Non-profit organizations are charitable organizations such as church groups, animal rescues and a number of government bodies that are not created to make a profit. Because of this, they are subject to an array of benefits including possibly income tax exemption.
Government-sponsored grants and private loans are available to non-profits but not without a great deal of paperwork and research. There is a lot of schmoozing involved to get the money they need, all for the greater good. Most of us are very familiar with television, radio or print ads for non-profit organizations asking the members of the public to donate. This and providing exchange of services and goods for money is how they raise money that is all put back into the organization for example to provide supplies, shelter and/or assistance to animals or homeless people perhaps.
Possibly the biggest financial benefit of running a non-profit organization is the income tax exemption but there are a lot of hoops to jump through in order to reap this. First, you have to be given nonprofit status by the state. From there, the Internal Revenue Service (IRS) requires a complete and accurate tax form submitted for a tax-emption request, of which the most commonly used is the 501(c)(3). Not surprisingly the drawback here is that non-profits are perhaps swimming in a lot more paperwork than for-profit companies. They have to stay on top of and be able to account for every penny in order to remain in the tax-exempt status. To get it done right the first time, seeking the guidance of an attorney or financial advisor who specializes in non-profit laws and taxes is highly advisable.
Another benefit non-profits may be able to take advantage of is limited debt liabilitiesin that the owner or organizers are not held personally responsible for any debts. The details of this perk vary from state to state so non-profits need to be well versed in their state’s laws. If necessary, there are insurance companies who can offer additional insurance and protection where needed. The other side of the coin on this one however, much like in the for-profit world, if a director is proven to not be performing their job in the best interest of the organization, they can be made personally liable and accountable.
Apart from the added benefit of knowing that a non-profit may be assisting a community using its donated funds and promoting volunteer work, some would also argue that non-profits work similar to for-profit organizations when it comes to the creation of paid jobs. In the United States, roughly 1 out of every 10 people are employed by a non-profit organization. They have shown time and time again that they are able to not only withstand but increase employment during harsh economic times. A recent example of this was during the crash of ’08, non-profit employment grew by 2.5 percent per year between ’07 and ’09. Meanwhile, the employment rate in the for-profit world fell 3.3 percent each year within the same time period.
Bottom line here, you might never get rich owning or working for a non-profit but you might get steadier work and more job satisfaction.