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What’s It Like to Operate a Nonprofit Organisation?

If you want to make a difference in the world or are motivated to help communities across the world, then there are plenty of advantages to operating a nonprofit organisation. However, there are also a couple of downsides especially if you’re just looking to create a business from the ideas that you already have. So in this article, we’re going to explain what it’s actually like to operate a nonprofit organisation and what you should expect in terms of benefits and downsides.

Advantages

First, let’s take a look at some of the advantages of starting a nonprofit organisation.

Public and private grants

For starters, many nonprofit organisations are considered public charities which can offer you many opportunities to accept public and private grants. If other businesses or individuals offer charitable contributions to your business, then you can also offer them tax deductions on those amounts. This is a fantastic way to fund your operation but also a great way to accept donations and crowdfunding to further your cause.

Limited liability

Founders and directors of a nonprofit organisation are not actually personally liable for a nonprofit’s debts, meaning that there’s more of a safety net should your nonprofit organisation become difficult or expensive to operate due to a poor financial situation. There are exceptions to this, such as being unable to use your nonprofit for irresponsible acts and you must perform your job to your nonprofit’s best interests.

Financial exemptions and deductions

Organisations that are considered public charities actually qualify for several tax exemptions and deductions. For example, there’s a large list of expenses that you can avoid paying VAT for. There’s an extensive article of information available on VAT for charities which will give you a lot more detailed information on how you can get VAT relief and what can be claimed. This is just one of the many examples of financial benefits that come with running a nonprofit organisation.

Making a difference in the world

Lastly, nonprofit organisations are often able to make a difference in the world. Whether it’s a charity that provides assistance to other countries or a small nonprofit organisation that provides a service to the local community, it’s easy to find purpose in the work you do and it can motivate you and your team to make a difference with the products, services and assistance you offer.

Disadvantages

Now let’s take a look at some of the disadvantages that you might face when creating a nonprofit organisation.

It can be difficult to find supporters

Whether you’re selling a product, offering a service or simply taking donations to help others, it can be difficult to find supporters or other companies to work together with. Thankfully, there are specialised modern customer relationship management systems like Reldesk that are geared towards nonprofits, making this process a little easier. However, that doesn’t change the fact that it can still be hard to get customers and clients if you’re not offering anything compelling.

It’s still a business

Even if you have good intentions, it’s still a business that requires you to take good care of your staff and clients, it requires you to advertise your services or products and you need to consider how to efficiently run your organisation. Creating a business is no easy task and even if funding is easier to secure, it’s still very difficult to get up and running without the help of consultants, attorneys and financial advisors.

You’re required to do more paperwork

Since you’re able to take advantage of many unique financial benefits, you’re required to keep incredibly detailed records of your finances. This means that you need to submit annual filings and keep a log of all of your expenses, especially if you plan to make them exempt from VAT. In addition, since you’re dedicated to public interest it may open you up to scrutiny if you’re not making enough of a difference. This can lead to public inspections of your finances and paperwork which means that you absolutely need to keep your records up to date.

We hope that this article has shed some light on what it’s like to operate a nonprofit organisation. While some people will find it invigorating and motivational to make a difference to their community or even the world, others might find that it’s not the right choice since a nonprofit can be more difficult to operate than a regular business and you need to put the public’s interest ahead of your company’s.

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