Non–profit corporations have a similar structure
than other types of corporations. Both entities will have leadership as well as
employees that answer to those in management. Corporations will likely be
for profit, while non–profit corporations have income which is then funneled
back into the operations of that organization. Those monies are then used to meet the
goals of the non–profit corporation, as well as paying the
salaries of those employed there.
There are many companies which conduct business without
the purpose of gaining a profit for the owners or shareholders. Instead, those
companies wish to take the income and utilize it to reach the companies’ goals in the local community or on a global level. Both
non–profits and not–for–profits use the income of the organization to
assist those that need it. For example, non–profits may use the income to feed the homeless or build
homes for those that have lost their home to a natural disaster such as flooding,
hurricanes or fires.
However, not–for–profit organizations may include a membership
roster which does directly benefit from the income of the organization. For example, an organization that has fund drives to send
children to a destination would likely be a not–for–profit if the children were the ones that
took part in the fundraising efforts, such as selling candy to raise funds.
Non–profits rely on a variety of sources of
income in order to keep operations running, as well as for
payment of employees and other
expenses. That funding may come from grants or donations, and fundraising is usually vital to the success of a non–profit organization.
Non-profit organizations are those which are set up in order to raise money for a cause. The cause may be on the local level or the global level, but in either case monies raised are not used as profit, but are instead used to support the cause. Any income for the company is funneled back into the organization rather than used as a profit which gets distributed to shareholders, owners and employees, as it would in other types of businesses.
- Percentage spent on charitable purpose – most efficient charities will spend 75% or more on programs. Exceptions are made for organizations that do not receive tax deductable contributions
- Cost to raise $100 – AIP considers $35 or less to raise $100 reasonable for most charities
- Years of available assets – how long the charity can afford to operate without additional fundraising. AIP considers assets lasting three years or less reasonable. Charities with large amounts of assets receive lower grades as they do not have a pressing need for more donations.
- AIP does not rank local organizations or national organizations comprised of local affiliates, only charities that have a national focus.
- Public support of more than $500,00 and total revenue more than $1,000,000
- 4 years of Form 990 filings
- Operations based in the US and registered with the IRS, although the scope of the organization can be international.
- Fundraising expenses