How Do Non Profits Work?

A nonprofit organization is defined as an business that has been incorporated and recognized under the laws of its state, and as a business that the Internal Revenue Service (IRS) has classified as a 501(c)(3), determined to be a public charity. The government term “501(c)(3)” enables businesses to operate under tax exempt laws with the idea that profits and revenue are shared with those that the organization seeks to serve. 

The term nonprofit is often used interchangeably with other names such as third sector, independent sector, voluntary sector, philanthropic sector, social sector, tax-exempt sector, or the charitable sector. Non profits serve a variety of purposes, from maintaining local parks and youth advocacy to public radio programs and immigration assistance. Essentially, non profits benefit society by implementing programs to assit communities with types of services that the government institutions feel necessary for the well being of society.   In doing so, non profit agencies relieve the governments burden in exchange for funding and special tax provisions.  The partnership between a nonprofit organization and government practices are mutually advantageous and ultimately benefit the cause, programs and individuals in which they support. 

Aside from the typical employee structure that most organizations are made up of, a non profit’s business structure includes a team of advisors, referred to as the Board of Directors. A Board of Directors panel typically consists of individuals who are not employed or paid by the company but have joined others to ensure the credibility and accountability of the organization, Actively involved Board members often feel a sense of responsibility to the organization in which they serve and make certain that the companies mission statement is being carried out.