A non-profit organization is a non-business entity in many countries which is exempted from tax. The Internal Revenue System in America grants non-profit organizations a status of business exempted from the tax.
Non-profit organizations are established for a cause. If a non-profit generates revenue, it is further used for the exact cause in which the organization was made. Non-profits pay no income tax on the donations they receive or any money they make through fundraising movements.
Guide to Starting and Running a Non-profit Organization
Be clear on the purpose and mission statement
What is the mission statement?
The mission statement of a non-profit organization should be clear on the purpose of its creation. Mission statements become essential when you want to generate profit for your organization. Mission statements will also clear where and for which purposes the money generated will be used.
The mission statement describes the whole purpose of the non-profit organization. The statement can be of any length, but it must be concise, comprehensive, and easy to understand. Mission statements should include the benefits to its clients, services it will provide, the population it will focus upon, and how the non-profit organization will operate.
Plan the working of a non-profit organization and its members
Some non-profit organizations are made by friends with a shared vision to serve their common purpose. They manage the tasks per their schedule and feasibility. But it is good to register their non-profit organization if they want to grow it further.
A non-profit can have a bank account and is a legally registered entity.
Avoiding frauds in a non-profit
If the non-profit organization also gets donations and funding by other means, that non-profit should be audit-ready all of the time. Suppose the financial data is not up to date and the organization is not audit-ready. In that case, this is a clear indication of discrepancies in the bookkeeping of the organization. Accounting statements must match.
Financial statements must be related to the balance sheet and cash flow statements. You can easily spot a financial fraud if the accounting statements do not match. When the directors know that there is enormous cash present in the account of a non-profit but checks frequently bounce back, this may indicate fraud. An audit must be conducted to ensure transparency.
Consider fiscal support
You can initially get finance management support and sponsorship from another non-profit organization. It is called its fiscal sponsor. This fiscal sponsor can train the members of the new non-profit how to deal with financial management issues.
Proper documentation and bookkeeping
For example, if a natural disaster in your area and your non-profit organization comes in front to help people, you cannot just collect money and say it was used for that cause. There should be proper documentation and proper planning that goes into collecting money. Volunteers give their services free of cost. The money donated can be used to assist further in re-establishing the families of that area. There should be complete recording and data of your finances at all times.
Find the right partners
You must find the right type of people to work for and with your non-profit organization. The directors, managers, volunteers, and doers should be working for a great cause and believe in your mission statement. You will most likely need accounting consultancies if your non-profit organization keeps a banking account and finances to support its cause.
If you want to build and run a non-profit organization, it is a great way to help ailing souls in any way. Non-profits are tax-exempt, and the money generated is solely used on the cause for which the non-profit was made. Follow the above guidelines to establish and successfully run a non-profit.About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks™️ file, critical financial documents, and back-office tools in an efficient and secure environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.