Starting A Non-Profit: An Introductory Guide
Non-profit organizations have always had a crucial role to play in modern society, helping to elevate a particular issue and ensuring that all needs - be they environmental, societal, or anything else - can be met. If you have a passion for a particular cause, then starting a non-profit is a fantastic way to ensure attention is drawn to the issue and play a role in making sure that it receives the funding it requires.
If you are curious to start a non-profit of your own, then here’s an introductory guide you may find beneficial…
The purpose of a non-profit
In a for-profit business, the revenue earned by the business is, well, profit. After all costs are deducted, the profit is returned to the owner or - if relevant to the business - shareholders.
Non-profits, on the other hand, are not designed to generate income for the owner or shareholders. Instead, the funds raised are used to further a particular cause or meet a societal or cultural need. Soup kitchens, churches, self-help groups, museums, and hospitals are all examples of non-profit organizations. Non-profits are not owned by anyone, the way a conventional business would be: they are individual, unique entities, overseen by (usually) a board of directors.
Taxation
Non-profits can apply for tax exemption on state and federal taxes, providing they meet certain criteria. You can learn more about this process at at IRS.gov.
Funding a non-profit
Non-profits tend to rely heavily on fundraising and philanthropic donations to fund most of their activities, though some organizations can also generate an income by other means. As a general rule, income must be generated as a result of activities related to the core goal of the organization. For example, a non-profit dedicated to increasing awareness of the arts could run art workshops for children, with all attendees required to pay a fee to attend.
If a non-profit wishes to maintain its tax exemption status, it cannot operate a business entirely unrelated to their core mission. For example, an arts-focused non-profit could not decide to offer dog walking, or run a store, in an effort to increase its funding.
However, the above rules are complex, so it is always important to consult with a specialist tax advisor if you hope to earn revenue from a non-profit.
Income from a non-profit
Non-profits do not pay profits to an owner or shareholders, but staff can be hired (and paid) to work for the organization.
Day-to-day running of the business
The main focus of a non-profit is on providing a core service or benefits; for example, a non-profit healthcare business will focus on meeting community health care needs, or a soup kitchen will provide meals.
In addition, the day-to-day running of a non-profit involves administrative work that helps the company to deliver its service to end users. For example, non-profits still need to draw attention to their cause, so advertising and marketing requires significant focus. Similarly, IT needs also have to be met, so finding out more at houkconsulting.com and similar sites about the options available is of paramount importance. HR is also an important aspect, especially given that most organizations utilize a mixture of paid staff and volunteers.
In conclusion
The above is designed to provide a brief overview of non-profits, how they function, and what it may be like to be involved in one. Hopefully, it will come in useful if you choose to start a non-profit in the future.
