NPO Full Form: Features, Types, How to Start NPO etc

NPO Full form denotes a not-for-profit organisation that prioritises a certain social cause and uses all donations and earnings to further its goals and cover administrative expenses. Not-for-profit companies do not share their surplus earnings with their shareholders as for-profit corporations do. Instead, they utilise the money to advance a certain social cause or promote a similar viewpoint.

The money that not-for-profit organisations make or receive in donations from well-wishers is exempt from taxation because they function as charity organisations. The majority of non-profit organisations work to advance social objectives in the fields of education, research, science, and religion.

NPO Features

1. Serving society is non-profit organisations’ primary goal, as they are striving to advance society as a whole.
2. Non-profit organisations are established for a variety of idealistic motives, including humanitarian, educational, and religious ones. Their goal can never be to make money.
3. Non-profit organisations can use the separate entity concept much like for-profit businesses. These groups are regarded as different from their members and treated as such.
4. Non-profit organisations typically rely on subscriptions, contributions, and grants from various government departments to fund their operations because they are typically unable to do so with the cash generated by their sources.

Types of Not-for-Profit Organizations (NPO)

The following are the main types of not-for-profit organizations:

1. Social advocacy organizations

The purpose of social advocacy organisations is to advance or lobby for a certain social cause or political cause. They can plan fundraising events and other activities to raise awareness of the cause they are supporting and compel people to support it.

2. Trade organizations

Trade associations are created to enhance their member businesses’ operating environments. These organisations receive funding from membership dues and from members who pay a fee to participate in their educational activities. Chambers of business, real estate boards, and associations for health professionals are a few examples of popular trade organisations.

3. Foundations

Rich people and large corporations frequently start foundations with the intention of financing charities and events that advance a certain social purpose. To maintain their status, they must donate a certain percentage of their income. Despite being able to donate to groups engaged in political lobbying, foundations are not allowed to finance political activities in the US.

How to Start a Not-for-Profit Organization?

A not-for-profit organisation can be founded by anyone; there are no restrictions. A not-for-profit organisation can be started by anyone who recognises a need in the community in the fields of religion, science, or education. Following the discovery of a community need, thoroughly investigate the issue to learn more about it and potential solutions. Then, draught a business strategy explaining the issue, your goals, and the strategies you’ll employ to achieve those goals.

Create a board of directors and volunteers who will be in charge of managing the day-to-day operations of the business after the concept is solidified. The next phase is to assess the idea’s viability and create a thorough business plan that includes a purpose statement, organisational strategy, budgetary projections, and the development of financial resources.

Fill out the state registration forms for not-for-profit organisations to start the incorporation procedure in your home state. Along with applying for 501(c)(4) tax-exempt status with the IRS, you should also look to have your organisation recognised as tax-exempt at the state and local levels.

Frequently Asked Questions (FAQs)