NPOs: Advantages & Disadvantages

Advantages of starting a non-profit organization

  • Most of the income of a non-profit is exempt from income taxes.
  • The contribution from a donor is also tax exempt in most of the cases.
  • A non profit organization can receive grants or aid in contrast to business entities that have to use loans as a means of raising funds.
  • The satisfaction at being able to contribute to social development is immense.

Disadvantages of starting a non-profit organization

  • Non-profit organizations are subject to stricter reporting requirements.
  • Benefits arising out of the nonprofit organization cannot be inured for the personal benefit of its members, directors, officers beyond a permissible limit.
  • Getting grants is a tedious job.
  • In case, the incorporators decide to move onto some other pursuits in life, they cannot take along the assets accumulated by the non profit organization.

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