Is Your Organization Really A Nonprofit?
What exactly is a nonprofit, anyway?
The term “nonprofit” encapsulates traditional charities and smaller, start-up organizations that fund a vast range of causes, including: education, the arts, health, human rights, animal rights, the environment, and saving our planet.
Broadly, a nonprofit is an organization that reinvests all the money it receives back into itself rather than a group of shareholders. While there have been recent calls to find a new word to describe this type of work, “nonprofit” continues to be the most widely used term.
We are all likely familiar with such organizations as Goodwill, United Way, Habitat For Humanity, the Red Cross, and the Salvation Army. These types of nonprofits may also resemble international corporations that bring in hundreds of millions, if not billions, of dollars in annual charitable donations. And would you believe that many hospitals, schools, health insurance providers, and even cemeteries, can be considered their own specific type of nonprofit organizations?
That being said, the reality is that out of the 1.8 million registered nonprofits in the U.S., more than 95% raise less than $10,000 dollars a year.
Although there are many different types of nonprofits, traditional charitable organizations remain the most common. They are recognized with a 501(c)(3) designation by the US government and donations made to these organizations are tax-deductible.
Besides charitable organizations, other examples of nonprofits include:
Foundations — organizations that support the charitable efforts important to their executives — are also nonprofits themselves. In fact, some of the largest nonprofits in the world in terms of total assets are classified as foundations (think Bill & Melinda Gates Foundation).
Social Advocacy Organizations
Did you know that groups working on specific social causes are designated separately from mainstream charitable organizations? If an organization is participating in lobbying for a specific cause, then it is classified as a 501(c)(4) rather than a 501(c)(3). Importantly, for donations made to these organizations, it is not usually possible to receive a charitable deduction for tax purposes.
Trade and Professional Associations
These nonprofits operate with the goal of improving working conditions for their members. They lobby for policy changes and provide educational and professional development opportunities. Examples of this type of organization include unions and chambers of commerce.
Besides these examples, there are more than 20 different types of nonprofits classified by the U.S. government, including recreational clubs and Veteran’s associations, to name a few. Additional organizations with nonprofit status include educational institutions and major health insurance companies
Doing More Good Requires More Donations
Whether a nonprofit is a large organization or run by just a few volunteers they generally have two features in common besides their nonprofit designation. First, they aim to do good work and help others, and second, they rely on fundraising for some or all their income.
Due to the huge demand and need for donations, fundraising for nonprofits has become a large industry. True to the American entrepreneurial spirit, as the nonprofit sector evolves and grows, so do the technologies that allow for simple and impactful giving.
Today, one of the most innovative donation tools advancing nonprofit fundraising is Donate Now, Pay Later from B Generous.
Also referred to as Give Now, Pay Later, using this tool, the donor’s favorite nonprofit receives the donation immediately while the donor can spread out their payments over 3 to 9 months without any additional cost to them. Where available, the donor also receives the full tax deductible receipt right away.
The result? Donations are less impactful on donors’ wallets, but more impactful to the charitable causes they care about most. A win-win!