Question

In: Finance

Which of the following is not a benefit of a not-for-profit organization?

Which of the following is not a benefit of a not-for-profit organization?

Solutions

Expert Solution

NOT FOR PROFIT ORGANISATION :

Not for profit organisation are the establishment that are for utilized for the welfare of the community and set up as charitable association which operates without any for profit. The primary objective is to furnish service to a specific class or the public at the larger picture.

The funds raised by such establishment are credited to the general fund or capital fund. The major sources of their income usually are subscription from their members donation, income from investment, grant etc.

There are many benefits of not for profit organisation, some disadvantages discussion below :

1) Public Scrutiny :

The Financial statement of not profit organisation are subject to public scrutiny. The organisation must make its financial statements available to general public. It can also in some case , results in coverage, particularly in the organisation is experiencing Financial or administration challenges.

2) Social pressure :

Not profit organisation whose mission are considered whether they are based on fundamental belief or progressive attitude. Progressive organisation whose goal is communities and expand the concept of diversity in social pressure.

3) Not profit organisation limited funding :

Fund development and fund raising can be a not profit organisations greatest challenge when unemployment rates are high. Some nonprofit are forced to discontinue services are forced to discontinue services fo population itself to lacks finding.

4) Low paying cost

A notprofit doesn't rewards as much work as for profit organisation, it is because the profit generated by a nonprofit must be put back into the company Operations.

5) paperwork and administration costs :

Comparison with profit organisation, the paperwork work involved in starting a non profit organisation is more. It requires to fill up tax forms and notprofit incorporation to qualify.

6) Loss of tax status

A nonprofit organizations can lose its Tax status. It may not be allowed to continue qualifying for its tax status. The deadline of tax in this case are very strict.

7) Competition for funding

Notprofit organisation rely on Grant's, donation and authorised investment to fund their organisation. There is no guarantee of receiving the funds of choice.

So , as long as the organisation has public confidence, its can prosper well and they deviate from their mission, people lose their faith in them Which results in their downfall.


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