By : M.S.Yatnatti: Editor and Video Journalist Bangaluru : In "not for profit organization” question of buying or selling control does not arise as no one is the owner in the organization .No one person or group of people can own a nonprofit organization. You don't see nonprofit shares traded on stock exchanges, and any equity in a nonprofit organization belongs to the organization itself, not to the board of directors or the staff. Nonprofit assets can be sold, but the proceeds of the sale must benefit the organization, not private parties.If you start a nonprofit and decide at some point in the future that you don't want to do it anymore, you have to walk away from it and leave the running of the organization to someone else. Or, if the time has come to close the doors for good, any assets the organization owns must be distributed to other nonprofits fulfilling a similar mission.
It is pertinent to not the If someone found a non-profit corporation and then hedon't want to be involved in it anymore, He cannotsell it to someone else? AndEven if the assetssold, nobody can pay in exchange for control over the corporation?. If you want to leave and transfer control to someone else, you can do that by placing them on the board of directors and then resigning. You can't keep the assets of the company. One of the requirements of non-profit certification is that you agree to donate the assets of the non-profit to anothernon-profit corporationif you wind up the company. If the assets are sold, then the proceeds of the sale must be donated to another non-profit. This article describes the various laws related to non profit organisations in India. A non profit organisations can be registered in India as a Society, under the Registrar of Societies or as a Trust, by making a Trust deed. A third option is registration as a section-8 Company under the Companies Act, 2013. Designation as a nonprofit does not mean that the organization does not intend to make a profit, but rather that the organization has no 'owners' and that the funds realized in the operation of the organization will not be used to benefit any owners.
Whether a trust, society or section-8 company, the Income Tax Act, 1961 gives all categories equal treatment, in terms of exempting their income and granting 80G certificates, whereby donors to non-profit organisations may claim a rebate against donations made. Foreign contributions to non-profits are governed by FC(R)A regulations and the Home Ministry.For an organisation to be termed as charity it requires Income tax clearances under 12 A Clause of Income Tax Act. Section 2(15) of the Income Tax Act defines 'charitable purpose' to include 'relief of the poor, education, medical relief and the advancement of any other object of general public utility'.In a technical sense, it's probably correct to say there is no significant difference between the two terms. State "nonprofit" or "not-for-profit" corporation statutes sometimes use both terms side by side to suggest they are synonymous.A nonprofit organization (NPO, also known as a non-business entity is an organization whose purposes are other than making a profit. A nonprofit organization is often dedicated to furthering a particular social cause or advocating for a particular point of view. In economic terms, a nonprofit organization uses its surplus revenues to further achieve its purpose or mission, rather than distributing its surplus income to the organization's shareholders (or equivalents) as profit or dividends. This is known as the distribution constraint.The decision to adopt a nonprofit legal structure is one that will often have taxation implications, particularly where the nonprofit seeks income tax exemption, charitable status and so on.
The terms nonprofit and not-for-profit are not consistently differentiated across jurisdictions. In layman's terms they are usually equivalent in concept, although in various jurisdictions there are accounting and legal differences.The nonprofit landscape is highly varied, although many people have come to associate NPOs with charitable organizations. Although charities do comprise an often high profile or visible aspect of the sector, there are many other types of nonprofits. Overall, they tend to be either member-serving or community-serving. Member-serving organizations include mutual societies, cooperatives, trade unions, credit unions, industry associations, sports clubs, retired serviceman's clubs and peak bodies - organizations that benefit a particular group of people i.e. the members of the organization. Typically, community-serving organizations are focused on providing services to the community in general, either globally or locally: organizations delivering human services programs or projects, aid and development programs, medical research, education and health services, and so on. It could be argued many nonprofits sit across both camps, at least in terms of the impact they make.For example, the grassroots support group that provides a lifeline to those with a particular condition or disease could be deemed to be serving both its members (by directly supporting them) and the broader community (through the provision of a helping service for fellow citizens).Many NPOs use the model of a double bottom line in that furthering their cause is more important than making a profit, though both are needed to ensure the organization's sustainability.Although NPOs are permitted to generate surplus revenues, they must be retained by the organization for its self-preservation, expansion, or plans.NPOs have controlling members or a board of directors. Many have paid staff including management, whereas others employ unpaid volunteers and even executives who work with or without compensation (occasionally nominal).In some countries, where there is a token fee, in general it is used to meet legal requirements for establishing a contract between the executive and the organization.Designation as a nonprofit does not mean that the organization does not intend to make a profit, but rather that the organization has no 'owners' and that the funds realized in the operation of the organization will not be used to benefit any owners. The extent to which an NPO can generate surplus revenues may be constrained or use of surplu Benefiting the public: People form nonprofit organizations to create a public benefit. In fact, nonprofit corporations are referred to sometimes as public benefit corporations. A nonprofit organization can't be created to help a particular individual or family, for example. If that was possible, we'd all have our separate nonprofit organizations.