A non-profit organization (NPO) is an organization whose main purpose is not to make a profit and which does not distribute profits among the participants. Non-profit organizations can be created to achieve social, charitable, cultural, educational, scientific and other goals. Some activities of NPOs can be carried out only on the basis of licenses.
If several people want to do some socially useful thing, they can unite and create a non-profit organization. From the point of view of the law, an NPO is a legal entity that must have its own charter and reporting. I note that legal entities can also create NPO: for example, a non-profit partnership or association.
The main difference between such an organization and a commercial firm is that NGOs are created not to make money, but to do good deeds: help the homeless, take care of the environment, protect human rights, hold cultural events, and even promote some kind of politics or religion.
The main difficulty in keeping records in NPO is the targeted financing of its activities. If an NPO provides paid services, the profit from which is used to ensure the main activity, then accounting for it is kept almost the same as in a conventional organization. But the income, for example, from members of the SNT or association, is already membership fees and a special accounting procedure.
You cannot spend money at your own discretion. There is a charter and regulations that regulate the purposes for which all proceeds go. In order to calculate the required amount of expenses, estimates are required. They are also required to receive grants.
Many, but not all, NPOs have paid staff in managerial positions; Almost all use volunteers. NPOs have no owners to whom excess profits can go, and any surplus after operating expenses is used to further their goals rather than being shared among members or employees of the organization. For an NPO to qualify as a government-recognized and tax-exempt organization, it must meet the conditions set by government agencies. In the United States, the IRS determines the validity and tax status of NPOs.
NPOs often rely on the commitment of employees who believe in their cause because they find it difficult to compete with private sector wages. On the other hand, executive salaries are often quite high in order to be able to compete with equivalent positions in the private sector.
Not-for-profit and not-for-profit organizations are both widely used to refer to NPOs, but there are subtle differences. The US Internal Revenue Service (IRS), for example, uses the term "nonprofit" to refer to activities such as hobbies that do not generate income.
The terms NPO and NGO (non-governmental organization) are also often used interchangeably, but they are different. NGOs are separate from government and do not need government advice but depend on government for funding. However, most NGOs are also non-profit organizations.
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