Background Research For Your Future

The nonprofit organizations play a significant role in the society. The social life of human beings is quite dynamic and experiences endless challenges. For instance, health is among the major social challenges that the society faces. Therefore, if I were to start a non-profit organization, it would be a social health organization to help the vulnerable groups of people. The society is composed of people with varied financial capabilities, and therefore it is imperative to extend a helping hand to those in need (Hopkins, 2017). The assignment seeks to evaluate the primary purpose of establishing the hypothetical nonprofit organization, key stakeholders and their needs and expectations.

What is the primary purpose of an organization? The primary purpose of any organization is to maximize revenue and minimize expenses. Profit is the single most important aspect on the mind of shareholders and/or owners. However, that is not the primary purpose of all organizations. A not for profit organization has a mission that seeks to benefit the greater good of the community, society or the world. Nonprofit Organizations can make a profit however, the financial benefits are not for the owners/shareholders of the company. Profit in nonprofit organizations should only be used to achieve the mission of that organization whether it is to feed the children, provide funds for Cancer research, or Stop Global Warming etc. Starting a non-profit is nearly parallel to a profit organization. You need a proper financial system, payroll, bank account, staff, insurance, mission statement, planning and re-evaluation. These are just a few basics of any organization. However, some differences due arise since Nonprofit do have differences to profit organization. For example, Filing the necessary documents such as the 501C is a tax exempt under the Internal revenue code for charitable organization. In this research paper, I am going to discuss the overview of taxation of exempt organization.

According to our text, “Not-for-profit organizations lack a residual ownership claim and the organization’s purpose is something other than to provide goods and services at a profit.” “Because significant resources are provided to governments and not-for-profit organizations, financial reporting by these organizations is important.” (Page 2).

Whereas a not-for-profit healthcare provider, cannot share their profits with any shareholders since they receive a tax-exempt status as long as their services are towards the members of the surrounding communities and are following a stricter set of rules and regulations. Non-for-profit healthcare providers are also seen as a voluntary healthcare organization and are known for providing charity care, especially to those that are uninsured.

A company is described as a non-profit company when the company is tax exempt because serves a public purpose. Non-profits fall into the categories of being charitable, educational, scientific, etc.  These companies can make profit, but they are not designed for primarily profit making. This means the purpose of a non-profit is to give to give services and support to the community, raising money to fund these programs, rather than personal economic gain for the company itself. Human service agencies play an important role of support services for the community, whether it be helping people find houses, jobs, groceries, lawyers, etc. Human service workers are the vital resource for those in need of guidance and support. Human service programs are implemented to give the individual's self-esteem, problem solving skills, confidence to change their behaviors to better themselves, and education on how to integrate back into society. Other ways

Until spending time in the nonprofit program at Johnson, I never considered the many different tasks associated with starting a nonprofit. Additionally, through growing up at a long-established nonprofit, I took for granted the work involved in establishing it as a 501(c)(3) nonprofit. The IRS website provides explanation for the many these required tasks needed to file for tax-exemption status. Filing the articles of incorporation and establishing bylaws remain crucial for an organization to receive recognition as a legal entity. However, establishing a nonprofit involves a great deal more than simply attaining tax-exemption status. Tschirhart and Bielefeld highlight many of these aspects, such as developing the mission and vision statements of the organization (Tschirhart and Bielefeld 49). As the reading from last week discussed, evaluating and acquiring resources for an organization should stem from the mission of an organization. Even more so, in order for that to take place, the organization needs established with a mission that will keep it rooted in its cause and a vision

The primary reason people form a non-profit is to pursue a charitable goal or mission. Non-profits are one of the essential sources of support for social harmony and economic stability. A non-profit organization doesn’t have to be recognized by the IRS to pursue charitable work. However, the public will be motivated to donate if they can benefit from tax deductions. Obtaining the IRS-approved 501(c)(3) status means that the public will view the organization as legitimate. The IRS requires that non-profits report most of their financial and operating information, so this becomes public record available for scrutiny and accountability. Filing for 501(c)(3) is important because the incorporation process legally protects the owners personal assets.

Empowerment Most nonprofit goals are to ensure that they help an individual for a long term. They equip their beneficiaries with skills that will empower them and sustain in latter days. They guarantee that they fix the more significant problem at hand and enable its recipients. They identify the primary problem and find its solution or ways to deal with it long term.

California legislature has declared that directors and officers who work for a non-profit in a volunteer capacity (are not paid) are critical to public service and therefore have enacted legislation to reduce the risk of personal liability and loss. Corporations Code section 5047.5 was enacted to protect non-profit corporations and their directors and officers who provide charitable, educations, scientific, social, or other forms of public service. It provides that directors and officers cannot be sued for any negligent act or omission occurring within the scope of the director’s duties that are made in good faith. Acts not protected are those that involve self dealing, gross negligence, or intentional

So how can that definition be taken in? Is a non-profit organization just a business trying to avoid paying taxes? That could be the case though let us delve a little deeper.

One of the main areas that the state and federal tax departments look at to see if a nonprofit business is true to its stated cause is the amount of its net revenue. The reason for this is that a nonprofit isn't supposed to be profitable. All of its earnings should break even with its expenses. This shows that it is using its funds as it receives them. So it is crucial that all nonprofit businesses keep a careful watch over the application of all of the income

Non-profit organizations provide services to those in need, they protect, maintain, and enhance the well-being of their clients, and they meet the needs of the clients by creating policies and programs. A non-profit organization is a tax exempt organization operating for an exclusive purpose,such as religious, charitable literacy, educational or public safety. Organization is dedicated to the promotion of social welfare for charitable, educational, or recreational purposes. Cannot take political positions or be involved in political campaigns, discriminate on the basis of race, nationality, or ethnicity. Excessively engage in activities unrelated to its tax-exempt purposes, pay profits to individuals and/or lobby to influence legislation except

Generally, nonprofit organizations and for-profit organizations differ in the aspect that nonprofit receive an exemption from paying federal income taxes. For profit organizations pay taxes, most nonprofit organizations are legally bound from paying income to the owners of the organization including but not limited to officers,

Non-profit organizations do not belong to the commercial sector or the public sector, but occupy an intermediate position. It gives

A not for profit organization is a corporation or an association that conducts business for the benefit of the general public without shareholders and without a profit motive (Legal, 2013).” There are immense community benefits as a not-for-profit generally accepts everyone regardless of ability to pay. Nonprofit organizations are granted tax-exempt status which helps them to provide services to the public and are expected to be effective managers of their finances as well as being efficient (Financial Management, 2010). In doing so, they can gain exemptions from federal and state incomes taxes and have the ability to solicit tax-deductible contributions (Financial Management, 2010). Organization must follow legal financial