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Nonprofit organizations - Essay Example

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Non-profit making organizations are those which are not in operation with the aim of direct or indirect individual or organizational gain or profit (Salamon, 1992). This statement is true when the organization is both in operation and when it closes up. In a non-profit…
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Nonprofit organizations
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Download file to see previous pages A non-profit organization or entity should be structured or formal in some way in that they can easily be differentiated from mere extemporized groups or informal family groups (Salamon, 1992). In essence, this provision means the organization in question should have some governing rules and or procedures, an instrument of organization, as well as regularly chosen officers that carry out organized procedures or activities. In addition, these institutions have a legal identification and enter into contracts legally without obligating the personal financial accountability of its personnel.
This provides that non-profit organizations be separate institutionally from the government, i.e., neither its board is dominated by members of the government nor is it by any means part of the government. In the US, Salamon (1992) asserts that non-profit organizations make part of the private sector and are administrated by private boards of directors. Despite them being structurally and organizationally separate from the government, Salamon (1996) argues that non-profit organizations are often under great governmental influence. An example is where organizations are bound by state regulations regarding sexual harassment, environmental protection, equal opportunity, handicapped accessibility, and protection of human subjects. This has led to some pundits positing that the involvement of the government is a mere intrusion and undermining of the typical nonprofit sector (Rathgeb and Lipsky, 1993).
A non-profit organization operates with no intention of making profit for the owners. All profits generated are invested back into the organization’s mission thus forming a distinct difference between it and private business. In essence, Murray (2004) points out that non-profit distributing organizations means that non-profit organizations do not, and are not allowed to generate profits from reduced expenditures and increased receipts.
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