Intro to Nonprofit

Religious Charity

-churches are classified as 501(c)(3) charities, but cannot accept government funding - churches that wish to receive government funding must create a 501(c)(3) organization separate from church operations, and operate as a faith-based organization that does not discriminate

Hybrid Boards:

a mix of elected, self perpetuating and appointed members

501(c)(3)

charitable organizations that are tax exempt and gifts to them are tax deductible -501(c)(3) public charities -501(c)(3) public foundations

For profit organization

conduct business for the express benefit of making money

Self-Perpetuating Boards:

existing board members recruit new people to serve; existing board members vote to accept the recruited prospects

501(c)(4)

further the common good and general welfare of the people

Leading Nonprofit Organizations

nonprofit organizations are governed by boards, which are most often made up of volunteers

Nonprofit organization

organization that conducts business for the benefit of the general public without a profit motive

Appointed Boards:

people are asked to join board by an authority figure, such as the POTUS, governor, mayor, etc. or by a representative from the entity that created the organization

Elected Boards:

people are elected to the board by the general membership; prospective board members can either self-proclaim their interest in running for a seat, or people can nominate someone to run for a seat on the board

Advisory Boards:

provide advice to the leadership of the agency; have no legal authority over the organization's operations

Others

-501(c)(5): labor organizations (unions), agricultural organizations -501(c)(6): business leagues, chambers of commerce -501(c)(7): social/recreational clubs (Greek sororities/fraternities, country clubs, hobby clubs)

Familiar Private Foundations

-Bill and Melinda Gates Foundation -Ford Foundation -Kellogg Foundation -Annie F. Casey Foundation -Hyde Foundation -Grizzlies Foundation -Poplar Foundation

Familiar 501(c)(4) organizations

-NAACP -National Rifle Association -AARP -Rotary Clubs -Kiwanis clubs -Volunteer fire companies -PACs and Super PACs

Familiar public charities

-Salvation Army -MIFA -Catholic Charities -American Cancer Society -Ballet Memphis -Goodwill Industries -St. Jude's Children's Research Hospital -Friends for Life -CBU/Rhodes College/LeMoyne-Owen College -UNICEF -Amvets -Dress for Success

Faith-Based Charity

-are 501(c)(3) charities and can accept government funding -cannot discriminate if they receive government funding -are not affiliated with any specific congregation

Similarities between NPO's and FPO's

-both are concerned with delivering good service or a good product -both need effective, motivated employees and/or volunteers -both need competent, skilled management -both should value a measure of the transparency in their business practices

Legal Responsibilities of Board Members

-care: be interested in the operations of the agency, that decisions made are being done in the best interest of the agency and clients; stay engaged; regularly attend meetings -loyalty: don't join the board for personal or financial gain; avoid conflict of interest situations -obedience: make sure the agency adheres to all applicable laws and sticks to its stated mission

Ethical Responsibilities of Board Members

-contribute to the work of developing a clear mission for the organization -be aware of the agency's programs and/or services, and endorse or support them -closely monitor the agency's fiscal health, and call attention to problems when you recognize them -hold the agency's staff accountable for their work by helping to establish performance measures and reviewing them regularly

Types of Nonprofit Boards

-elected boards -self perpetuating boards -appointed boards -hybrid boards -advisory boards

501(c)(3) public charities

-gifts are tax exempt and tax deductible up to 50% of donors income -receive support from a variety of donors and government funding -some provide direct services to clients, while some are funding intermediaries -not allowed to support political candidates, but limited lobbying is allowed

Better names for the NP sector?

-independent sector -third sector -charitable sector -voluntary sector -tax exempt sector civil society sector

Characteristics of a For profit organization:

-many are property of the organization's owners and/or stockholders -most measure success by how much money they make -if organization goes out of business, its assets can be liquidated and the proceeds distributed among the owners and/or stockholders

What an NPO is not:

-not all NPO's are mom and pop organizations -are not all organizations that dont earn profits. many do earn profits -not all employees work for free -employees are not poorly paid. many employees earn wages comparable to their counterparts for-profit organizations

501(c)(4) characteristics

-promote social welfare -are often thought of as advocacy organizations -can engage in lobbying activities without restriction, so long as it pertains to the organization's mission -can donate time/money to political campaigns -are tax exempt, but gifts to them are not tax deductible

Characteristics of a nonprofit organization

-tax exempt -owned by the people; when the organization goes out of business, the organization must be handed over to someone else to run as a NPO -generate revenues in a variety of ways over and beyond fees for service/fees for products -most are mission-driven, concerned with bringing about social change, improving quality of life, etc. -most are concerned with staying true to the mission, but also pay attention to the bottom line -most are accountable to multiple audiences, including boards of directors, donors/funders, clients, volunteers

How did NPO's come to be?

-the 19th century saw a number of groups/associations forming to address social needs in America -industrial revolution of the late 19th century saw many people becoming wealthy -many wealthy people adopted the philosophy of giving back as a way for the rich to show gratitude for all they have earned -Andrew Carnegie helped define the difference between Charity, philanthropy, and volunteerism -the 1960s saw a great expansion of the federal government, thus an expansion of the nonprofit sector

What about the Government?

-the government sector, aka the public sector, serves the public good by using public money (taxes) to create laws, policies and services to benefit every citizen of the country -the public sector often calls upon the nonprofit sector to help provide or administer some of the services and programs created by the government

501()(3) characteristics

-their purpose must fit into one of the eight categories 1. charitable 2. religious 3. educational 4. scientific 5. literary 6. testing for public safety 7. nat'l/int'l amateur sports 8. prevention of cruelty to animals/children -are subdivided into public charities and private foundations

Did you know:

-there are nearly 2 million nonprofit organizations in the united states (as of 2009) -over 1.3 million people are employed by nonprofit organizations, about 10% of the US workforce. -nonprofit organizations account for about $668 billion in wages, nine percent of wages earned in the US

501(c)(3) private foundations

-usually receive funding from one source -gifts are tax exempt and tax deductible up to 30% of donors income -a small excise tax is charged on investment earnings -no lobbying allowed -some are funding intermediaries