NPO Notes1

Study Material & Notes for the Chapter 1

Non-Profit Organization

I. WHAT IS NON-PROFIT ORGANIZATION

Two types of Organizations – For Profit organization and Non-Profit Organization

A.  For-Profit Organization
  • A For-profit organization is the one that operates with the mission is to generate profit and forward these profits to the business’s owners and shareholders as well as to maximize wealth of the owners/shareholders.
  • For-profit organizations can be in the form of a sole proprietorship, partnership firm or a company.
  • For-profit organizations develop effective products and services that are valuable to consumers and makes profit by directly/indirectly selling these goods or services.
  • For-profit organizations fund their assets through owner’s capital, loans and revenue generated from sales
Examples
B. Non-Profit Organizations
  • NPO are organizations whose main objective is to render services to its members and society
  • These activities include charitable, religious, educational, scientific, literary, testing for public safety, fostering national or international amateur sports competition, and preventing cruelty to children, old or animals
  • Its profits/surplus is recycled back into the nonprofit corporation’s public benefit mission and activities.
  • A nonprofit organization can be constituted in the form of trust, clubs, society, committee
  • Nonprofits seek out private donations of time and money, corporate sponsorships, and government grants. They source revenue mainly through donations, subscriptions, or membership fees.
Examples
C. Difference between For-Profit & Non-Profit Organization
Table 1.1.C

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