non-profit vocab and terms

non-profit vocab and terms - Chapter 2 Nonprofit...

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Chapter 2 Nonprofit Terminology Nonprofit Names Nonprofits are known by many names: Foundations, associations, councils, chambers, institutes, societies, committees, task forces or special interest groups. Associations represent commercial businesses and trades. An example of an association is the Association for Wine Grape Growers. Societies represent individuals within a specific profession or industry. A good example of a society is the Society of Professional Engineers. Advocacy groups are composed of people with similar interests and positions. The Association for Executive Directors is an advocacy group. Affinity groups , such as the Quilters Guild, represent people with special skills or hobbies. From this point on, until the end of my course, for the sake of simplicity, I will refer to all nonprofit organizations as associations , agencies or nonprofits . Nonprofits are Businesses Nonprofits are actually businesses. The word nonprofit refers to a type of business that is incorporated into a legal organization that forbids the distribution of profits to its owners. In this sense, profit is generally defined as a surplus of revenues over expenditures. Nonprofits are organized into corporations formed under the corporation laws where they are located. Every state has provisions for forming nonprofit corporations. Just like any other business, nonprofits are allowed to own property and have their own bank account. Many nonprofits never get to the point of owning their own property, but all nonprofits have their own bank account to accept donations, receive income from fees, events and sales of merchandise, and to pay bills. They may hold passive investments, employ staff and enter into all sorts of contracts. Tax-Exempt and Not-for-profit Designations Both the state and federal government have a special place in their heart for associations. They understand that organized groups that do good works, and do not need to make a profit for their owners, need and deserve special considerations. A common thread that runs through each of these groups is their tax-exempt and not-for-profit designations. You are likely to hear both of these terms on a daily basis. These terms are often interchanged incorrectly in daily dialogue, so be careful when you hear and say these words. Tax-exempt refers to being excused from paying federal income tax. It is not an exemption from paying state sales tax. Not-for-profit refers to the organization's corporate status. It is not an exemption from paying state sales tax or federal taxes. Associations are usually exempt from paying federal income tax, with the exception of taxes on unrelated business income. ALL nonprofit organizations must file a 990, 990-EZ, or 990-N report at the end of each fiscal year starting with fiscal year 2007. Previously, if a nonprofit organization had gross receipts less then $25,000, they did not need to
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non-profit vocab and terms - Chapter 2 Nonprofit...

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