A.)
MEANING
A nonprofit organization (NPO, also known as a non-business entity) is an organization that uses its surplus
revenues to
further achieve its purpose or mission, rather than distributing its surplus
income to the organization's directors (or equivalents) as profit or dividends.
The nonprofit landscape is highly varied, although many people
have come to associate NPOs with charitable organizations. Although charities
do comprise an often high profile or visible aspect of the sector, there are
many other types of nonprofits.
Although NPOs are permitted to generate surplus revenues, they
must be retained by the organization for its self-preservation, expansion, or
plans. NPOs have controlling members or a board of directors. Many have paid staff
including management, whereas others employ unpaid volunteers and even executives who work with or
without compensation (occasionally nominal).
Designation as a nonprofit does not mean that the organization
does not intend to make a profit, but rather that the organization has no
'owners' and that the funds realized in the operation of the organization will
not be used to benefit any owners. The extent to which an NPO can generate
surplus revenues may be constrained or use of surplus revenues may be
restricted.
B.)
BENEFITS OF ESTABLISHING NON-PROFIT ORGANISATIONS
1.) 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.
2.) 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.
3.) 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.
4.) 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.
TYPES OF NON PROFIT ORGANISATIONS IN
INDIA
1.Trusts
The
public charitable trust is a possible form of not-for-profit entity in
India. Typically, public charitable trusts can be established for a
number of purposes, including the relief of poverty, education, medical relief,
provision of facilities for recreation, and any other object of general public
utility. Indian public trusts are generally irrevocable. No
national law governs public charitable trusts in India, although many states
(particularly Maharashtra, Gujarat, Rajasthan, and Madhya Pradesh) have Public
Trusts Acts.
2.Societies
Societies are membership organizations that
may be registered for charitable purposes. Societies are usually
managed by a governing council or a managing committee. Societies are
governed by the Societies Registration Act 1860, which has been adapted by
various states. Unlike trusts, societies may be
dissolved.
3.Section
8 Companies
A section 8 company is a company with limited
liability that may be formed for "promoting commerce, art, science,
religion, charity or any other useful object," provided that no profits,
if any, or other income derived through promoting the company's objects may be
distributed in any form to its members.
By CA Shivani Agarwal
www.akvassociate.com
https://www.facebook.com/akvassociates?ref=bookmarks
https://www.linkedin.com/company/home?trk=nav_responsive_sub_nav_companies
https://twitter.com/akvassociates
No comments:
Post a Comment