Nonprofit organizations are growing around the world, but do you really know what they are and how they operate? Perhaps you are considering working with, or donating to, a nonprofit and want to learn more about what this organization is and what role they play in your region or community. Below is a general overview of the common types of nonprofits and what sets them apart from other companies and organizations we commonly see.
What Is A Nonprofit Organization?
Nonprofit organizations can serve many purposes, but, by definition according to the National Council of Nonprofits, it is a tax exempt organization that serves a charitable purpose in the community. When we refer to an organization as being charitable, we state that it falls within the definition set forth in Section 501(c)(3) of the Internal Revenue Code.
An example of an actual, clear nonprofit purpose statement would be; “This corporation is a nonprofit public benefit corporation and is not organized for the private gain of any person. It is organizedunder the Nonprofit Public Benefit Corporation Law for charitable purposes.”
Essentially, this states that the organization doesn’t exist to make money, but serve the community beneficially in a charitable manner.
The Different Types Of Nonprofit Organizations
Nonprofit organizations are setup as a public charity or as a private organization. Additionally, a nonprofit organization will generally fall into one or more of the basic 8 categories which are:
- Arts, culture, and humanities
- Human services
- International and foreign affairs
- Religion based
How Do Nonprofits Make Money?
Nonprofits can make money by taking part in activities that are related to the cause they serve. A nonprofit usually depends on making money through fundraising and donations. An example of a great way for nonprofits to raise money would be to secure a booth at a local community festival or event, according to Gloria Horsley of Open to Hope.
It allows them to also make money through business endeavors without losing the nonprofit status, but they must pay corporate taxes on that revenue.
Keep in mind, however, that the majority offunds donated or raised by a nonprofit are usedfor operating expenses. The key to keeping a nonprofit up and running is integrity and maintaining a good public image.
Running a nonprofit is really about wanting to do good in the community and working hard to ensure that the entity stays afloat and remains an asset to the community.
There are many ways in which a nonprofit can produce funds to maintain itself and provide donations for operating expenses and its basic mission. As long as those fund generating efforts align with its purpose and serve the cause of its existence, it can continue to operate as a tax-exempt organization.
What Are The Functions Of A NonProfit Organization?
The most common function of a nonprofit organization is to raise money for a charitable cause that is community service based, religious affiliated, or scientific in nature. Some examples would be raising money for scientific research for cancer or other devastating diseases that have affected most people in the country with email campaigns and telethons.
They can also serve to help those in need through a religious affiliation, such as the church providing food and shelter for the homeless. They can also, for example, help veterans find new work or affordable housing opportunities. Essentially, a viable and useful nonprofit will in some way help others and make the community a better place to live in for everyone and even provide an assistance to those who face obstacles.
Creating and maintaining a nonprofit organization can be challenging, but equally rewarding for those who are committed to making a difference for those residing in the community. If you are considering starting your own nonprofit, or are currently working with an existing nonprofit, Purplepass can assist you with your fund generating and marketing endeavors.
Purplepass offers nonprofit discounted rates for any event you host, as well as no service charges for free or RSVP events. Purplepass can also provide you with the tools and support you need to extend your reach and visibility while providing essential products and services for nonprofit related events.