Clients: Not-For-Profits: Organizational goals

As the name implies, nonprofit organizations do not exist to create a profit. This does not mean that they can operate in the long run with expenses in excess of revenues; they must maintain positive net assets to continue as a going concern. However, rather than a profit motive, nonprofit organizations have as a primary goal the achievement of educational, charitable, scientific, or similar objectives. In other words, nonprofit organizations exist to engage in specific activities or provide specific services, often to specified groups or in specified areas of need, that profit-oriented entities might shun.

As a result, charitable, public interest, and social improvement considerations generally motivate the activities and operating policies of most nonprofit organizations and their staff members to a significantly greater extent than these considerations would affect businesses and business owners or employees. Once the basic goal, known in tax parlance as the exempt purpose, is established, the organization generally will have less latitude than business enterprises in setting other goals. This is not only because the IRC exempt purpose classification serves as a boundary, but also because funding sources that support the organization's basic goal may specify the activities in which the organization can engage to achieve the broad goal or establish restrictions on the use of their resources that effectively limit activities and goal setting. The organization's own articles of incorporation may narrowly circumscribe the organization's goals in recognition of these realities.

Copyright Blythe Paperless 2011