Regulation and Rule for Non-profit Organization
Name of Student
Course Name, Course Number
A non-profit organization is established based on the laws of business in the United States. State laws allow a non-profit organization to be organized either for a transient period or indefinite period of time. A major misconception related to non-profit organization is that it is unable to produce excess revenue in any particular tax year. While non-profit organizations possess a number of characteristics as well as accountabilities for profit organization, they likewise possess some diverse and unique guidelines to follow being tax-exempt entities. This paper presents the three processes involved in making sure that a non-profit organization becomes successful. In addition, this paper will cite the moral benefits as well as the tax benefits.
A non-profit organization is established based on the laws of business in the United States. The method for establishing and managing a non-profit organization is almost similar to that related to the business formed for profit. A non-profit organization functions to permit organizations to enjoy the legal protections related to the structure of the corporate business in the absence of tax liability. For instance, a private school is organizing a non-profit organization and thus its staff cannot be held liable individually for any form injury brought about by a student while they are at the school premises. Furthermore, since the organization does not produce profit, the organization does not have to pay any tax.
State laws allow a non-profit organization to be organized either for a transient period or indefinite period of time. The period of existence of a non-profit organization is identified by its articles of integration. For instance, a healthcare facility would be integrated indefinitely, while a certain cultural event may integrate for a certain time period. However, there is a warning to take heed. Just because an organization is designed as non-profit type, it does not excuse the organization from other necessities related to a corporate legal arrangement. For instance, a non-profit organization must retain and sustain its minutes of board meetings, just as for-profit organizations do. In addition, a non-profit organization should arrange and present a yearly report to the state secretary in the jurisdiction where the non-profit organization was established.
Three Processes to Ensure Success
There are three processes involved to ensure a successful non-profit organization – define the leadership abilities required to accomplish the organization`s mission over the next three years or five years evaluate the potential of the staff to acquire greater accountability establish a plan for leadership teams which will serve as the basis of the organization in the next three years.
A major misconception related to non-profit organization is that it is unable to produce excess revenue in any particular tax year. A non-profit organization will and shall produce excess revenue yearly and retain an emergency fund for any expenses that are unforeseen. The exclusion is in contradiction to producing profits that are paid to third parties, not revenue as well as a healthy balance sheet. Because of the distinct position of a non-profit organization, a lot of individuals may opt to retain a qualified lawyer. Several organizations have an attorney positioned on their board, a skilled professional who offers services to the non-profit organization. The American Bar Association provides resources for seeking lawyers with experience in non-profit law.
While non-profit organizations possess a number of characteristics as well as accountabilities for profit organization, they likewise possess some diverse and unique guidelines to follow being tax-exempt entities. Being organizations, non-profits need to maintain their lawful status and documenting functions just like other organizations. However unlike other organizations, when a non-profit organization explain for themselves in their returns to the Internal Revenue Services, non-profit organizations have to illustrate no profit and the way they utilized their money so as to maintain their status for tax exemptions.
Just like other organizations, conflicts of interests can create issues for non-profits. Every single state has certain type of restriction on non-profit directors who are likewise considered as interested parties. Simply put, these laws offer constraint to directors or executives from have their organizations perform services or vend products to the non-profit organization – therefore utilizing the non-profit for personal gain.
Moral Benefits of Non-Profit Organizations
Despite the fact that not all non-profit organizations depend on assistance some non-profit organizations including private college has their financial needs supported through private donations, community outreach remains beneficial to the objectives of non-profit organizations. More than just financial assistance and primary aims, community outreach is significant for businesses particularly non-profit organizations. The support of individuals and communities can determine the future success of organizations. A robust and diverse social network support is critical. By running outreach beyond the need to accomplish financial objectives, non-profit organizations can obtain the support of the community. Community outreach provides advantages to non-profit organizations in terms of employee and management involvement. Furthermore, community outreach can be beneficial in promoting the mission of non-profit organizations.
Dolnicar, S., & Lazarevski, K. (2009). Marketing in non-profit organizations: an international perspective. International Marketing Review, 26(3), 275-291.
Drucker, P. F. (2010). Managing the non-profit organization: Principles and practices. HarperCollins.
Hopkins, B. R. (2011). The law of tax-exempt organizations (Vol. 5). Wiley. com.
Paswan, A. K., & Troy, L. C. (2004). Non-profit organization and membership motivation: an exploration in the museum industry. Journal of Marketing Theory and Practice, 1-15.
Steinberg, R. (2003). Economic theories of nonprofit organizations. In The study of the nonprofit enterprise (pp. 277-309). Springer US.
Regulation and Rule for Non-profit Organization