Eclipse Government

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Credit: Previous Director of Public Relations Solomon Cobb

A nonprofit organization (NPO), also known as a non-business entity, not-for-profit organization, and sometimes a charity is a legal entity organized and operated for a collective, public or social benefit. This is in contrast to entities that operate as businesses aiming to generate profit for their owners. Examples of nonprofits can include but are not limited to:

• Churches
• Schools
• Political Organizations
• Social/Community hubs (e.g. community center)
• Business associations (Areas for business networking and guidance)

The main aspects of nonprofits are accountability, trustworthiness, honesty, and openness to every person who has invested time, money, and faith into the organization. They are accountable to the donors, founders, volunteers, program recipients, and the public community.

Nonprofits are either member-serving or community-serving. Member-serving nonprofit organizations create a benefit for the members of their organization and can include but are not limited to credit unions, sports clubs, and advocacy groups. Community-serving nonprofit organizations focus on providing services to the community either globally or locally. Community-serving nonprofits include organizations that deliver aid and development programs, medical research, education, and health services. It is possible for a nonprofit to be both member-serving and community-serving.

A common misconception about nonprofits is that they are run completely by volunteers. Most nonprofits have staff that works for the company, possibly using volunteers to perform the nonprofit's services under the direction of the paid staff. Nonprofits must be careful to balance the salaries paid to staff against the money paid to provide services to the nonprofit's beneficiaries. Organizations whose salary expenses are too high relative to their program expenses may face regulatory scrutiny.

A second misconception is that nonprofit organizations may not make a profit. Although the goal of nonprofits isn't specifically to maximize profits, they still have to operate as a fiscally responsible business. They must manage their income (both grants and donations and income from services) and expenses so as to remain a fiscally viable entity. Nonprofits have the responsibility of focusing on being professional, financially responsible, replacing self-interest and profit motive with mission motive.

Setting effective missions is a key to the successful management of nonprofit organizations. There are three important conditions for an effective mission: opportunity, competence, and commitment. One way of managing the sustainability of nonprofit organizations is to establish strong relations with donor groups. This requires a donor marketing strategy.