Vision classes
NON-PROFIT ORGANISATION
MEANING & CHARACTERISTICS
Organizations are of two types: - profit-making & non-profit making. Profit-making organizations operate with the main objective of earning profit. But there are organizations whose objective is not to earn profit but to render services. These organizations are called non-profit making organizations. The services are rendered to its own members or to the society at large. The main objective of such organizations may be social, educational, religious, or charitable. The surplus arising from rendering services is not distributed among its members by way of dividends or share of profit but utilized for the furtherance of the objective of the organization—examples of non-profit making organizations are clubs, societies, schools, colleges, hospitals, charitable trusts etc.
Features of non-profit making ORGANISATIONS:
The features of non-profit making organizations are as follows:
1. Service motive – Unlike profit-making organizations, the non-profit making organization operates with the motive to serve the people of the society.
2. Separate identity – The non-profit making organizations have separate legal entities.
3. Form of organization – Such organizations function in the form of schools, colleges, hospitals, clubs, societies, charitable trusts etc.
4. Utilisation of surplus – The excess revenue earned over the cost incurred in the process of rendering services is not distributed among its members. Rather it is utilized for achieving the objective of serving society.
5. Financing – Non-profit making organizations cannot financially operate only by receiving revenue from rendering services. Therefore, it receives donations either from members or outsiders to finance the cost of rendering services.
6. Budget – Each non-profit organization prepares an annual budget. The budget gives information about the anticipated receipt and expenditure for the ensuing year.
7. Management – Such organizations are managed by elected representatives of the members.
8. Accounting – Non-profit making organizations are required to prepare their annual accounts and these accounts are submitted to the members of the government departments. The accounts are prepared on an accrual basis.
