Nonprofit management principles and practice

NPO is an organization that does not make a profit as the main goal of its activities and does not distribute the received profit among its participants. Perfectly covered by Michael Worth in his book, nonprofit management principles and practice are in many cases pretty much different from an “ordinary” companies and corporations.

What are non-profit organizations

If several people want to do some socially useful business, they can unite and create a non-profit organization (NPO). From the point of view of the law, an nonprofit organization is a legal entity that must have its own charter and reporting. I note that legal entities can also create an nonprofit organization: for example, a non-profit partnership or an association.

Nonprofit Management Principles and Practice

The main difference between such an organization and a commercial firm is that nonprofit organizations are created not to earn money, but to do good deeds: to help the homeless, take care of the environment, protect human rights, hold cultural events and even promote some kind of religion.

It is impossible to compile a complete list of all areas of work of nonprofit organizations: public life and the needs of people can be very different. For example, the Friends of the Ocean nonprofit is engaged in the protection of marine animals, and there are also NPOs looking for alien civilizations.

Not all legal organizations that were created not for the sake of earning money are classified as nonprofit organizations. Horticultural and horticultural associations, real estate associations, consumer cooperatives and political parties are also public organizations that do not work for profit. But according to the law, they do not fall under the definition of nonprofit organizations.

How to register an nonprofit organization

To register, you will have to collect a package of documents. The main one is the charter. Before writing it, you need to decide how, where and what the organization will do.

It is better to formulate the purpose of the organization as broadly as possible. If you later want to receive a grant, it may turn out that the goal in the charter is too narrow, and your organization will not be able to participate in the competition. Therefore, it is better to write not specifically “supporting mothers”, “protecting women from domestic violence” or “teaching women to drive a car”, but rather specify the more abstract wording “supporting women”.

There may be several goals, but it is better if they are somehow related to each other. If the organization plans to preserve the monuments and at the same time teach children to play the cello, then the documents will be returned and told to create two different nonprofits. I also advise you not to use vague formulations like “other goals” or “other types of activity”: as my experience shows, the Ministry of Justice does not like this.

Decide on the geography of your organization. If you register the Society of Crochet Lovers of California, then in the future you will not be able to receive a subsidy from the budget of another region. The organization can be all-Russian, regional, and local. I advise you to start from where you really plan to work.

Come up with a name that will reflect the organizational and legal form, statutory goals and geography of activities. If you want to protect rare animals in Ryazan reserves, then the name may sound like this: “Regional Environmental Public Organization for the Protection of Animals”.

And where can we get money..?

A non-profit organization cannot work without money at all: it needs to pay rent, take transport somewhere, print leaflets or brochures. Therefore, nonprofit organizations are not prohibited from engaging in activities that generate income. The main thing is that the money earned should be spent on achieving the goals prescribed in the charter, and not distributed among the members of the organization.

Money and other property, such as real estate, furniture or securities, nonprofit organizations can receive from membership fees, sales of goods or services, donations, grants, as well as from local budgets.

While everything is clear with donations, entrepreneurship and membership fees, it is a little more complicated with grants, including state ones.

What you need to remember using money from government

All expenses must be controlled. I advise you to hire an accountant who will keep track of your finances. I faced offensive situations when, through carelessness, employees of the organization lost checks or sent money to the necessary for projects, but not specified in the application. I know a story when the Korean diaspora received a subsidy to host Chuseok, a national holiday. For budget money, they rented a concert hall, invited musicians, sewed costumes. We also bought food for the Songpyeong national dish. The culinary expense item was not in the estimate, and the money for the groceries had to be returned to the budget.

Finally, pay taxes on time! The absence of tax debts is a prerequisite for nonprofit organizations that apply for grants or budget subsidies. I know of cases when an organization made all payments to the budget on time, but due to a tax error, it had debts. To avoid such situations, I advise you to ask the tax office if everything is in order before applying for a grant.

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