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What is a Non Profit Organization

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Find Your Ideal Job at a Nonprofit

Make-a-Wish? Big Brothers? The local community homeless shelter? When you think about the term "nonprofit organization," these are the types of groups that usually come to mind. You know they’re about doing good in the community, but what is a nonprofit really?

You might hear about nonprofit organizations in a number of channels―especially if you’re looking for flexible work, pursuing a career that provides social or community fulfillment, or even doing some work in this space yourself as a freelancer or consultant.

In a broad definition, a nonprofit organization is a business that operates to fulfill a community or social purpose, to advance services for a group or groups of disadvantaged individuals, and to promote advocacy and raise awareness for different societal issues, locally and globally. A lot of businesses that aren’t labelled as nonprofits do this kind of work, and this is probably where the biggest difference comes in.

Unlike many larger corporations, nonprofit organizations seek to redistribute any profit or revenue they generate straight back into the organization to help it advance toward its goals and mission statement. Many other businesses share profit among their shareholders, private individuals or the equivalent within the business.

How Are Nonprofit Organizations Defined?

For economic purposes, as mentioned, nonprofits are defined as organizations that return all profits back into the organization so they can continue to deliver their purpose and work in the community.

As a result, nonprofits are tax-exempt under Internal Revenue Code Section 501(c)(3), which includes a wide range of organizations in various sectors. What most people don’t know is that 29 different types of organizations exist that are tax-exempt under this code. These are broken down into two main distinctions:

  • Public Charities: These are organizations set up by public groups or individuals, which are focused on addressing mainstream community and social issues.
  • Private Foundations: These are organizations set up by private individuals that focus on supporting public charities and similar organizations through grants and donations.

Categories of Nonprofit Organizations

Hundreds of different categories of nonprofit organizations exist that fall under the distinction of a public charity. Many of them you will be familiar with, and others you probably have never heard of, especially if they’re smaller and focus on one niche group rather than a much broader issue.

The National Taxonomy of Exempt Entities (NTEE) exists to define and categorize these charities. They currently have 645 categories, each with its own classification code. These fall into eight primary groups:

  1. Human Services Organizations (35.5 percent of all charities) including organizations such as UNICEF.
  1. Education Organizations (17.1 percent) including

    organizations such as Teach for America.

  1. Health Organizations (13 percent) including

    groups such as Doctors Without Borders.

  1. Community and Civil Rights Organizations (11.6 percent) including organizations such as the American Civil Liberties Union (ACLU).
  1. Arts Organizations (9.9 percent) including art groups such as the Museum of Modern Art.
  1. Religious Organizations (6.1 percent) including most churches and community church groups.
  1. Animal Protection Organizations (4.5 percent) including the World Wildlife Fund (WWF).
  1. International Development and Human Rights Organizations (2.1 percent) including charities such as the American Red Cross.

How Do You Become a Nonprofit Organization?

If you’ve started your own business and you think the work you’re doing could fall under the heading of a nonprofit organization, then it’s worth getting recognized as one, if only for the tax-exemption. That way, you can focus on putting revenue back into the business.

If you’ve got an idea and you want to set up as a nonprofit, then you’ll need to take a few steps. These are the same as setting up any new business, including starting with an idea and a solid business plan. The rules for getting set up as a nonprofit vary slightly from state to state, so do your homework. GrantSpace.org provides step-by-step guidance for anyone wanting to set up as a nonprofit, with resources available on a state-by-state basis.

Some initial fees and costs are involved in setting up as a nonprofit, so make sure this is the best avenue for you and your business before pursuing it. You'll need to incorporate your business, which basically means building up the structure of your business and establishing a board. You'll have to pay a fee and file for 501(c) tax exemptions, which can cost between $450 and $850, depending on your expected revenue.

Working for a Nonprofit

If you’re a parent, you probably have strong priorities when it comes to your children. Your priorities may spark a number of passions that you could pursue through working at a nonprofit.

Whether it’s education, health, human rights or access to creative pursuits, nonprofits work every day to help make our communities a better place. For a job that offers rewarding and fulfilling work, a career in a nonprofit could be the right fit for you.

Many nonprofits also offer flexibility, job shares and part-time work because of the nature of how they run, so if you want an employer who is understanding and supportive to working parents, nonprofits make a good starting point. Because nonprofits have a cause and purpose at the heart of their business, and since they aren’t focused on generating high profits to pay shareholders, they can provide an ideal working environment.