Nonprofits in General


Nonprofit, or Non-Profit, or Not-for-Profit, organizations are entities that are formed for a public purpose or mutual benefit and not the pursuit or accumulation of wealth. A true nonprofit is one that has been granted a 501(c)3 designation by the Internal Revenue Service (IRS)---organizations must apply for this exemption. 501(c)3 is a specific tax-code that has been created by congress to allow public purpose or mutually beneficial organizations to function with different tax-rules than standard for-profit organizations or corporations. The two main benefits of nonprofit organizations are:

Exemption from Revenue Taxes: Nonprofit organizations are not required to pay Federal taxes on their revenue. Note that nonprofit ''employees'' must still pay income tax.

Tax Deductible Donations: A major encouragement for individuals to donate to nonprofit organizations is that their charitable gifts are tax deductible on personal income taxes.

Nonprofit organizations are formed for a wide variety of functions, and while the standard idea of the social service (soup kitchen, food bank, early education) predominates, those are by no means the only purpose nonprofit organizations are formed.

Nonprofit organizations are ''prohibited''from political campaign activities to influence elections to public office, though they can perform limited lobbying to influence legislation.

=== Nonprofit Management ===

The primary structure and management of a Nonprofit Organization is determined by it's ''Articles of Incorporation'' or ''bylaws''. This document usually describes the organization's ''Mission'' and sets out general rules for oversight and management of the organization. These bylaws are usually written by the ''Founder'', who may wield considerable influence throughout the organization's lifespan.

Most nonprofits have a ''Board of Directors'' that oversees the long term, and strategic vision of the organizations. They usually meet several times a year in "Board Meetings" to set these long term goals. The Board of Directors is usually made up of socially influential persons, though sometimes there will be "diversity" positions in which other people from the community, youth or program participants can serve.

A practical function of the Board of Directors is to fundraise and perform outreach, using their influence and connections to raise money and awareness of the organization. This fundraising need is sometimes referred to as the Three-Gs: "Give, Get, or Get Out", the idea that members of the Board of Directors have minimal value if they are not actively fundraising, either through their own donations or acquiring the donations of others.

The Board of Directors is ultimately responsible for the functioning and legality of the organization. In this respect, they assume liability for the organization, and in some cases can be directly sued. In response to this, most boards carry ''Board Insurance'' that removes some of the personal financial liability of the members of the board.

Beneath the Board of Directors, most nonprofit organizations have an ''Executive Director'' that acts as a liason between the long term priorities of the Board and the day-to-day activities of staff. The Executive Director is usually ultimately responsible for ensuring that the Nonprofit is operating properly and effectively---though ultimate accountability rests with the Board.