Fund of Non Profits- Exam 1
What are the 3 requirements that qualify an organization to pay UBIT?
-It is a trade or business -It is regularly carried on -it is not substantially related to the exempt purpose of the organization
Individuals can deduct contributions from their personal income tax when contributions are made to _____________?
501(c)(3) organizations
What is the difference between charity, philanthropy, and volunteerism?
Charity is giving that is intended to meet current individual human needs or to alleviate current human (or animal) suffering. Charity is typically done out of emotion and is spontaneous. Philanthropy is the rational form of long-term giving/investment. --Philanthropy is planned and usually comes in the form of an investment in the infrastructure of society (e.g., endowments, buildings) Volunteerism is a form of active involvement with either beneficiaries directly or to an organization. Volunteerism is typically measured by the giving of one's time.
A significant risk of resource dependency within a nonprofit organization is
Goal Displacement
Who identified the six qualities that characterize nonprofit organizations?
Lester Salamon
To maintain their nonprofit tax exempt status, churches and synagogues must file annual reports with who?
None of the above. Unlike all other 501c3 charities, houses of worship receive an automatic exemption from the IRS. Furthermore, they are not legally required to provide any ongoing financial documentation to demonstrate their continued eligibility, either to the IRS or to any other organizations.
Explain why/how nonprofit organizations act as gap fillers.
Nonprofit organizations act as gap fillers when the market and government fail. The market may fail due to information asymmetry and the government may fail due to its inability to offer services and goods because of constraints (e.g., time, size and complexity, etc.). When the market and government fail, nonprofit organizations step in and fill the void by offering goods and services to meet the need of the people.
What is an organized entity?
Nonprofit organizations are formal organizations that for the most part incorporate under state law and have have the same benefit as business organizations.
What does Double Bottom Line mean?
Nonprofit organizations are managing for both mission and profit.
Define non-profit distributing.
Nonprofits are not allowed to distribute any excess of revenues over expenditures to benefit individual owners. Profit that is generated must be returned to the organization itself rather than to pay dividends to owners or investors.
Define self-governing. (in relation to the characterizations of nonprofit organizations)
Nonprofits are self governing i.e., they are not controlled either by government or by individual owners. Control rests within the Board of Directors (i.e., a set of people who have responsibility for ensuring the organization serves its mission and uses its funds in accordance to that mission and the law). The board is responsible for the organization
Define voluntary. (in terms of the six characteristics of non profit organizations)
Nonprofits can employ paid staff; however, most nonprofits utilize a set of volunteers such as a board of directors or other people to carry out activities who do not receive any compensations.
Define "of public benefit" (in relation of the six characteristics of non profit organizations)
Nonprofits exist to serve a social purpose that is deemed to be of public benefit. The purpose is stated in the "mission" of the organization
The nonprofit sector is comprised of how many 501c3 organizations.
Over 1,100,000
What are the six qualities that characterize nonprofit leadership?
Private Organized Entity Voluntary Of Public Benefit Non-Profit Distributing Self-Governing
Which subsector of charitable nonprofit organizations is the least professionalized?
Religious organizations
T or F: 501c4 organizations are also known as Social Welfare Organizations.
True
T or F: Tax-exemption means that nonprofit organizations (i.e., organizations classified under the 501c code) are not required to pay federal taxes on their income.
True
True or False: Management is defined as a set of coordinating activities and efforts that people do in order to accomplish desired goals and objectives using resources efficiently and effectively
True
What does UBIT stand for?
Unrelated Business Income Tax
What is private? (in relation to the 6 characterizations of nonprofit organizations)
While nonprofit organizations have a commitment to the public or to public service, they operate in the private sector rather then in the government sector. These types of agencies form a third economic sector.
What is volunteerism?
a form of active involvement with either beneficiaries directly or to an organization. Volunteerism is typically measured by the giving of one's time
Who receives automatic exemption from the IRS?
charities, and houses of worship.
The best way to help after a major disaster (like hurricane Katrina), when people desperately require the basic necessities such as food, water, and clothing is to ___________?
donate money to a vetted charity.
These are organizations that exist for the sole purpose of directing money to other nonprofits.
funding intermediaries
What is charity?
giving that is intended to meet current individual human needs or to alleviate current human (or animal) suffering. typically done out of emotion and is spontaneous.
The requirement that nonprofits meet the expectations for measurable results has increased the need for _____________
management
What is the exception to non profits being tax exempt?
private foundations do pay a modest excise tax on their investment earnings.
This theory explains the behavior of organizations in terms of their dependence on external constituencies.
resource dependence theory
What is philanthropy?
the rational form of long-term giving/investment. Philanthropy is planned and usually comes in the form of an investment in the infrastructure of society (e.g., endowments, buildings)