Nonprofit Organizations Characteristics, Classification and Future

Understanding the non-profit organizations (NPO)

A non-profit organization (NPO) is an entity whose primary focus is clamoring for a particular social cause and the main reason why such organizations are exempt from paying tax. Several common characteristics are evident in NPOs. Typically, they are centered on a specific mission whose main objective is to create a sense of direction and purpose for these non-business entities. This particular characteristic allows such organizations to harness the will of every participant while ensuring they align their goals with organizational objectives. Non-profit organizations also organizations also operate in an environment of scarcity. Resources are often limited within such organizations and the prime reason why they espouse hyper-cost-consciousness (Ahmed, 2017, p.201).

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Additionally, NPOs have a bias towards informality where leaders do not pay much attention to hierarchy within its overall structure to create an inherent dimension of attractiveness. Although informality may impede the exercise of authority, NPOs still embrace it to reach a consensus over significant issues within the shortest time possible. NPOs are also characterized by dual bottom lines that focus mainly on finances and the organization’s mission. Furthermore, the assessment of program outcomes is typically challenging to gauge due to an inadequacy in program evaluation capacity. Governing boards also serve a dual role of oversight and bolstering the organization’s capabilities.

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            NPOs are regarded as private foundations, with the Red Cross, Best Friends Animal Sanctuary, and the Bill and Melinda Gates Foundations serving as some of the best examples. The differentiation of non-profit organization is based on stark differences present within the basic framework used to create them (“Governance and performance in public and non-profit organizations,” 2016). NPOSs may be grouped under the 501(c) (4) category which covers civil leagues and local welfare associations. Organizations under this classification are involved in the promotion of community welfare while striving to attain a specified set of organizational objectives. The 501(c) (5) classification category of NPOs contains major labor and agricultural organizations. Their primary purpose is improving the welfare of workers while providing significant instructional material to improve efficiency.   The 501(c) (6) category, on the other hand, contains business leagues tasked with clamoring for improved business conditions. 501(c) (7) NPOs are social recreation organizations whose primary intention is the promotion of social activities. 501(c) (8) consists of fraternal associations which provide compensations to benefit their members. 501(c) (9) NPOs are a special category of beneficiary associations which to benefit employees. The 501(c) (10) classification category contains fraternal associations with a specified purpose.  501(c) (11) NPOs amalgamates retirement funds and benefits for teachers. The 501(c) (14) umbrella covers federally recognized credit unions which offer loans to members        

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The future of non-profit organizations lies in its application of innovation to deal with emerging challenges affecting their operational capability. Scarcity of resources within such organizations can be addressed through the creation of consumer products to compete favorably with other organizations. This will ensure that NPOs always has a steady kitty of funds rather than depending on donations and grants as is currently the case. A drive towards socially-minded businesses such as Tom’s and Union & Faith will also create non-profit organizations with a business mindset for future self-funding. This should also be accompanied by a process of redefining the customer not only as a customer, but a supporter of an even larger cause. Future NPOs will also benefit greatly from innovative partnerships with other players in the sector with the aim of creating a sustainable business model.

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