First, you must know that what is a non-profit organization? It is essentially a firm that is established for the welfare of the masses. This means that the benefit of the public or the mutual benefit of two parties is kept as the main criteria of work. Thus, it is referred to as a non-profit firm mainly because the primary focus is not on just accumulating or gathering wealth. The best part about owing a non-profit organization is that it is active and functional presently in a number of fields and sectors such as the environment, humanitarian aid, protection of animals, education and several other industries. Other fields included are religion, health, research, sports and early childhood as well. In order to make the explanation more effective, I would like to include some examples too. They are namely Habitat for Humanity, Mercy Malaysia, etc.
The benefits of forming a non-profit organization:
- Tax exemption: Taxes are a huge menace that every business person needs to pay timely so that he is not charged for illegal action later. This means that every business has to pay this. But, the moment you are registered as an organization that does not work for personal profit, you become eligible for tax exemption. This means that you are cut the slack. However, do not think that this will happen automatically the moment you start a non-profit organization. You actually need to go and register yourself under IRB as a non-profit organization. IRB is the acronym for Inland Revenue Board.
- Eligibility for various grants: This means that in case of a personal firm, you need to arrange for the funds in the form of capital or take loans from the banks. However, in case of a non-profit organization, you have the power and the right to request for funds from the public. Public charities are one of the best way to function and ensure that what you take from the people is given back to the society itself.
- Existence on formal structure: one of the other benefits of owning a non-profit organization is that it exists as separate and different from those people as a legal entity which has its own rights. This means that if anyone who is related to the firm or has a role to play in it has any personal interest, then that will be considered to be above the mission of this firm.
- Limited liability: Last but not the least, this is definitely an advantage that most people look out for. This means that creditors and courts are limited to the assets of your non-profit organization. The founders, members of the committee or even the employees are not liable for this firm’s debts. However, please note that there are exceptions and rules too. No one should use the firm’s shield to do their personal work or any illegal act. In fact, neither should any director ignore his responsibilities towards the firm. If this happens and the work is affected, then he will definitely be held responsible as well as liable.