Questions and Answers
What is a nonprofit organization?
Who owns a nonprofit organization?
The public at large
How do nonprofits primarily make revenue?
Through donations and fundraising events
Where does most of a nonprofit's revenue go?
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Do nonprofits have administrative expenses?
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Do nonprofits keep their profits?
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Who do nonprofits report their revenue and expenses to?
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What is social entrepreneurship?
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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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Description
Explore essential terms and definitions related to nonprofit organizations and social entrepreneurship through these flashcards. Understand the legal framework and ownership aspects of nonprofits, including the significance of 501c3 status.
