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Questions and Answers
What is a nonprofit organization?
What is a nonprofit organization?
- An organization that is owned by an individual
- An organization that provides services without making a profit (correct)
- An organization that focuses on making a profit
- An organization that operates only in the private sector
Who owns a nonprofit organization?
Who owns a nonprofit organization?
The public at large
How do nonprofits primarily make revenue?
How do nonprofits primarily make revenue?
Through donations and fundraising events
Where does most of a nonprofit's revenue go?
Where does most of a nonprofit's revenue go?
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Do nonprofits have administrative expenses?
Do nonprofits have administrative expenses?
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Do nonprofits keep their profits?
Do nonprofits keep their profits?
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Who do nonprofits report their revenue and expenses to?
Who do nonprofits report their revenue and expenses to?
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What is social entrepreneurship?
What is social entrepreneurship?
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What is the bottom line in social entrepreneurship?
What is the bottom line in social entrepreneurship?
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Study Notes
Nonprofit Organization
- A nonprofit organization prioritizes service provision over profit generation.
- Must file incorporation documents with the state and apply for 501c3 status with the IRS to gain tax-exempt status.
Ownership of Nonprofits
- Nonprofits are not owned by individuals; they are owned by the public.
- Managed by a Board of Directors and required to maintain financial records.
Revenue Generation
- Nonprofits primarily generate revenue through donations and fundraising events.
Allocation of Nonprofit Revenue
- Most revenue must be allocated towards primary exempt purposes, serving the nonprofit's mission.
Administrative Expenses
- Nonprofits do incur administrative expenses in order to operate effectively.
Profit Retention in Nonprofits
- Nonprofits are not allowed to keep profits; all surpluses must be reinvested into their operations and goals.
Financial Accountability
- Nonprofits report their revenue and expenses to the IRS, ensuring their activities align with their stated purposes.
Social Entrepreneurship
- Social entrepreneurship addresses societal challenges through various foundations or programs, and these entities are subject to taxation.
Bottom Line of Social Entrepreneurship
- The net profit serves as the fundamental measure of success in social entrepreneurship, reflected on the income statement.
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