Introduction to Nonprofits - 2020
Download as PPTX, PDF1 like297 views
The document provides an overview of nonprofits, highlighting their importance in American society as entities formed to address unmet needs through mission-driven efforts. It details the types of nonprofit organizations, particularly 501(c)(3) and 501(c)(4) categories, and emphasizes their reliance on diverse revenue sources such as donations, grants, and government contracts. The role of nonprofits in providing services at little or no cost to individuals is also stressed, illustrating their distinctive social impact.
Introduction to Nonprofits - 2020
- 2. Introduction to Nonprofits 2 Why Nonprofits?
- 3. Introduction to Nonprofits 3 Why Nonprofits? Alex de Tocqueville (1805 – 1859) Traveled in America in 1832. Wrote “Democracy in America” 2 volumes published in 1835 and 1840. Forming associations is part of the American character…
- 4. Introduction to Nonprofits 4 Why Nonprofits? “Americans of all ages, all conditions, and all dispositions constantly form associations. They have not only commercial and manufacturing companies, in which all take part, but associations of a thousand other kinds, religious, moral, serious, futile, general or restricted, enormous or diminutive. The Americans make associations to give entertainments, to found seminaries, to build inns, to construct churches, to diffuse books, to send missionaries to the antipodes; in this manner they found hospitals, prisons, and schools. If it is proposed to inculcate some truth or to foster some feeling by the encouragement of a great example, they form a society. Wherever at the head of some new undertaking you see the government in France, or a man of rank in England, in the United States you will be sure to find an association… In democratic countries the science of association is the mother of science; the progress of all the rest depends upon the progress it has made.” - Democracy in America, Vol. 2
- 5. Introduction to Nonprofits 5 Scope of Nonprofits The private nonprofit sector comprises • private universities • schools • hospitals & clinics • day-care centers • social service providers • symphonies & museums • arts organizations & theaters • environmental organizations • and many others eligible for tax exemption under Section 501(c)(3) of the Internal Revenue Code.
- 6. Introduction to Nonprofits 6 Independent Sector, a national coalition of voluntary organizations and foundations, estimates that there are over three million nonprofits, many of which are not registered with the government. These organizations provide • services, • reinforce culture, • advocate, educate, • address faith and spiritual needs, • provide health, • housing, • jobs, • and numerous other objectives. Types of Organizations
- 7. Introduction to Nonprofits 7 Difference between 501 organizations • 501(c) is a provision of the United States Internal Revenue Code (26 U.S.C. § 501(c)), listing 28 types of non- profit organizations exempt from some federal income taxes. Many states reference Section 501(c) for definitions of organizations exempt from state taxation as well.
- 8. Introduction to Nonprofits 8 Mission Driven not Profit Driven Nonprofits exist to serve a mission, to respond to a situation or opportunity that has not been addressed. They serve constituents left unserved by the government and for-profit sectors. It is the mission which provides the meaning and direction of an organization, as well as the uniqueness or niche of an organization.
- 9. Introduction to Nonprofits 9 Key Aspects of Nonprofit Organizations Social/Operating Distinctions - Mission driven – created to serve and fulfill “unmet needs” - Can earn revenue in excess of operating budget (net surplus, not “profit”) - If organization earns a surplus, that money is plowed back into the organization, not paid out as dividend or executive bonuses - No one owns the organization - The board of directors serves without pay and represent the community, which would be viewed as the organization’s true “owners” - People who use the service of a nonprofit do not pay the full cost of that service
- 10. Introduction to Nonprofits 10 A KEY DISTINCTION OF ALL NONPROFIT ORGANIZATIONS – THEY PROVIDE SERVICES TO PEOPLE WHO DO NOT PAY THE FULL COST OF PROVIDING THOSE SERVICES. IN MANY CASES THE USERS PAY NOTHING AT ALL.
- 11. Introduction to Nonprofits 11 A special kind of nonprofit – the 501 (c) 4 501(c)(4) are civic leagues or organizations not organized for profit and operated exclusively for the promotion of social welfare, or local associations of employees. Net earnings are devoted exclusively to charitable, educational, or recreational purposes. The exemption applies so long as "...no part of the net earnings of such entity inures to the benefit of any private shareholder or individual.“ Characteristics that set these organizations apart from a 501(c)(3) non-profit organization include but are not limited to: • Limited membership. Examples include limiting membership to the employees of a designated company or persons in a particular municipality or neighborhood. • Broader ability to lobby for legislation. • Deductibility of donations to 501(c)(4) organizations - Unlike donations to 501(c)(3) non-profit organizations, donations to a section 501(c)(4) organization are not deductible by the donor under section 170 of the code unless the recipient organization is either: a volunteer fire department , or a veteran's organization. Prominent 501(c)(4) organizations AARP - Democratic Leadership Council - League of Conservation Voters - MoveOn.org - National Rifle Association
- 12. Introduction to Nonprofits 12 Sources of Revenue for Nonprofits • Donations from individuals (donated) • Grants from corporations, foundations and government (donated) • Sales of goods and services, including ticket sales (earned) • Government contracts (earned)
- 13. Introduction to Nonprofits 13 The Nonprofit Revenue Gap 72 53 47 45 30 15 10 50 38 16 10 14 3 17 54 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Education Arts & Recreation Health Care Social Services Civic & Other Philanthropy Government Fees This is what the users pay
- 14. Introduction to Nonprofits 14 How Big is the Nonprofit Sector?
- 15. Introduction to Nonprofits 15 How Big is the Nonprofit Sector? The 501(c)3 organizations are what we typically experience as “nonprofit” organizations
- 16. Introduction to Nonprofits 16 How Big is the Nonprofit Sector? Who gives?
- 17. Introduction to Nonprofits 17 How Big is the Nonprofit Sector? Who gets?
- 18. Introduction to Nonprofits 18
- 19. Introduction to Nonprofits 19 Employment in Nonprofits - USA
- 20. Introduction to Nonprofits 20 Employment in the Nonprofit Sector in Illinois
- 21. Introduction to Nonprofits 21 Employment in the Nonprofit Sector in Illinois
- 22. Introduction to Nonprofits 22 Food for thought… “Never doubt that a small group of thoughtful committed citizens can change the world. Indeed it’s the only thing that ever has.” Margaret Mead, anthropologist