Non-Profits: Sharing Your Mission with the World
- Team KAS
- Jun 11, 2023
- 3 min read
Have a cause you're passionate about but hate the idea of wasting money that could be used to help others on taxes? Maybe it's time to consider starting a non-profit organization!
Last week we highlighted B Corps and the new move toward for-profit corporations who have a social responsibility to their community and the world as a whole. But what do you do if your ONLY goal is to benefit society and make the world a better place in your own unique way? Well, then it sounds like creating a non-profit organization is exactly what the doctor ordered!
What is a Non-Profit?
A non-profit organization is a an entity that the government has chosen to forgo collecting taxes from in the interest of the greater good they provide to society. There some non-profits that are easy for people to identify such as places of worship, charities, hospitals, and schools. However, non-profits can include organizations like farms, fraternities or sororities, chambers of commerce, real estate boards, cemeteries, and pensions to name a few!
While this may seem like a sweet deal, there are some strings. As a trade off for not having to pay taxes, these organizations are not allowed to retain an profit at year's end. So each year instead of distributing their profit to the owners or stockholders, they are obligated to donate their income to the causes they support.
Did You Know: Even though non-profits cannot turn a profit, this does not mean that they are surviving on donations or that everyone who works there is a volunteer. These organizations are allowed to sell products, pay expenses, and maintain employees on payroll just like other business structures.
Pros
Non-profits provide more benefits than the feeling good about making a difference! Some of those benefits include:
Tax Exemption: If structured correctly so as to be acknowledged by the IRS, a non-profit organization is free from the burden of having to pay corporate income tax on any income created. Additionally, patrons are able to deduct the cost of their donations from their personal taxes.
Goodwill: Not only do non-profits give their employees something to feel proud about, the are also able to foster positive vibes from the communities which they service. This goes a long way towards making the venture a success..
Legal Protection: As with many business structures, non-profits protect their operators from personal liability when faced with legal issues like lawsuits or debts accrued on behalf of the company.
What causes would your non-profit advocate for?
The environment
Education
Social Justice
Politics
Cons
While giving back to the community or causes you believe in is always a plus, sometimes running a non-profit can have its drawbacks including:
Prying Eyes: It's important to note that non-profit organizations have to make their financial records open to the public to ensure that they are truly operating as a non-profit and not as a for-profit business that simply doesn't pay taxes. This means that any financial struggles the organization may have is on display to any one who may care to look.
The Volunteer Conundrum: Having a business where a large part of your staff are volunteers may seem great since you have the ability to allocate funds usually utilized for payroll to other expenses. However, since they are not being paid, there is no real obligation or incentive for volunteers to show up consistently or even do a good job once they are there.
Funding Troubles: As a non-profit, the majority of funds that come into your organization are going to be from donations and grants. This is great when the economy is strong and your cause is one that people feel strongly about or is in the spotlight. However, people tend to become less charitable during hard economic times and this can be a real concern for may non-profits.
How To Get Started
Creating a non-profit is a noble endeavor and we'd love to be a part of your vision. Schedule a business growth consultation with us so we can help you choose the perfect structure for your business. Click the button below to get started.
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