For the past 20 years, the number of non-profit organizations registering in the U.S. has increased, with the total number counting to 1.56 million.
Fig. 1. Number of non-profit organizations in the U.S. from 1998 to 2015
As communities grow, it seems that the need for the services offered by non-profit organizations also rises.
What are non-profit organizations and why are they important to society? How do they contribute to community development and economic growth?
What Is A Non-Profit Organization?
A non-profit organization (NPO) is a corporation established for pursuing a social cause that will benefit the public. Different from a typical business setting, surplus profits aren’t distributed to members and owners of the organization. Instead, all profits generated in excess of what it takes to keep the organization operational are redirected to furthering its advocacies. Surplus profits can also be dispensed to other charitable organizations, if needed.
NPOs are given tax-exempt status, so long as they satisfy the conditions set out by the government. They’re often required to make their operating and financial information public so that interested donors can make well-informed decisions before contributing. Businesses in the private sector often make donations to NPOs since their contributions are tax-deductible. Kane Georgiou, Owner of The Money Pig, KG Physio and Kola Holdings states, “Giving money to any good cause is a rewarding feeling. The fact that donating to NPO’s is tax deductible provides enormous incentive for business owners like myself to really get the best of both worlds in terms of contribution but also tax savings.”
Usually, NPOs use volunteers to fill the roles needed to do daily tasks. But as the organization gets bigger, full-time staff are hired for permanent positions.
PAID STAFF MEMBERS TYPICALLY BELONG TO management positions because they’re needed to keep the organization running. It’ll be hard to depend only on their dedication to serve since private companies can offer the same position in return for executive salaries.
Funding is often a challenge for NPOs since they rely mostly on contributions, donations, and membership fees. NPOs are allowed, though, to generate revenue through fundraising activities. For instance, an NPO involved in fighting animal cruelty may sell shirts, tote bags, and other products to fund their campaigns.
Non-profit organizations exist in various subsectors, including arts, healthcare, education, and environmental protection.
Fig. 2. Number and finances of non-profit organizations by subsector
NPOs are usually involved in handling trusts, scientific researches, charities, cooperatives, and environmental groups. Popular examples of NPOs are the UNICEF, the World Wildlife Fund, and the Rotary Foundation of Rotary International.
How Does Society Benefit from NPOs?
- Service Provision
Even if the government strives to serve everyone in the community, there will always be areas where their aid doesn’t reach. Many NPOs are built to fill these gaps and answer societal needs that aren’t met by government services.
In times of crisis, NPOs can act faster than government agencies because they have smaller detachments that offer better flexibility and mobility. They don’t need to wait for long meetings and arduous approval processes to act on a plan.
For example, women and children in abusive situations can seek protection in organizations who provide shelter to such victims.
- Advocacy And Values Development
Non-profit organizations empower individuals to take part in activities that can change the community for the better. They can draw public attention and have it refocused on people, views, and societal issues which are often marginalized and under-represented.
Usually, interested individuals first partake in small projects to learn more about an NPO. As they meet more volunteers and understand the passion and mission of the organization, they share more of their talent and time to the cause.
- Solving Community Problems
The government may be undermanned to do tasks that will improve the lives of everyone in the community. NPOs can help add to the workforce through volunteers who share the same passion to alleviate the community’s condition.
Some NPOs focus on providing training and education to communities to open better opportunities for employment or establishment of a micro-business. Some tackle issues on a smaller scale like observing the security of the local neighborhood. Those who have bigger funding and a worldwide reach are capable of handling global issues like trafficking and poverty.
- Bridging Profits And Philanthropy
NPOs encourage those in the for-profit sector to donate for a cause and engage in social welfare activities. Donations are tax-deductible to corporations who give them and the receiving NPO have tax exemptions in handling the provided funds, creating a win-win situation for both parties.
- Economic Contribution
Non-profit organizations provide employment opportunities to the local community. A research conducted by the Americans for the Arts revealed that NPOs in the arts and culture sector alone generates economic activity amounting to $166 billion a year.
Fig. 3. Economic impact of non-profit entities
(Source: National Council of Nonprofits)
As of 2015, NPOs in the said sector have provided full-time jobs to over 2.3 million individuals across the country. The Bureau of Labor Statistics found that the non-profit sector generates jobs for 11.4 million people which is equivalent to more than 10% of the total workforce in the US.
Non-profit organizations embody the best values the humanitarian spirit can give. They promote social welfare and tackle issues often undervalued by society. Through volunteerism and unflinching dedication to a cause, they give shape to the noblest goals an ideal society can enjoy.
There will always be individuals and communities that need help. NPOs give people a chance to make a difference and create a better world for everyone. All are encouraged to support non-profit