October 7, 2014

What is a Non-Profit Organization?

A non-profit organization or NPO is an organization that does not sell products, hold profitable shares or render services to gain profits. The funding of such organization is not used to acquire profit, but is used to help realize its goals and agenda. Among the most common kind of NPOs are charitable institutions. Other recognized non- profits are trade associations, trade unions and public arts organization. Although most governments and government organizations can be described as non- profit organizations, but they belong a separate category in most countries.

Some nonprofit organizations are able to earn profit from various sources, although they are more accurately referred to as surplus. These earnings must be allocated by the corresponding organization in lieu of advancing its agenda, including self- preservation, expansion and plans. This task, as well as other functions and managerial issues are supervised by controlling members or boards. The organizations are mostly composed of a managerial staff that is compensated, while others employ unpaid volunteers and even uncompensated executives.

The gaining of profit is not the primary goal of an NPO, which is why it is called as such. However, there are instances where an NPO can legally or ethically trade at a profit to increase its funding or to ensure sustainability of its programs. The extent of income generation may be constrained, as well as the spending of such income. Many NPOs are funded by private and public funding agencies in the form of donations. These donations can be tax deductible. NPOs are typically exempted from income and property taxation.

There are various NPOS around the world and they vary in size and goals. Many NPOs are directed towards social and community welfare as education, health, and many other concerns. NPOs are often required to be registered to be recognized.