What are the advantages/disadvantages of becoming a nonprofit organi... about:reader?url=https://asianngo.org/magazine/post-magazine/article/a...

asianngo.org

What are the

advantages/disadvantages of
becoming a nonprofit organization?
7-9 minutes

Building a nonprofit organization can bring many benefits to

numerous individuals and communities. As an organization in
itself, there are also tremendous benefits of running a nonprofit.
Thus, with all the advantages it brings also come with several
disadvantages. Among these advantages and disadvantages are
the following:

Advantages:

1. Tax exemption
Unlike many for-profit businesses, nonprofits are exempted from
taxes, which is a huge relief from an organization who relies
mainly on donations and grants.

2. Eligibility to apply for grants

Applying for grants, most of the time will be exclusive to nonprofit
organizations, which for-profit organizations will be unable to
attain. Furthermore, many philanthropic foundations have also
been very focused in helping nonprofits attain many of their
initiatives by providing numerous funds.

3. Structure
Although a nonprofit gets to enjoy benefits, it is still recognized as
an organization with a formal structure. This means that

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employees still get to experience the same amount of benefits as

those who work under for-profit organizations.

4. Fewer liabilities
Being a member of the board brings prestige to a person’s title,
alongside big responsibilities. Apart from that, they are also put in
a very risky position. They are liable for many debts as their
names are in most of the papers. Hence, for nonprofits, the case
will not be the same. The board of directors, alongside all
employees, are safe. Thus, this doesn’t mean that employees
who do things based on their personal interest and possibly
harming the organization are safe as well.

Disadvantages:

1. Expense
A for-profit business will require capital to begin operations and
nonprofits are not exempted from that. Before achieving tax
exemption, certain fees need to be paid which the founder will
normally shoulder. In some occasions, philanthropists who give to
individuals decide to sponsor startup nonprofits before the
organization even begins to start operations. Also, sometimes an
additional cost could be the hiring of accountants, lawyers, or
consultants.

2. Documentation
Given that nonprofits would like to get exempted from taxes,
governments do not simply approve of their requests. Thus, a
long process takes place. Through this process, loads of time and
manpower is needed of an NGO, which can be costly for
organizations who do not work for profit.

3. Control
Often times, a co-owned or merged business can be difficult to

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manage given the differences in opinions with regards to

decision-making matters. Having many differences when it comes
to decisions will cause an incredible amount of conflict. For an
NGO, having sole control in decision making is next to
impossible. There are many rules and regulations NGOs need to
abide with in order to be recognized, apart from their own bylaws,
where in some cases the possibility of sole control will not be
permitted.

4. Subject to public scrutiny

For NGOs and nonprofits, they are considered to be public
interests and therefore have to present everything to the public.
To hide things such as finances will not be tolerated and the
public can easily question in case necessary expenses were
made.

Running an NGO is no easy task, which comes with lots of hard

work and many complications. Philanthropic organizations will not
always be around to provide aid and support to your organization.
Many other disadvantages and difficulties also need to be dealt
with accordingly to succeed in the causes your NGO plans to
support. Ultimately, an NGOs goals and initiatives can be
implemented successfully by consistently abiding by the rules and
dealing with the disadvantages properly.

Kimberly Nicole Yu Kimberly Yu is the Content Marketing

Associate of AsianNGO. She earned her degree in Consular and
Diplomatic Affairs from De La Salle – College of Saint Benilde
where she was an active student who participated in various
Model United Nations conferences locally and once in
Washington D.C. She’s passionate about what she does and one
day aims to contribute to strengthening world peace.

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