Lesson 1: What Does It Really Mean to be a Non-Profit

Nonprofit implies a special name for those organizations which are neither a business nor run by the government. In the United States, nonprofit is also called the not- for -profit sector, philanthropic sector or voluntary sector and outside of the U.S nonprofit is  called NGO( Nongovernmental organization).In simple words, nonprofit is not part of the government , it has no profit for its shareholders and is supported by grants and foundations. Healthiest nonprofits make the equivalent of profits. The United States is the hub of the world’s biggest nonprofit organizations. The primary purpose of any nonprofit is to fulfill its mission. All nonprofits are allowed tax exemption because they reduce the government’s load and benefit and enrich society. The IRS perceives nonprofit organizations from qualitative outlook and looks very carefully at their missions. If a nonprofit produces an earned income which is not related to its mission, tax is imposed on that income. Nonprofit organizations can generate revenue and utilize and reserve their profits. Usually, nonprofits face budget shortfalls because donors do not keep their pledges and government contracts are reduced .To overcome these unexpected incidents nonprofits are required to keep a reserve fund. Reserves can be gathered gradually from a few years of surpluses. To sum up, Healthiest nonprofit always makes profit and their continuous reserve funds open doors for opportunities, program research and development.