You can adjust things within the organization to continue to meet needs and generate capital. This will allow the organization to continue long after the founder dies.
Organization at Scale
When there is a need in whatever industry and you feel you can fulfill that need with a service, a non-profit organization allows you to get others to see your vision and become a part.
Protection from Personal Liability
A considerable benefit of non-profit organizations is no personal liability for the organization’s debts resting on the employees.
Tax-Exempt Status on Net Income
Non-profit organizations are eligible for tax-exempt status.
Grant Eligibility
Government grants and private grants, along with donations and sponsorship (from companies and individuals), are other benefits for non-profit organizations.
Employee Benefits
Group rates for discounted health and life insurance benefit programs.
Volunteer Board Members
Normally, with non-profits, board members are not paid. These board members have skills, networks, and expertise that can and will assist the organization’s vision.
DISADVANTAGES
Lack of Funds
In non-profit organizations, the primary source of funds is through donations, so relying on fundraisers and donations will be a challenge.
Lengthy Application Process and Not Guaranteed Approval
When filing a Form 1023 with the IRS for 501(c)(3) status, the process is lengthy. It can cost up to $400 and consist of numerous pages and consume a lot of time to complete. The IRS takes tax exemption seriously, and the process is fitting to make sure your organization is in full compliance.
Public Scrutiny
With non-profit organizations, all financial records are made available for public access, causing public scrutiny and unwanted press and media.
No Profits for Directors and Officers
Directors and officers in non-profit organizations are prohibited from receiving profits from funds generated. A non-profit organization is in business not to generate profit, but to benefit a specific plan. Therefore, funds received are to be allocated to the general operations of the organization. Receiving profits will cause you to lose your tax-exempt status.
