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Non-profit organization (view source)
Revision as of 13:55, 31 December 2011
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'''Nonprofit organization''' (abbreviated as ''NPO'') is neither a [[legal]] nor [[technical]] [[definition]] but generally refers to an [[organization]] that uses surplus revenues to achieve its [[goals]] rather than to distribute them as profit or dividends. States in the United States defer to the IRS designation conferred under United States Internal Revenue Code Section 501(c), when the IRS deems an [[organization]] eligible. They may or may not have shareholders.
While Not-for-profit organizations 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 boards. Many have paid staff including [[management]], while others employ unpaid volunteers and even [[executives]] who work without compensation (or that work for a token fee, such as $10 per year). Where there is a token fee, in general, it is used to meet legal requirements for establishing a [[contract]] between the executive and the organization.
Designation as a ''non-profit'' and an intent to make [[money]] are not related in the United States. This means nothing can be conferred by the [[declaration]]. It is unclear whether or not this holds outside of the U.S. In the United States, such inference is the [[purpose]] of the Internal Revenue Code, Section 501(c). The extent to which an NPO can generate surplus revenues may be constrained or use of surplus revenues may be restricted.
Some NPOs may also be a [[charity]] or [[service]] organization; they may be organized as a not-for-profit corporation or as a trust, a cooperative, or they exist informally. A very similar type of organization termed a supporting organization operates like a foundation, but they are more complicated to [[administer]], hold more favorable tax status and are restricted in the [[public]] [[charities]] they support.
*Formation and structure
In the United States, ''nonprofit organizations'' are formed by filing bylaws and/or [http://en.wikipedia.org/wiki/Articles_of_incorporation articles of incorporation] in the state in which they expect to operate. The act of incorporating creates a [[legal]] entity enabling the organization to be treated as a corporation by [[law]] and to enter into [[business]] dealings, form contracts, and own property as any other individual or for-profit corporation may do.
Nonprofits can have members but many do not. The nonprofit may also be a [http://en.wikipedia.org/wiki/Trust_(law)_USA trust] or [http://en.wikipedia.org/wiki/Voluntary_association association] of members. The organization may be controlled by its members who elect the [http://en.wikipedia.org/wiki/Board_of_Directors Board of Directors], Board of Governors or Board of Trustees. Nonprofits may have a delegate structure to allow for the [[representation]] of groups or corporations as members. Alternatively, it may be a non-membership organization and the board of directors may [[elect]] its own successors.
The two major types of nonprofit organization are membership and [http://en.wikipedia.org/wiki/Board-only board-only]. A membership organization elects the board and has regular meetings and power to amend the bylaws. A board-only organization typically has a self-selected board, and a membership whose powers are [[limited]] to those delegated to it by the board. A board-only organization's bylaws may even state that the [[organization]] does not have any membership, although the organization's literature may refer to its donors as "members"; examples of such organizations are Fairvote and the National Organization for the Reform of Marijuana Laws. The [http://en.wikipedia.org/wiki/Model_Nonprofit_Corporation_Act Model Nonprofit Corporation Act] imposes many [[complexities]] and requirements on membership [[decision]]-making. Accordingly, many organizations , such as Wikimedia, have formed board-only [[structures]]. The [http://en.wikipedia.org/wiki/National_Association_of_Parliamentarians National Association of Parliamentarians] has generated concerns about the implications of this [[trend]] for the [[future]] of openness, accountability, and [[understanding]] of [[public]] concerns in nonprofit organizations. Specifically, they note that nonprofit organizations, unlike [[business]] corporations, are not subject to [[market]] [[discipline]] for products and shareholder discipline of their capital; therefore, without membership [[control]] of major decisions such as election of the board, there are few inherent safeguards against [[abuse]]. A rebuttal to this might be that as nonprofit organizations [[grow]] and seek larger donations, the [[degree]] of scrutiny increases, including [[expectations]] of audited financial statements.
In many countries, nonprofits may apply for [http://en.wikipedia.org/wiki/Tax_exempt_status tax exempt status], so that the [[organization]] itself may be exempt from income tax and other taxes. In the United States, to be exempt from federal income taxes the organization must meet the requirements set forth by the [http://en.wikipedia.org/wiki/Internal_Revenue_Service Internal Revenue Service].[http://en.wikipedia.org/wiki/Non_profit_organization]
[[Category: General Reference]]
'''Nonprofit organization''' (abbreviated as ''NPO'') is neither a [[legal]] nor [[technical]] [[definition]] but generally refers to an [[organization]] that uses surplus revenues to achieve its [[goals]] rather than to distribute them as profit or dividends. States in the United States defer to the IRS designation conferred under United States Internal Revenue Code Section 501(c), when the IRS deems an [[organization]] eligible. They may or may not have shareholders.
While Not-for-profit organizations 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 boards. Many have paid staff including [[management]], while others employ unpaid volunteers and even [[executives]] who work without compensation (or that work for a token fee, such as $10 per year). Where there is a token fee, in general, it is used to meet legal requirements for establishing a [[contract]] between the executive and the organization.
Designation as a ''non-profit'' and an intent to make [[money]] are not related in the United States. This means nothing can be conferred by the [[declaration]]. It is unclear whether or not this holds outside of the U.S. In the United States, such inference is the [[purpose]] of the Internal Revenue Code, Section 501(c). The extent to which an NPO can generate surplus revenues may be constrained or use of surplus revenues may be restricted.
Some NPOs may also be a [[charity]] or [[service]] organization; they may be organized as a not-for-profit corporation or as a trust, a cooperative, or they exist informally. A very similar type of organization termed a supporting organization operates like a foundation, but they are more complicated to [[administer]], hold more favorable tax status and are restricted in the [[public]] [[charities]] they support.
*Formation and structure
In the United States, ''nonprofit organizations'' are formed by filing bylaws and/or [http://en.wikipedia.org/wiki/Articles_of_incorporation articles of incorporation] in the state in which they expect to operate. The act of incorporating creates a [[legal]] entity enabling the organization to be treated as a corporation by [[law]] and to enter into [[business]] dealings, form contracts, and own property as any other individual or for-profit corporation may do.
Nonprofits can have members but many do not. The nonprofit may also be a [http://en.wikipedia.org/wiki/Trust_(law)_USA trust] or [http://en.wikipedia.org/wiki/Voluntary_association association] of members. The organization may be controlled by its members who elect the [http://en.wikipedia.org/wiki/Board_of_Directors Board of Directors], Board of Governors or Board of Trustees. Nonprofits may have a delegate structure to allow for the [[representation]] of groups or corporations as members. Alternatively, it may be a non-membership organization and the board of directors may [[elect]] its own successors.
The two major types of nonprofit organization are membership and [http://en.wikipedia.org/wiki/Board-only board-only]. A membership organization elects the board and has regular meetings and power to amend the bylaws. A board-only organization typically has a self-selected board, and a membership whose powers are [[limited]] to those delegated to it by the board. A board-only organization's bylaws may even state that the [[organization]] does not have any membership, although the organization's literature may refer to its donors as "members"; examples of such organizations are Fairvote and the National Organization for the Reform of Marijuana Laws. The [http://en.wikipedia.org/wiki/Model_Nonprofit_Corporation_Act Model Nonprofit Corporation Act] imposes many [[complexities]] and requirements on membership [[decision]]-making. Accordingly, many organizations , such as Wikimedia, have formed board-only [[structures]]. The [http://en.wikipedia.org/wiki/National_Association_of_Parliamentarians National Association of Parliamentarians] has generated concerns about the implications of this [[trend]] for the [[future]] of openness, accountability, and [[understanding]] of [[public]] concerns in nonprofit organizations. Specifically, they note that nonprofit organizations, unlike [[business]] corporations, are not subject to [[market]] [[discipline]] for products and shareholder discipline of their capital; therefore, without membership [[control]] of major decisions such as election of the board, there are few inherent safeguards against [[abuse]]. A rebuttal to this might be that as nonprofit organizations [[grow]] and seek larger donations, the [[degree]] of scrutiny increases, including [[expectations]] of audited financial statements.
In many countries, nonprofits may apply for [http://en.wikipedia.org/wiki/Tax_exempt_status tax exempt status], so that the [[organization]] itself may be exempt from income tax and other taxes. In the United States, to be exempt from federal income taxes the organization must meet the requirements set forth by the [http://en.wikipedia.org/wiki/Internal_Revenue_Service Internal Revenue Service].[http://en.wikipedia.org/wiki/Non_profit_organization]
[[Category: General Reference]]