Careers in Nonprofit

As part of the Career Speaker Series given at Keene State College, a panelist of all KSC Alumni came to discuss careers in the nonprofit sector on Tuesday, the third of March, 2020. The panel discussed their journeys and goals which quite evidently coincided with their personal ambition to help other people. Every single panelist stated in some way that they loved what they do. One panelist, Dylan Bates from the class of 2019, stated, “it is inspirational because everyday I can do something that can make a difference.”

Go forth and serve…

Many people associate nonprofits with volunteerism, which while extremely important, is not the entire picture. There is a lot of work and hustle involved with making a nonprofit organization function. The staff has to get paid, rent paid, maintenance fees, and yes even electricity. This is all on top of the expenses associated with accomplishing projects and funding research.

What is a nonprofit?

Typically consists of a group or organization that has come together for a shared belief and goal to make a positive change in their communities. Unlike most organizations it does not have shareholders and revenue is redistributed within the organization to further their mission. The revenue is not distrubted to the directors or board of directors but rather is invested into projects that are meaningful and that have a positive impact on the community.

The nonprofit status must be assigned at the begining of creating the organization and has to meet certain requirements set by state laws. Some typical nonprofits include churches, public education, legal aid groups, museums, and animal shelters [1]. There are many community service and volunteerism based nonprofit organizations as well as professional organizations without charitable goals such as a sports association wich provides community enrichment.

Funding a nonprofit:

Everything in life costs money, except love. Love is free, which is why people dedicate themselves to a cause like a nonprofit. To keep the dream alive for everyone to enjoy, regardless of time, effort, and passion invested, there must be some source of money to keep the lights on. This is accomplished through several different avenues.

Nonprofits are able to apply for grant money. Grants are what college students like to call “free money”. This is money that must be applied for and is given by the government or a private organization based upon merit and the goal to promote social welfare and stimulate the economy.

Another potential source of revenue for nonprofits is the hard work and hustle of public relations officers, board directors, and campaign managers when networking, running events, and working directly with the people they serve. Positive public relations leads to personal donations from local individuals and companies. Fundraising programs are often effective at generating funds for a specific project by promoting issues that the public cares about.

Endorsments such as annual or unresticted gifts are essential in providing the funds necessary to keep the day to day functions of the organization going. This includes the elctric bill and the employees paychecks, because it cannot all be done by volunteers. Unresticted gifts are donated without a specific purpose and are generally used for operational expenses. Restricted gifts on the other hand are donated for a specific purpose or project.

Starting a nonprofit:

There are several steps that must be taken before a group can be considered a nonprofit organizations. These include: [2]

  • Formulating a “Mission Statement
  • Creating a set of bylaws to guide the organization. The bylaws encompass the rules of conduct and business model, similar to a constitution for the organization.
  • Develop a Board of Directors to oversee operations
  • Apply to the federal and state governments for an Article of Incorporation (and pay that FEE)
  • Apply for Tax-Exempt status through the IRS
  • Apply for a solicitation license through the local government if needed
  • Formally register the nonprofit organization
  • Get insurance for liability purposes and for equipment

Nonprofit vs Tax-Exempt

Nonprofit organizations are run for the benefit of the community without producing revenue for shareholders or a board of directors. Most of these nonprofit groups do receive tax exemptions, especially those that are educational and charitable organizations.

Requirements for a nonprofit organization to receive tax exemptions vary depending on the state as well as the type of nonprofit organization (churches vs labor unions). Tax exemptions are determined by the Internal Revenue Code which is regulated by the US Department of Treasury through the Internal Revenue Service (IRS).

These corporations still pay taxes, just not on the funds generated to accomplish their mission. These taxes include the federal corporate income tax as well as social security and medicare, and many others [3]. All tax exemptions have to be applied for through the IRS and are determined based on the corporations mission, structure, and programs.

To maintain a nonprofit and tax exempt status under the 501(c)(3) portion of the US Internal Revenue Code, the organization must follow a very strict set of rules and regulations. One such stipulation is that the net profits or activities cannot solely or unfairly benefit any single individual within the organization. All assets are also considered charitable and are donated should the organization shut down [4]. Organizations are also required to reapply annually and prove that standards are met.

What is the 501(c)(3) or 501(c)(6)…wait how many are there???

There are multiple sections and subsections within the Internal Revenue Code. The 501 section pertains to nonprofit organizations and there are several subsections. The 501(c)(3) is the most common and what people generally think of when they hear nonproft and tax-exempt. However, it is not the only type of nonprofit tax exemption listed within the Internal Revenue Code.

The 501(c)(3) is a subsection of the Internal Revenue Code that grants tax exempt status to stricly charitable purposes [4] such as: religious organizations, literary/educational, scientific research/public safety, national/international sports training programs, and organizations related to the prevention of cruelty to children or animals. These purposes fall into three categories. Public charities are those that receive a third of its total revenue from the general public such as local companies and individuals. In addition, to remian a “public charity” it must be organized and directed by “independent, unrelated individuals” [4] which typically inludes churches and animal shelters. Another catergory under the 501(c)(3) includes Private Foundations or “non-operating foundations” which typically do not have “active” programs but rather sponsor grants or scholarships which typically generate revenue from a smaller client base than public charities, sometimes coming from a single family. The last catergory of 501(c)(3) organizations are the Private Operating Foundations. They function in a similar manner as the public charities but act on a smaller scale and have limitations more similar to those of the private foundations.

The 501(c)(6) is another subsection within the Internal Revenue Code that handles nonprofit organizations. These nonprofit organizations differ from the 501(c)(3) charitable organizations in that they function as a business association. They are considered nonprofit because they do not generate revenue or pay shares. These organizations include chambers of commerce, real estate boards, pro-football leagues, and business leagues [5]. These organizations must adhere to regulations set forth by the IRS to maintain their tax exempt status.

The 501(c)(4) is another, yes another, subsection within the Internal Revenue Code that grants tax-exempt status to nonprofit organizations, in particular, social welfare organizations. These groups are dedicated to social improvement [6].

Local Nonprofits

Cheshire County, NH

Cedarcrest Center for Children with Disabilities: a nonprofit organization dedicated to providing the best care. It was officially incorporated as a nonprofit on June 28, 1952 but was established in the 1950’s by Dorothy “Dot” Sawyer.

The Monadnock Conservancy: protecting the wildlife and land in the Monadnock region since 1989.

Monadnock Family Services: provides mental health, financial, and housing support to families in need in the Monadnock Region.

MOCO Arts: a nonprofit arts education organization that offers children a creative outlet that nurtures a sense of community and cooperation.

Bibliography

[1] “Non-Profit Organizations.” Legal Information Institute, Cornell Law School, www.law.cornell.edu/wex/non-profit_organizations.

[2] Little, Libby. “How to Start a Non-Profit Organization.” HowStuffWorks, 3 June 2009, money.howstuffworks.com/economics/volunteer/starting-a-charity/start-a-non-profit-organization1.htm.

[3] Constantine, George, et al. “The Difference between Nonprofit and Tax-Exempt Status: Insights: Venable LLP.” Venable, 1999, www.venable.com/insights/publications/1999/10/the-difference-between-nonprofit-and-taxexempt-sta.

[4] “What Is a 501(c)(3)?” Foundation Group®, www.501c3.org/what-is-a-501c3/.

[5] Sherman, Fraser. “What Is a 501 C (6) Organization?” Small Business , Chron.com, 25 Jan. 2019, smallbusiness.chron.com/501-c-6-organization-60734.html.

[6] “Social Welfare Organizations.” Internal Revenue Service, www.irs.gov/charities-non-profits/other-non-profits/social-welfare-organizations.

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