Business Insurance

Non- Profit Organization: Feast or Famine

Non- Profit Organization

The non-profit organization is a business which is granted tax-exempt status by the Internal Revenue Service because it furthers a social cause and provides a public benefit. The non-profit sector in the US has faced a barrage of insurance-related issues over recent months that have culminated in what some are calling an “insurance crisis,” including a hardening property and casualty insurance market, lessened appetite among insurers that traditionally supported the space, and last but certainly not least, the COVID-19 pandemic, during which time many non-profits have been providing frontline services to the public. The pandemic has forced non-profit organizations to make adjustments necessary to continue their mission-critical activities, explained William Henry, consultant at Volunteers Insurance Service Association (VIS) in Alexandria, Virginia. In some cases, it’s a matter of adjusting operations to take best advantage of paid staff and volunteer resources. In some cases, they have had to suspend activities entirely. But there are many examples of organizations redirecting some of their ‘normal’ volunteer activity into new channels.

How non-profit organizations are organized?

These organizations are usually set up as a charitable institution with the service motive. The organizations are managed by the trustees, the members of the organisation elect the trustees. Non-profit Organisations raise funds from its members as well as from the general public for meeting their objectives.

What are the objectives of non-profit organizations?

Non-profit organizations are mainly to provide help or resources to a target audience with the specific need. This organizations deals with the public purposes such as enriching the lives of people in the community, and enjoy special considerations in terms of tax, legal status and accountability. The primary objectives of these organizations are,

Financial objectives This objectives usually raise enough money to fund the activities included in their strategic plan, as well as fixed costs such as premises rental, staff compensation and utility bills.
Governance objectives Non-profit organizations are subject to stringent governance requirements, mainly because they usually use donor or grant funding to do their work.
Partnership objectives Partnerships are vital aspects of non-profit management, with organizations using in-kind donations of much-needed products and services.
Operational objectives The operational objectives of a non-profit organization relate to the management of funds and resources to achieve specific tasks.

Does non-profit means free?

According to public extensions of a nation’s revenue department, non-profits are tax-exempt or charitable, meaning they do not pay income tax on the money that they receive for their organization and they can operate in religious, scientific, research, or educational settings.

How much can a non-profit have in a bank?

For savings there’s no legal limit, it can be big, at one point it had $34 billion in reserves banked away. The bare minimum for a typical non-profit is three months; if you’ve got more than two years’ of operating funds socked away, you have too much. These organizations have founders, not owners. They can make money in various other ways, however, including receiving compensation from the non-profit. Net earnings and funds may be built up and invested for the organization’s future operational use.

It has been almost eight months since the world is fighting against COVID19. No doubt, these were some of the most stressful days of the year for non-profit fundraising teams, with anything from 30 to 50 percent of annual revenue riding on such a relatively short period of time. So, it’s no surprise that most organizations invest heavily in ensuring that every donor and potential donor knows this is the most tough time. Ups and downs are always being a part for organizations and due to pandemic it has extended more. This is how it seems to go in recent years, feast and famine, while numerous experts, reports and surveys warn that the donor universe is shrinking and that donors report excessive solicitation as a leading factor in their dissatisfaction with the organizations they support. It seems clear that the frenzied emphasis around year-end may well deliver short-term gain, with a serious long-term price.

The important factors of non-profits are accountability, trustworthiness, honesty, and openness to every person who has invested time, money, and faith into the organization. Non-profit organizations are accountable to the donors, founders, volunteers, program recipients, and the public community. Confidence of public is a factor in the amount of money that a non-profit organization is able to raise. and more non-profits focus on their mission, the more public confidence they will have, and as a result, more money for the organization. The activities a non-profit is partaking in can help build the public’s confidence in non-profits, as well as how ethical the standards and practices are.

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