A nonprofit is a tax-exempt organization that serves the public interest. In general, the purpose of this type of organization must be charitable, educational, scientific, religious or literary. This is a common and broad definition that fits the type of information likely to be found at this site. The public expects to be able to make donations to these organizations and deduct these donations from their federal taxes.  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.     The sole purpose of any business organization is to earn profit. In other words, they work for self interest. However, there are some organizations whose basic aim is to serve the society i.e. they work for the benefit of the society as a whole. These are called not-for-profit organizations or non­profit organizations. They are formed for some idealistic purposes and provide service to its members and the public in general. Their aim may be educational, religious, charitable or social welfare of the people at large. They are working in variety of forms ranging from small to large. In small forms, they are working in the shape of resident welfare associations, charitable dispensaries, religious societies etc. However, in large forms they are working in the shape of hospitals, schools, colleges and bar councils etc. The main sources of their income are subscriptions, donations, income from investment and grants-in-aid from any governmental agencies. The funds raised by these organisations are credited to capital fund or general fund the balance of which goes on accumulated due to capital receipts year after year.    Similar to starting a for-profit business, starting a nonprofit requires funds to pay for leasing or purchasing office space, buying equipment, hiring a staff and for programming. Nonprofits have a wide variety of financial resources available to them, beyond loans. They have access to various grant programs designed to help them fund their organizations. In many instances, the grants available to nonprofit businesses differ from what’s available to for-profit businesses.     The biggest tax advantage to a non-profit organization is the fact that it does not need to pay certain taxes at all, according to the IRS. Specifically, it doesn’t need to pay corporate income taxes if it operates solely for the benefit of the public. The organization must file annual returns with the IRS; it must also state any changes in its purpose and activities and must submit to periodic audits to ensure that it continues to adhere to standards. In exchange, it will not be taxed on the income it earns, allowing it to apply those funds to charitable causes or otherwise meet its stated goals.      According to the American Hospital Association (AHA), in 2014 about 78 percent of the 4,974 US community hospitals were nonprofit entities (58 percent private nonprofit and 20 percent operated by state or local governments). The remaining 22 percent are for-profit, investor-owned institutions.Nonprofit hospitals may qualify for favored tax treatment under federal–as well as a variety of state and local income, property, and sales–tax laws. In addition to tax exemptions, nonprofit status allows hospitals to benefit from tax-exempt bond financing and to receive charitable contributions that are tax-deductible to the donors.     Exemptions from income taxes for charitable institutions date back to the first income tax code enacted in 1913. In 1954 Section 501(c)(3) of the Internal Revenue Code was codified and provided for the exemption from federal income tax for organizations that operated exclusively for religious, charitable, scientific, or educational purposes. Prior to 1969, to qualify for tax-exempt status a hospital had to provide, “to the extent of its financial ability, free or reduced-cost care to patients unable to pay for it.” In 1969 this charitable care standard was replaced with a more general requirement that compelled hospitals to engage in activities that benefit the communities they serve. Under the “community benefit” standard, spending that promotes community health, in addition to charity care, counts toward meeting the requirements for tax exemption.       Employee engagement is a challenge faced by all organizations regardless of sector and has been a subject of research in both the public and for-profit sector for decades as organizations have tried to find ways to improve their outcomes by activating the skills, abilities and passions of employees. Current engagement literature suggests an engaged workforce could be mean the difference between a “solvent” organization and a thriving organization, as employee engagement has been shown to have a positive impact on key organizational outcomes including: higher worker productivity and creativity on the job, higher levels of job satisfaction, and lower turnover rates         Many employees who work for nonprofits have a personal interest in and commitment to the organization’s cause. For example, a woman whose relative or close friend fought breast cancer may look for a career opportunity with the nonprofit Susan G. Komen foundation. A parent whose child is active in scouting may enjoy a staff position with the Boy Scouts of America. There is an advantage to employing workers who believe in the nonprofit’s mission, values and philosophy. In addition, employees with a personal interest may have a better understanding of the structure and processes of a nonprofit organization.   Organizational culture is defined as having a system of shared values, understandings and perspectives that are held in common by all the employees. An organization’s culture can distinguish it by fostering a collective behavior that encourages employees to determine which things get done, how they get done and who does them in the most productive way. It is an agreement that the vision and mission of the organization drives the commitment of all individuals involved with the dayto-day activities. Culture can create a passion that is instilled in each employee to provide a common ground toward productivity, innovation and creativity. Communications in the organization is the number one cultural issue that nonprofits need to review. Communication should be a dialogue where an employee can be honest and free to express how they are feeling without retribution. Leaders of nonprofits should meet with their employees on a regular basis. Taking an interest in employee’s thoughts and ideas fosters an inclusive culture. By doing this, the trust value is exhibited and helps to make individuals feel included in the decision processes.     A culture that supports full inclusion and diversity will thrive. Today, the workforce and customer bases consist of a variety of people beyond race and gender. The more diverse an organization’s workforce, the more they can identify with the needs of the community they support. Assessing the culture of your organization and developing and implementing policies and procedures that support a diverse, inclusive and healthy culture can benefit. It is a way to provide better services and be more effective and efficient. A positive culture enhances organizational commitment and increases the consistency of employee behavior. Individuals who join nonprofit organizations are usually there to be physically and emotionally enriched in the knowledge that what they are doing is making a difference in someone’s life and in the community.      Nonprofits can sustain their organizational culture by selecting leaders who encompass the mission and values honored by the organization. A leader’s actions set the tone and establish the conduct and tenor of the organization. Nonprofits are proud of their brand, and what they provide to the community. The language of the organization provides a sense of teamwork where each individual comprehends the values, focus and mission to succeed.  a positive nonprofit culture gives individuals a strong sense of purpose focusing on individual development and maturity. When there is honesty in communication, a trust develops that supports an employee’s positive belief in doing their jobs, tasks and duties to forward the organization’s mission. Openness in communication, allows the freedom of individual expression that provides employees with strength of purpose to achieve optimum results while dealing with financial constraints. Maintaining a positive culture in a nonprofit organization greatly insures the employee’s productivity and retention.    Forming a nonprofit corporation normally protects the directors, officers, and members of the nonprofit from personal liability for the corporation’s debts and other obligations. Called limited liability, this shield may ensure that anyone who obtains a judgment against the nonprofit can reach only the assets of the corporation, not the bank accounts, houses, or other property owned by the individuals who manage, work for, or participate in the business.        Non-profit organizations have different performance goals and financial restrictions than for-profit organizations. Obviously, for-profit enterprises focus on maximising profits, whereas non-profits try to maximise their social impact and the benefits that they provide to the community. In for-profit organisations, generated profits can either be distributed to their capital investors or be invested for further growth. Nonprofits lack this financial flexibility. Surpluses, grants and other resources must be spent on particular purposes, which are specifically identified by the donor or implied in the nonprofit’s mission.       Nevertheless, both nonprofits and for-profits still have expenses. Although some non-profits use only volunteer labor, any sufficiently large non-profit is likely to require staff of paid full-time employees, managers and directors. Additionally, operating expenses such as rent and on-going program costs need to be covered. It is for these reasons that there is also a significant financial commonality between these two organizations: just like any for-profit organization, non-profits have to continuously stay financially solvent, as running out of cash will sooner or later result in financial difficulties.       Because there are no shareholders in a non-profit organization, there are no required dividends to be paid out if the business begins to grow. This allows the organization to have larger percentages of total revenues to reinvest back into the business and keep cash flows positive. Not only does running a nonprofit organization benefit you, it also benefits the donors to your organization. Donors are allowed by the government to write these “giving expenses” and the donor will be able to take a deduction off their income taxes.  This donor tax benefit can be used as an incentive to raise future capital for the organization.      The choice of whether to become a for-profit or nonprofit entity may not be as clear-cut as anticipated. The obvious tax benefits of becoming a nonprofit weigh against the flexibility granted to for-profit organizations that have the leverage to raise money and attract the best talent. Moreover, nonprofits face public scrutiny and strict legislation. Perhaps if we change the way our society views charity, nonprofits would have a better chance up against bigger and more powerful corporate rivals. On the other hand, the nonprofit world seems to have taken innovation upon itself, as social entrepreneurs take up hybrid organizations that demand the public’s respect while strategizing like a for-profit business.

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