Not For Profit Organisation

Presented By:Deepak Saini-11BSP1937 Yatin Mundeja-11BSP1229

Non Profit Organizations

A

non profit organization, as defined by law, is an organization that cannot distribute assets or income to, or for the benefit of, its members, officers, or directors. which are formed not for earning profits but for a charitable or social purpose are called as not for profit organisations.

Organisations

Special Characteristics
Absence

of the profit measure capital

Contributed Fund

accounting

Governance

FEATURES
1) 2) 3) 4) 5) 6) Separate legal entity Service motive Form Profit- not a motivator Funding Accounts

Separate legal Entity

According to the principle of separate legal entity, a not for profit organisation is an separate entity independent of its members. These are the separate entity promoted by individuals or companies, but these are not owned by the promoters or managers.

Service Motive
These organisations are formed
For For

welfare of the society. providing services to its members. motive is to provide services.

Main

Form

Charitable hospitals Schools Trusts Colleges Clubs

Hospitals
Societies

Profit not a motivator

NPOs do not operate with the objective of earning profits. Their aim is to promote art, science, commerce, religion, culture, education, charity, sports etc.

Some NPOs may involve in trading activities

Main objective is not to earn the profit but to benefit the members and society. Any excess of income over expenditure is termed as SURPLUS while any excess of expenditure over income is termed as DEFICIT.

Funding
The main sources of income of such organisations are:

Subscriptions from members, Donations, Legacies, Grant-in-aid,

Income from investments, etc.

Accounts
The

Not-for-Profit Organisations are also required to prepare financial statements at the end of the each accounting period. have to prepare their final accounts at the end of the accounting period and the general principles of accounting are fully applicable in their preparation.

They

The final accounts of a not-for-profit organisation consist of the following:

Receipt

and Payment Account Income and Expenditure Account, and Balance Sheet.

Management control system

Product pricing: Many nonprofit organizations give inadequate attention to their pricing policies. Pricing of services at their full cost is desirable.

Pricing for peripheral activities should be market-based. A nonprofit hospital should price its health care services at full cost, but prices in its gift shop should be market based.

Management control system

Strategic planning & budget preparation: In nonprofit organizations that must decide how best to allocate limited resources to worth-while activities, strategic planning is a more important & more time consuming process than in the typical business. Operation & evaluation: In most nonprofit organizations, there is no way of knowing what the optimum operating costs are. Responsibility center managers, therefore, tend to spend whatever is allowed in the budget, even though the budgeted amount may be higher than is neccesary. Many organizations have had increasing difficulty in raising funds, especially from government resources.

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