FAQs

  • What are nonprofit organizations?

NPOs are institutions that run for the sole purpose of helping others, groups and various causes. Non profit companies or organizations do not have shareholders and do not distribute the profits equally. This helps to keep the profits within the shareholders, benefits the causes they follow. NPOs uses its surplus revenue and invests it back into its cause to further achieve its mission rather than giving out a dividend to the organization’s share holders – this is known as ‘distribution constraint.’ Taking this stance often has legal implications as the NPOs can seek tax exemptions and charitable status.

  • What is the difference between an NGO and an NPO?

Many people don’t fully understand the differences between an NGO and an NPO. The first difference is that NPO stands for non-profit organization and NGO stands for Non-governmental organization. NGOs are created by legal people who are not part of the government even though NGO funds are largely raised by the government.

NPOs on the other hand, do not share the profits with its shareholders, but utilize the excess revenue for the needs and purposes of the organization. They offer services and programs through federal, state and local entities and aim to raise substantial funds. They are also known as endowments or foundations with huge stock funds. They do have legal responsibilities.

  • What is the purpose of an NPO?

NPO123-2NPOs enjoy certain privileges whether they’re charitable or tax exempt. These privileges are in exchange for following the rules imposed by the government in regards to the way the organization’s assets are used. Also, NPOs require governance by a board and agree to operate solely for charitable purposes.

  • Is there a difference between a private and a public NPO?

A private foundation is a 501 NPO that doesn’t operate its own charitable services but instead gives out grants to other charities and has few sources of funding.  Private NPOs are usually funded by a single corporation, family or individual. A Public NPO receives funding from many sources and runs its own charitable services.

  • If a person started an NPO, are they owners of that NPO?

Regardless of who started an NPO, they are not owners of the said NPO and rather are members of the board of directors. An NPO is not owned by the people who started it – it belongs to the public as it is a public organization.

  • How many NPOs does the US have?

According to the NCCS, there are over 1.5 million NPOs in the United States and these include public charities, private foundations and other types of NPOs like civic leagues, fraternal organizations and more.

  • What type of NPOS are there? Can they be categorized into different parts?

There are 6 types that have been identified.

  • Animal Charities which are further sub divided into four distinct groups – wildlife conservation, pet and animal welfare, hunting and fishing conservation, zoo and aquariums.
  • Environmental Charities which focus on sustainable development and preservation of the environment. This has two groups – Environmental Conservation and Protection and Parks and Nature Centers
  • International – these may be headquartered in one country but may have their operations in another. They deal with humanitarian work, disaster relief, peace and human rights and more.
  • Health Charities that deal with disabilities, disease and disorder, medical research and medical related subjects.
  • Education Charities
  • Arts and Culture Charities