NPS- quiz 1

governance by diverse volunteer board of community members

-nonprofit organizations have volunteer, diverse board members, who make collective decisions have fiduciary responsibility for the organization -contrasts to boards of for profit corporations who frequently receive lucrative fees, homogeneous, and often receive direct benefit from decisions they make

nonprofits and commercial businesses aspects in common

1. both need capital to launch operations 2. cash flow to pay bills in timely manner 3. need revenues to pay for staff, supplies, utilities, rent equipment, printing, and other resources 4. 70% or more of revenue from charity provides social services comes from user fees

nonprofits are in four types depending on their primary source of income

1. donative and mutual: national audubon society, political clubs 2. donative and entrepreneurial: CARE, march of dimes, art museums 3. commerical and mutual: american automobile association, consumers union, and country clubs 4. commercial and entrepreneurial: national geographic society, education testing service, hospitals and nursing homes

distribution of output differences

1. nonprofit can provide for individual choice that could not otherwise be provided by the private sector, private sector has incentives to provide a uniform service in order to stay economically competitive 2. many large nonprofit hospitals financial service companies and mutual benefit companies also fit into this hybrid category of what he calls corporatized nonprofit 3. some nonprofits depend so heavily on government contracts that they have become almost indistinguishable from government agencies 4. governmental instrumentality form nonprofit organizations to avoid the managerial constraints they would have if a program or function were to be directly carried out by government

distinctions between nonprofit and for profits

1. privately governed- benefits of what the organizations produces accrue no more to the organization's governors than to other members of society or organization's beneficiaries 2. principal purpose- promote a collective goal that is perceived to increase the benefit to the collective much greater number than the organization's board, such as a group with common interest 3. organization makes business decisions designed to increase the benefits to that constituency rather than maximize profits not viewed as making bad business decision if it implements as a strategy that advances interests of constituency 4. people feel as if their contributions to organizations will benefits that constituency rather than any private interest and are willing to volunteer their time and donate money

differentiating nonprofit sector into nine subsectors:

1. relgious 2. private education and research 3. health care 4. arts and culture 5. social services 6. advocacy and legal services 7. internal assistance 8. foundations and corporate funder 9. mutual benefit organziation

1994

1.03 million nonprofit entities, 6.5% of naitonal income, employing 9.7 million full and part time workers and 5.5 million full time equivalent employee volunteers

size and growth of voluntary nonprofit sector

1986-2016 population in US increased by 20% while number of reporting exempt organizations increased by 61% -organizations that operate "exclusively for religious, charitable, scientific, literary, or education purposes" are eligible to receive tax deductible donations from individuals and corporations. justification: organizations are serving purposes that are public in character and government might otherwise have support through tax revenues

sector accounts for

8.3 of all wages and salaries accounted for 5.6% of the gross domestic product in 2011

hospitals and institutions of higher education that are much more dependent on fees for goods and services

IRS reported that 40% came from grants and donations, 54% from services and fees, 2% from investment income

private foundations pay

a federal tax on net investment income must meeting a minimum annual threshold for making distributions of their assets to charities and are prohibited from lobbying

program officer

aka corporate affairs officer, program associate, public affairs officer or community affairs officer, a program officer is a staff member of a foundation or corporate giving program who may do some or all of the following: solicit and review grant requests, recommend policy, manage budgets, and process applications for funding

hollow state

applied to organizations that perform the duties of government through contracts including the nonprofit sector

grant

award of funds to an organization or individual to undertake charitable activities

ethical framework and set of values geared to

benefit of society and collective rather than any single individual -nonprofit serves as the commons in which people voluntarily from communities with shared visions and values

member serving organizations

business legauges, granted federal tax-exempt status -nonprofit, cooperative designed to assist conveners and its industry in daling with mutual business problems promote common interest and not engage in regular business of a kind ordinary carried out in for profit -devoted to improvement of business conditions for one or more lines of business as distinguished from the performance of particular services for individual persons -other types include social and recreational clubs, labor and agricultural organizations, benevolent life insurance associations, and political organizations both poetical committees and political charities

nonprofits that do not fit neatly into public serving

category estimated 312 thousand religious congregations about 80% do not register with IRS or file a 990 federal annual tax return

tax exemption status to 25 categories of non profits including

charities, business and trade, fraternal organizations, cemeteries, and credit unions -one category provides donations made by public organizations are tax deductible

legal definition of tax-exempt chargeable organization

conferred by individual states through incorporation producers -authorizes federal tax exempt status for nonprofit organizations that meet certain criteria

decisions regarding what services to provide and to whom is and if doing so is

consistent with the mission of the organization -some nonprofits seek maximize profits

tripled assets from 1975-1995

contrast with a 74% increase in gross domestic product during the same period

civil society

describes broader social infrastructure of organizations and associations though there appears to be no clear agreement on what the term encompasses

models of nonprofit organizations

each strategy translates to the establishment of an organization has its place in nonprofit organization purposes and activities

Private Inurement Doctrine

essential difference between nonprofit organizations and their profit counterparts

nonprofit organizations have five things in common

formally constituted organized separately from government nonprofit seeking self governing voluntary to some significant degree

commercial nonprofits

generate most income from sales and goods of services

some nonprofits depend so heavily on

government contracts that they have become almost indistinguishable from government agencies

nonprofit status

influence in many states on whether an organization will qualify for state and local sales, income, and property tax exemptions

depends on donations for some of

its revenue and may be directly subsidized by government grants and indirectly subsidized by tax laws that encourage the public to make these donations -contrasts to the government which can invoke coercive power of law and imprison those who do not submit in which depends on using the market for voluntary compliance with quid pro quo transactions -problem arises when the benefits from a transaction cannot be confined to those who have contributed to the exchange and there is nothing to stop non-contributors from taking a free ride on backs on contributors

nonprofit organizations are included in the construct

mediating structures stand in between the individual and the government

mutual nonprofit

members directly benefit from services provided

entreprenuerial nonprofit

members who benefit no more from organization than others in the community

third model

might create an advocacy organization to increase public awareness about the degree to which finding missing persons is high or low on law enforcement agenda

second model

might fund research to find out the core reasons people become missing and what steps might work to mitigate this

donative nonprofit

most of revenue from donations

nonprofit taxonomies

national taxonomy of exempt entities is used by internal revenue service as part of its master list of exempt organizations -645 different subcategories with major categories including arts, culture, humanities, education, environment and animals, health, human services

private foundation

non government, nonprofit organization with funds and program managed by its own trustees or directors, established to maintain or aid social, educational, religious or other charitable activities serving the common welfare primarily through grant making

nonprofit organizations

non outside equity interests, not privately owned by rather controlled by self-perpetuating board of directors with constraints on their activities

public charity

nongovernmental, nonprofit organization that receives finanical support from broad segment of the general public through donations or sale of services that further its mission. includes religious educational, and medical institutions as well as community foundations

assets of the sector

nonprofit organization control poverty, cash, and investments valued at 850 million, did not take into account wealth controlled by churches or small nonprofits that are not required to file federal form 990 tax returns

1977-1994

nonprofit sector explanded with 3.7% -annual increase in total employment in nonprofit was 3.3% while it was 1.9% for profits, 1.4% for governemnt

dissemination of information differences

nonprofits are more willing than for profits to share information because nonprofits do not gain an advantage by covering up information

direct service organziations

nonprofits that provide services directly to individuals and communities

accountability to the public, not stockholders

organizations are authorized to exist by state for limited purposes and qualify for tax exemptions -must register and file public reports with various agencies -specialized tax rules and accounting practices apply to tax exempt nonprofit organizations -larger organizations are required to disclose many details to general public and state regulators -organizations that raise at least $25,000 in donations from public in Pennsylvania must register and file reports with charitable organizations

advocacy organizations

organizations that advocate on behalf of certain communities or groups of people

willingness of people to volunteer

people do not volunteer generally for profit organizations volunteering for nonprofit is ingrained in our culture

endowment

principal amount of gifts and bequests of a foundation

distinctions between nonprofits and for profits

principal purpose governance structure level of public accountability destination of net revenue

corporate foundation

private foundations that derive grantmaking funds primarily from the contributions of a profit-making business. the company-sponsored foundation often maintains close ties with the donor company, but it is a sperate, legal organiation, sometimes with its own endowment, and is subject to the same rules and regulations as other private foundations

operating foundation

private foundations that use the bulk of their income to provide charitable services or to run charitable programs of their own. they make few grants to outside organizations

fourth model

provide grants to law enforcement agencies, advocacy organizations, or direct service providers

differences between private foundations and public charities

public charities and private foundations are both granted tax-exempt status under section 501 of internal revenue code

public serving organizations

public serving nonprofit organizations provides direct services such as day care, hospitals, etc. 40% of nonprofits are in this category and account for 80% of nonprofit organization employment -principal mission is to mobilize others to engage in activities that promote public good (involved in substantial direct lobbying of legislative bodies to promote the passage or defeat of legislation and include political action organizations) -consists of education and research organizations -fourth subclass is compromised of funding -second group of funding intermediaries consists of organizations such as united ways

nonprofit sector is a

significant part of our national economy and social fabric. significant differences between nonprofit and for profit organizations although both are forms of businesses. nonprofits are mission drivers rather than profit or power drives despite the fact that revenues come more from fees and dues than from contributions from private sources. assets of US nonprofit organizations exceed $4 trillion

must pass a public

support test enforced by IRS -the organization must pass to be considered a public charity -if passed organization will qualify as public charity for the following two years

community foundation

tax-exempt, nonprofit, autonomous, publicly supported composed primarily of permanent funds established by many separate donors living in a defined geographic area. Typically, a community foundation serves an area no larger than a state. more than 750 community founds across the US

nonprofits does not preclude

the organization from making profit but these profits must be used to further the purpose of the organization rather than be distributed

how organizations are funded

through combination of grants and donations, sales and fees for services, investment income

governmental instrumentality form nonprofit organizations

to avoid the managerial constraints they would have if a program or function were to be directly carried out by the government

nonprofit organizations are not required by law

to file for exempt status with IRS provided they are sacerdotal

nonprofit property is

typically not subject to regular appraisal and it is difficult to appraise property of tax-exempt institutions under standards that apply to residential or business property because value of property if based on profit it can generate

north american industry classification system

used by census bureau and for purposes of compliance with north american free trade agreement -includes 1,057 categories of organization

many nonprofit organizations start out as

voluntary associations have evolved into organizations that resemble large business organizations

mission driven rather than profit driven

voluntary sector has traditionally distinct role compared to public and private sectors, mission is driving force for nonprofits likely to respond to the heterogeneity of public demand rather than nothing one size fits all