpose,limitationsonspending,andinternalsafeguardsforacharity),may
issueanauthorizationlettertothenonprofitgrantingittaxexemptstatusforincometaxpayment,filing,and
deductibilitypurposes.Theexemptiondoesnotapplytootherfederaltaxessuchasemploymenttaxes.
Additionally,ataxexemptorganizationmustpayfederaltaxonincomethatisunrelatedtotheirexempt
purpose.[38]Failuretomaintainoperationsinconformitytothelawsmayresultinthelossoftaxexemptstatus.

Individualstatesandlocalitiesoffernonprofitsexemptionsfromothertaxessuchassalestaxorpropertytax.
Federaltaxexemptstatusdoesnotguaranteeexemptionfromstateandlocaltaxesandviceversa.These
exemptionsgenerallyhaveseparateapplications,andtheirrequirementsmaydifferfromtheIRSrequirements.
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Furthermore,evenataxexemptorganizationmayberequiredtofileannualfinancialreports(IRSForm990)at
thestateandfederallevels.Ataxexemptorganization's990formsarerequiredtobeavailableforpublic
scrutiny.AnexampleofanonprofitorganizationintheUSisProjectVoteSmart.

Governance

Theboardofdirectorshasultimatecontrolovertheorganization,buttypicallyanexecutivedirectorishired.In
somecases,theboardiselectedbyamembership,butcommonly,theboardofdirectorsisselfperpetuating.In
these'boardonly'organizations,boardmembersnominatenewmembersandvoteontheirfellowdirectors'
nominations.[39]PartVI,sectionA,question7aoftheForm990asks'members,stockholders,orotherpersons
whohadthepowertoelectorappointoneormoremembersofthegoverningbody?'

Accreditation

AnonprofitorganizationintheUnitedStatescanreceiveanaccreditationbyundergoingathirdpartyreview
fromtheStandardsforExcellenceInstitutetoensureefficientuseofresources.

Problems
Founder'ssyndrome

Founder'ssyndromeisanissueorganizationsfaceastheygrow.Dynamicfounders,whohaveastrongvisionof
howtooperatetheproject,trytoretaincontroloftheorganization,evenasnewemployeesorvolunteerswant
toexpandtheproject'sscopeorchangepolicy.[40]

Resourcemismanagement

ResourcemismanagementisaparticularproblemwithNPOsbecausetheemployeesarenotaccountableto
anybodywhohasadirectstakeintheorganization.Forexample,anemployeemaystartanewprogram
withoutdisclosingitscompleteliabilities.TheemployeemayberewardedforimprovingtheNPO'sreputation,
makingotheremployeeshappy,andattractingnewdonors.Liabilitiespromisedonthefullfaithandcreditof
theorganizationbutnotrecordedanywhereconstituteaccountingfraud.Butevenindirectliabilitiesnegatively
affectthefinancialsustainabilityoftheNPO,andtheNPOwillhavefinancialproblemsunlessstrictcontrols
areinstated.[41]Somecommentershavearguedthatthereceiptofsignificantfundingfromlargeforprofit
corporationscanultimatelyaltertheNPO'sfunctions.[42][43][44]

Competitionfortalent

Competitionforemployeeswiththepublicandprivatesectorisanotherproblemthatnonprofitorganizations
inevitablyface,particularlyformanagementpositions.Therearereportsofmajortalentshortagesinthe
nonprofitsectortodayregardingnewlygraduatedworkers,[45]andNPOshavefortoolongrelegatedhiringtoa
secondarypriority,[46]whichcouldbewhytheyfindthemselvesinthepositionmanydo.Whilemany
establishedNPOsarewellfundedandcomparativetotheirpublicsectorcompetitors,manymoreare
independentandmustbecreativewithwhichincentivestheyusetoattractandmaintainvibrantpersonalities.
Theinitialinterestformanyistheremunerationpackage,thoughmanywhohavebeenquestionedafterleaving
anNPOhavereportedthatitwasstressfulworkenvironmentsandimplacableworkthatdrovethemaway.[47]

Publicandprivatesectoremploymenthave,forthemostpart,beenabletooffermoretotheiremployeesthan
mostnonprofitagenciesthroughouthistory.Eitherintheformofhigherwages,morecomprehensivebenefit
packages,orlesstediouswork,thepublicandprivatesectorshaveenjoyedanadvantageoverNPOsin
attractingemployees.Traditionally,theNPOhasattractedmissiondrivenindividualswhowanttoassisttheir
chosencause.CompoundingtheissueisthatsomeNPOsdonotoperateinamannersimilartomostbusinesses,
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oronlyseasonally.ThisleadsmanyyounganddrivenemployeestoforegoNPOsinfavorofmorestable
employment.Today,however,nonprofitorganizationsareadoptingmethodsusedbytheircompetitorsand
findingnewmeanstoretaintheiremployeesandattractthebestofthenewlymintedworkforce.[48]

Ithasbeenmentionedthatmostnonprofitswillneverbeabletomatchthepayoftheprivatesector[49]and
thereforeshouldfocustheirattentiononbenefitspackages,incentivesandimplementingpleasurablework
environments.Agoodenvironmentisrankedhigherthansalaryandpressureofwork.[46]NPOsareencouraged
topayasmuchastheyareableandofferalowstressworkenvironmentthattheemployeecanassociatehimor
herselfpositivelywith.Otherincentivesthatshouldbeimplementedaregenerousvacationallowancesor
flexibleworkhours.[50]

Examples
IntheUnitedStates,twoofthewealthiestnonprofitorganizationsare
theBillandMelindaGatesFoundation,whichhasanendowmentof
US$38billion,[51]andtheHowardHughesMedicalInstituteoriginally
fundedbyHughesAircraft[52]priortodivestiture,whichhasan
endowmentofapproximately$14.8billion.OutsidetheUnitedStates,
anotherlargeNPOistheBritishWellcomeTrust,whichisa"charity"
byBritishusage.See:Listofwealthiestfoundations.Notethatthis
assessmentexcludesuniversities,atleastafewofwhichhaveassetsin
thetensofbillionsofdollars.Forexample:ListofU.S.collegesand FrontbuildingoftheBill&Melinda
universitiesbyendowment. GatesFoundationinSeattle

MeasuringanNPObyitsmonetarysizehasobviouslimitations,asthe
powerandsignificanceofNPOsaredefinedbymorequalitativemeasurementssuchaseffectivenessat
performingcharitablemissions.

SomeNPOsthatareparticularlywellknown,oftenforthecharitableorsocialnatureoftheiractivities
performedoveralongperiod,includeAmnestyInternational,Oxfam,RotaryInternational,Kiwanis
International,CarnegieCorporationofNewYork,NourishingUSA,DEMIRADeutscheMinenrumer
(GermanMineClearers),FIDHInternationalFederationforHumanRights,GoodwillIndustries,UnitedWay,
ACORN(nowdefunct),HabitatforHumanity,TeachForAmerica,theRedCrossandRedCrescent
organizations,UNESCO,IEEE,INCOSE,WorldWideFundforNature,HeiferInternational,Translators
WithoutBordersandSOSChildren'sVillages.

However,therearealsomillionsofsmallerNPOsthatprovidesocialservicesandreliefeffortstopeople
throughouttheworld.Therearemorethan1.6millionNPOsintheUnitedStatesalone,andmillionsmore
informal,communitybasedentities,whichFrumkinandothersconsiderpartofthenonprofitsector.[53]

Therearealsoexamples,forinstanceinIrelandofNGOumbrellaorganizationsbringingaboutadegreeofself
regulationintheNGOsector.

Onlinepresence
ManyNPOsoftenusethe.orgor.us(ortheCCTLDoftheirrespectivecountry)or.edutopleveldomain
(TLD)whenselectingadomainnametodifferentiatethemselvesfrommorecommercialentities,which
typicallyusethe.comspace.

InthetraditionaldomainnotedinRFC1591,.orgisfor'organizationsthatdidn'tfitanywhereelse'inthe
namingsystem,whichimpliesthatitisthepropercategoryfornoncommercialorganizationsiftheyarenot
governmental,educational,oroneoftheothertypeswithaspecificTLD.Itisnotdesignatedspecificallyfor
charitableorganizationsoranyspecificorganizationalortaxlawstatus,howeveritencompassesanythingthat
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2017615 NonprofitorganizationWikipedia

isnotclassifiableasanothercategory.Currently,norestrictionsareenforcedonregistrationof.comor.org,so
onecanfindorganizationsofallsortsineitherofthesedomains,aswellasothertopleveldomainsincluding
newer,morespecificoneswhichmayapplytoparticularsortsoforganizationincluding.museumformuseums
and.coopforcooperatives.Organizationsmightalsoregisterbytheappropriatecountrycodetopleveldomain
fortheircountry.

Alternativenames
Insteadofbeingdefinedby'non'words,someorganizationsaresuggestingnew,positivesoundingterminology
todescribethesector.Theterm'civilsocietyorganization'(CSO)hasbeenusedbyagrowingnumberof
organizations,includingtheCenterfortheStudyofGlobalGovernance.[54]Theterm'citizensector
organization'(CSO)hasalsobeenadvocatedtodescribethesectorasoneofcitizens,forcitizensby
organizationsincludingAshoka:InnovatorsforthePublic.[55]Advocatesarguethatthesetermsdescribethe
sectorinitsownterms,withoutrelyingonterminologyusedforthegovernmentorbusinesssectors.However,
useofterminologybyanonprofitofselfdescriptivelanguagethatisnotlegallycompliantrisksconfusingthe
publicaboutnonprofitabilities,capabilities,andlimitations.[56]

InsomeSpanishlanguagejurisdictions,nonprofitorganizationsarecalled'civilassociations'.

Seealso
Associationwithout Nongovernmental Socialeconomy
lucrativepurpose organization(NGO) Supportingorganization
Communityorganization Nonprofitorganizationsand (charity)
Fundraising accesstopublicinformation UnitedStatesnonprofitlaws
MasterofNonprofit Nonprofitsector Category:Nonprofit
Organizations Nonprofittechnology organizations
Mutualorganization Occupationalsafetyand
Noncommercial health
Nongovernmental Socialeconomy
References
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AshgatePublishing.p.19.ISBN0754677702.
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Concepts.Bloomington:IndianaUniversityPress.ISBN9780253347831.p.156157("nonprofitgroup")p.158159
("nonprofitorganization").
3.Hansmann,R.B.(1980).Theroleofnonprofitenterprise.Yalelawjournal,835901.
4."NonprofitBusinessGoalsandObjectives"(http://www.dummies.com/howto/content/nonprofitbusinessgoalsand
objectives.html).Retrieved23March2013.
5.Lyons,Mark.ThirdSector:ThecontributionofnonprofitandcooperativeenterprisesinAustralia.Allen&Unwin,
2001.
6."Publication4220(Rev.82009)"(http://www.irs.gov/pub/irspdf/p4220.pdf)(PDF).Retrieved31July2010.
7.Drucker,Peter(1989)."WhatBusinessCanLearnfromNonprofits".HarvardBusinessReview:17.
8.FairVoteBoardofDirectors(http://www.fairvote.org/?page=6).
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11.HowtoConvertTaxesintoProfits:ProfessionalGuideforNonProfitOrganizations(https://books.google.com/book
s?id=I9zBptuV1wC&pg=PA12&lpg=PA12&dq=The+Model+Nonprofit+Corporation+Act+imposes+many+complexi
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EOgaKrNU&hl=en&sa=X&ei=leZPVK3GB7T_sASOioGwDA&ved=0CCUQ6AEwAQ#v=onepage&q=The%20Mod
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membership%20decisionmaking&f=false).InternationalBusinessPublications.p.12.Retrieved28October2014.
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Number6,November/December2000.

Furtherreading
Snyder,GaryR.,Nonprofits:OntheBrink:HowNonprofitshavelosttheirwayandsomeessentialsto
bringthemback(https://books.google.com/books?id=5OFFNw0a1dkC&printsec=frontcover),2006.
P.Hartigan,2006,'It'saboutpeople,notprofits'(http://www3.interscience.wiley.com/journal/118624146/
abstract),BusinessStrategyReview,Winter2006

Externallinks
NonprofitResources(https://dmoztools.net/Society/Organization
WikimediaCommonshas
s/Nonprofit_Resources/)atDMOZ
mediarelatedtoNonprofit
AidforChange(http://www.aidforchange.org/) organizations.
OurCommunity(http://www.ourcommunity.com.au/community/)
resourcesfortheAustraliannonprofitsector
Wikiquotehasquotations
NonprofitResources(http://nonprofitcareer.net/index.php/resourc relatedto:Nonprofit
es)resourcesforthenonprofitsector organization
Nonprofits&PhilanthropyResearchatIssueLab(http://www.issu
elab.org/issues/profile/nonprofits_and_philanthropy)
TheBenefitsofNonprofitOrganizations(http://online.lewisu.edu/maol/resources/thebenefitsofnonprof
itorganizations)

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