Benefits of Non-Profit Organizations


When you run a for-profit organization, the main goal is to produce a profit for yourself as the owner and any shareholders. Though, in many ways, non-profit organizations are similar to for-profits, a non-profit's goals are different. If you're thinking about starting a non-profit, consider the goals and various benefits of this type of organization.

Identification

A non-profit organization is a group that raises money or performs deeds for a specific cause or set of causes. For instance, an organization that uses its revenues to feed the homeless or educate children is a non-profit. The organization receives revenue by soliciting donations from the community or selling items to raise money for the cause.

Purpose

A non-profit does not operate in an effort to build wealth or revenue for the benefit of the owner, directors or shareholders. The main goal of a non-profit is to generate funds and volunteer assistance to help further its chosen cause. A non-profit organization can also act as a publicity vehicle to bring more attention to an issue in the community.

Considerations

While just about anyone can start a non-profit organization by simply taking up a cause, it's beneficial to file for official non-profit status with the state and federal government. The Internal Revenue Service requires non-profits to seek 501(c) classification in order to file as a charitable tax-exempt groups. Many states require an organization to register as either a corporation, fund, foundation or trust in order to operate as a state-recognized non-profit. In Texas, groups can register as non-profit corporations or unincorporated non-profit associations.

Benefits

One of the main benefits of running a non-profit organization is that you have an opportunity to assist the community via funds and volunteer work . Because the organization is tax-exempt, it does not have to pay taxes on the money it raises. Additionally, registered non-profits have limited liability under the law when it comes to debts; the owners and organizers are not personally responsible for business debts with a few exceptions. Non-profits also have access to government-sponsored and private grants and loans that for-profit companies do not. Another benefit of running a non-profit is that, like a standard for-profit business, it helps create paid jobs.

Expert Insight

According to the National Center for Charitable Statistics (NCCS), as of 2010, about 37 percent of the approximate 925,000 registered charities are very small organizations that bring in $25,000 or more per year. Though small non-profit organizations do not always take in much money, these groups tend to grow more quickly in numbers and have a significant influence in their respective communities.

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