Assignment PAPER THREE- LAW OF ORGANIZATIONS TOPIC NON- PROFIT ORGANIZATIONS POST GRADUATE DIPLOMA IN BUSINESS LAW Submitted by TSHEWANG PHUNTSHO Roll no- B71 Officer Trainee of 71th Batch of IRS (IT) Table of Contents SL NoTopicPage No1Introduction32Starting of Non-Profit Organization43Difference between Profit and Non-Profit Organizations54Non- Governmental Organizations in Bhutan6-75Advantages and Disadvantages of Non-Profit Organizations86Conclusion97Bibliography10 Introduction Charitable organizations are sometimes referred to as nonprofits or not for profit organizations. Usually, people use the terms interchangeably. But there are some similarities between the two types of organizations and there are also several differences, including the process of acquiring tax-exempt status, banking practices and procedures, membership and the use of the funds that they raise to fulfill the objectives of the organization. Profit is not the primary motive of all the organizations which are established, as there are a number of organizations which are established with an objective of providing services to its members and the public as a whole. These can be charitable institutions, religious organizations, clubs, hospitals, trade unions, welfare societies etc. Such organizations do not carry out any business or trading activity and are under the control of trustees. Two such organizations are a non-profit organization and not for profit organization. A nonprofit organization as per Section 8of the Indian Companies Act, 2013 is the companies with limited liability. The organization is mainly formed to pursue charity, religion, science and art. The profits earned by the organization must be applied for achieving the objects of the entity rather than distributing to its owners. Not for Profit Organization refers to an organization whose sole function is to achieve the objects of the entity. The organization does not work for earning the profit. Thesetypes of organizations can include club like womens club, sports club, etc. or an association or any other group formed by people. . How to Start a Not for Profit Organization To start a Not for Profit Organization is not an issue to anyone as it is solely volunteer basis who wants to start to pursue the main objectives of the organizations. If someone wants to start the not for profit organization in their community or elsewhere in the world, he can research his idea outlining the proposed non-profits objectives and how it plans to meet those goals and objectives. For the purpose of tax exemption, the organization needs to request HYPERLINK https// 501(C)(3)status from the Income Tax Department as per Income Tax Act,1961. Once the organization is registered and operating, the organization has to maintain compliance with the appropriate state agency regulating charitable organizations. In HYPERLINK https// o India India, HYPERLINK https// o Non-governmental organizations Non-Governmental Organizations(NGOs) are the most common type of public institutions that do not have commercial interests to earn profits as main motive. The organizations can be registered in the following ways Trust, Society, special licensing, Schools, sports. The registration can be with either the Registrar of Companies (RoC) or the Registrar of Societies (RoS). The following laws or Constitutional Articles of the Republic of India are relevant to the NGOs Articles 19(1)(c) and 30 of the Constitution of India Income Tax Act, 1961 Public Trusts Acts of various states Societies Registration Act, 1860 Section 25 of the Indian Companies Act, 1956 (Section 8 as per the Companies Act, 2013) Foreign Contribution (Regulation) Act, 1976. Profit Organization and Non-Profit Organization One of the major perceptions of people, regarding the non-profit organization, which most of the people is that it does not make the profit from business activity. But in reality, the non-profit organization too makes the profit from various activities just like a for-profit organization does, except only the way of handling profit is different in the two organizations. The differences between Profit making organization and not for profit organization are BASIS FOR COMPARISONPROFIT ORGANIZATIONNON-PROFIT ORGANIZATIONMeaningA legal entity, which operates for earning profit for the owner, is known as For-profit or Profit organization.A non-profit organization is a legal entity, which operates for serving the society as a whole.MotiveProfit motiveService MotiveForm of organizationSole proprietorship, Partnership firm or companyClub, Trust, Public hospitals, society, etc.ManagementSole proprietor, partners or directors, as the case may be.Trustees, committees or governing bodies.Source of revenueSale of goods and services.Donation, subscription, membership fee etc.Commenced throughCapital contributed by the owners.Funds from donation, subscription, government grant and so on.Financial StatementIncome statement, Balance Sheet and Cash flow statementReceipt Payment A/c, Income Expenditure A/c and Balance Sheet.Money earned over and aboveProfit, is transferred to capital account.Surplus is transferred to capital fund. Non- Governmental Organizations (NGOs) in Bhutan Bhutan, the land of thunder dragon is a tiny Himalayan country with just over 700,000 people and it is one of the developing countries in the world. In Bhutan, there are lots of Non Profit Organizations supported by many International agencies to help the community and nation as a whole whose main objectives is not profit making motive. The Non Profit Organizations in Bhutan should registered under the Civil Society Organizations Act, 2007 Some of the NGOs in Bhutan are HYPERLINK http// o Bhutan Center for Media and Democracy Bhutan Center for Media and Democracy As Bhutan recently completed the 3rd parliamentary election democracy, we see the emergence of a civil society space that is evolving and growing more dynamic. So, with the help of UNICEF, Bhutan Centre for Media and Democracy was established in the year 2008. HYPERLINK http// t _blank Bhutan Foundation Among many other activities, the Bhutan Foundation supports the Snow Leopard Conservancy and celebrates the culture of communities living in close proximity to endangered snow leopards and promotes community-based initiatives related to conservation of these magnificent animals during theJomolhari Mountain Festival. HYPERLINK http// o Bhutan Nuns Foundation Bhutan Nuns Foundation The Bhutan Nuns Foundationfacilitates the improvement and basic well-being and education of the nuns of Bhutan. Established in 2009, thefoundation builds on existing support provided and placesspecial focus on out-reach to those most in need byorganizing activities that advocate for and strengthen nunspotential through quality education, skill development tofurther benefit their communities and to connect nuns withothers in the country while at the same time striving toimprove their basic living conditions so that the nuns ofBhutan can contribute to the peace and well-being of Bhutan as a country and the world at large. HYPERLINK http// o Bhutan Youth Development Fund Bhutan Youth Development Fund As Bhutans leading youth organization, the Bhutan Youth Development Fund strives toensuring that all youth have equal access to education, meaningful employment and opportunities to develop their potential and to address the growing needs of our youth. Her Majesty the Queen Mother Ashi Tshering Pem Wangchuck founded the Youth Development Fund on 16 June 1999 and is the President of the Fund. HYPERLINK http// t _blank RENEW (Respect, Educate andNurture Women) Her Majesty Queen Mother Sangay Choden Wangchuck, established RENEW in 2004. The NGO plays a leading role in shaping the future role of women in the Bhutanese society. HYPERLINK http// t _blank Tarayana Foundation Her Majesty Queen Mother Ashi Dorji Wangmo Wangchuck, the Founder and President of the Foundation established the Foundation as a means of organizing and streamlining assistance to the vulnerable communities and individuals. Tarayana is a non-profit organization working to uplift and enhance lives of vulnerable individuals and communities in Bhutan. HYPERLINK http// o Pilou Animal Rescue and Care NGO Pilou Animal Rescue and Care NGO Pilou established its first country programme through the HYPERLINK http// Bhutan Animal Rescue and Care(BARC) centre in Thimphu. The BARC centre provides animal rescue, shelter and medical care mostly to injure and sick stray dogs, cats and monkeys, in a safe environment where they are cared for professionally and with kindness and compassion. HYPERLINK http// t _blank VAST (Voluntary Artists StudioThimphu, Bhutan) VAST was established with an aim toprovide opportunities to Bhutanese youth to participate anddevelop their potential talents and share socialresponsibilities through artistic exploration and othersocially useful and productive work. Advantages of Non Profit Organization Nonprofit organizations are typically in operation to provide funding or services not available from other sources to the people they serve. As they are not intending to earn a profit, nonprofits usually have significant tax advantages over for profit-making businesses. Opportunities to get grant funding and lower costs on such things as postal service fees are also advantages. Some of the advantages are They have the ability to experiment freely with innovative approaches They are flexible in adapting to local situations and responding to local needs and therefore able to develop integrated projects for the communities. They enjoy good relationship with people and can render micro-assistance to very poor people as they can identify those who are most in need and tailor assistance to their needs. They have the ability to communicate at all levels, from the neighbourhood to the top levels of government. They are able to recruit both experts and highly motivated staff with fewer restrictions than the government. Disadvantages of Non Profit Organization Nonprofits organizations sometimes sell products or services to generate revenue, but mostly they rely on fund raising and private donations to provide services and resources. Nonprofits typically must report how they use their funds. In general, the government and donors like to see most funds go to services and not administrative expenses. Nonprofits often have a hard time as they must motivate people to donate or volunteer. Some of the disadvantages are Paternalistic attitudes restrict the degree of participation in programme/project design. Restricted/constrained ways of approach to a problem or area. Reduce an idea, due to non-representativeness of the project or selected area, relatively small project coverage, dependence on outside financial resources, etc. Territorial possessiveness of an area or project reduces cooperation between agencies, seen as threatening or competitive. CONCLUSION Non-profit organizations have many purposes and functions in society and they serve the needs and interests of millions of people in the communities. Non-profit organizations are essential to our quality of life not only because of the valuable programs they provide local citizens, but also because of the positive economic impact within our local communities. Non-profit Organizations are a steady source of employment which provides various employment opportunities the citizens to ensure efficient operations. The Non Profit Organizations like Schools, hospitals, museums, business associations and non-governmental institutions are mainly considered non-profits in some form which helps in innovation, empower, restore and sustain the common good. In India, Non-profit Organizationscan be registered Society under the Registrar of Societies or as a HYPERLINK https// o Trust company Trust, by making a Trust deed, or as a Section 8 Company, under the Companies Act, 2013. Whether the organization is trust, society or Section 8 Company, the Income Tax Act, 1961 gives all categories equal treatment regarding the exemption of their income and granting 80G certificates, whereby donors to non-profit organizations can claim a rebate against donations made. Foreign contributions to non-profits are governed by FCRA regulations and the Home Ministry. Non-Governmental Organisations (NGOs) are also not-for-profit organisations which are voluntary associations of people and communities who work at local, regional, national or international level. They get funding from the charities, donors and Government agencies to perform social services and humanitarian functions Bibliography Online Sources Importance of Non Profit Organization available online at HYPERLINK https// https// Not for Profit Organization available online at HYPERLINK https// https// Key differences between Non-profit organization and Not for Organization available online at HYPERLINK https// https// Advantages and Disadvantages of Non Profit Organization available online at HYPERLINK https// https// Non Governmental Organizations in Bhutan available online at HYPERLINK http// http// PAGE MERGEFORMAT 1 PAGE MERGEFORMAT 1 PAGE MERGEFORMAT 2 [email protected] oRt3f-C_1 . gm 2woz,QN_3.j
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