History of Non-Profit Organizations

Non-profit organizations are those which do not have owners, and any money brought in by the organization is then used to reach the organization’s goals. While employees of the organization can collect a salary, those salaries are not excessive and are not based on the amount of money brought in by the organization. Surplus funds are funneled back into the organization in order to continue meeting the goals of the organization.

Previous to laws and regulations, many non-profit organizations utilized a large percentage of monies brought in to pay the salaries of employees. Those salaries were sometimes excessive and included bonuses for the president and those that held certain positions within the organization. In addition, shareholders were able to sell their stocks for profit and any organization which could be considered a non-profit was able to avoid taxes.

However, there are new laws, especially in the United states, which govern the rules that make a business a non-profit organization. Shareholders are no longer able to sell their ownership in order to make a profit. In addition, the salaries of employees cannot be excessive and cannot exceed monies spent to reach the goals of the non-profit organization.

While non-profit organizations still receive tax breaks, they must follow very specific rules to avoid paying taxes on the income of that organization. They can also avoid taxes on the property where the organization is located, as long as they adhere to the specific local and Federal rules and laws that govern non-profit organizations.

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