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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About the Author:

Adrian B. Bennett is an attorney and nonprofit consultant by profession. He provides development sector legal services in areas of formation of nonprofit organizations, choice of entity, tax exemption, private foundation tax law, corporate governance and advocacy. He serves as a legal adviser to several non profit organizations in and around Florida.

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One Response to “NPOs: Advantages & Disadvantages”

  1. MOGOMOTSI says:

    What are the challenges that one face when running a non-profitable organasation?

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