By: Jenae Nichols
The term nonprofit organization covers an array of organizations that benefit the public in one way or another. Whether a nonprofit is on a national scale or within a local community, organizations rely on certain methods of funding in order to pursue the nonprofits mission. An organizations mission is a statement for the nonprofits purpose, goals, and how the association intends to reach them. Funding for nonprofits can come from a variety of sources such as: private donations, grants, tax revenue, and more. Generalizing nonprofits can be difficult because of the scale and scope that nonprofit organizations touch. Finding common ground in the way nonprofits fund its organization allows for a better understanding on how nonprofits work.
Government programs are not enough to manage the wants and needs of the people, this gap is where nonprofit organizations step in. Under International Revenue Code Section 501(c)(3) nonprofits are tax-exempt, this is because nonprofit organizations are created to benefit the public. According to the National Center for Charitable Statistics there are 1,571,056 tax-exempt organizations as of 2016. This current state of nonprofits allows for more funding and more missions to be met.
According to the Social Economy Network, volunteer focused and donation driven organizations appeared in the middle of the 18th century, but were primarily focused around religious institutions. Today religion related nonprofits accounts for 6.1% of the nonprofit sphere, according to National Council of Nonprofits. The Social Economy Network says that the Wilson-Gorman Tariff Act of 1894 was one of the first federal laws that allowed nonprofits to be tax-exempt. With governmental help, nonprofits were given the ability to grow and benefit specific areas of the public. Not-for-profit is how nonprofits get its name, this means that any profit that the organization makes must go back into the nonprofits mission.
Nonprofits have many advantages whether that is benefiting certain areas of society or being tax-exempt. A disadvantage of nonprofits is that fundraising efforts are sometimes not enough to support the organization and its mission. Finding donors can be somewhat tricky; this is because if an individual does not agree with the nonprofits mission they are unlikely to donate. The social pressures around nonprofits are magnified because nonprofits are held at a higher standard than for-profit companies.