Learn something new every day
More Info... by email
Non-profit models are typically categorized according to the funding sources the non-profit seeks and the needs it intends to meet through acts of benevolence. An organization formed as a non-profit entity conducts its activities without distributing a profit to shareholders. Non-profit models include those in which funding comes through public donations, a mix of donations and fees requested for services, or a partnership between government agencies and charitable patrons.
In some non-profit models, operations are funded through a select group of wealthy benefactors. Non-profit models that operate as foundations build equity through donations, then use the earnings on that equity to bestow grants. In a governmental partnership non-profit model, the organization receives funds from a government agency in exchange for rendering services to a specific population in need. If the beneficiary is a city park for example, a nonprofit group that seeks to support the park through fundraising may form a private/non-profit partnership model. The group may then use the non-profit entity for the purpose of purchasing playground equipment, or other infrastructure improvements.
In terms of administrative organization, in some non-profit models the organization functions as an independent entity steered by a board of directors. Businesses using other non-profit models are designed to work locally, but are linked together in national or international affiliations. The latter typically operate under a hierarchical authority structure. This is in contrast to a local neighborhood soup kitchen that may operate independently.
A successful non-profit model strives for a good match between a donor's desire to do good and the needs that the non-profit is striving to meet. With that in mind, non-profit models are usually chosen to cultivate the best match between the two. If the beneficiary is a community opera company, for example, and the donors are moderately wealthy musicians that love operatic performances, the non-profit model will be tailored to conducting activities that cultivate a successful opera performance. A small board may meet quarterly to plan an annual performance, or to raise funds for costly costumes.
Non-profit models may be public or private foundations. Research activity is one common non-profit activity that may be funded through a private foundation. Scholarships are often awarded through private foundations, which use the foundation's investment earnings to support higher education. Many large corporations have foundations that bestow grants for various purposes.
A not for profit model may also be organized around facilitating relationships. Various social and psychological support groups use this mentoring model. Tax-exempt status is not directly connected to the operating model for a non-profit. Various laws and regulations define nonprofits that have tax-exempt status, but not all non-profits are tax exempt.
One of our editors will review your suggestion and make changes if warranted. Note that depending on the number of suggestions we receive, this can take anywhere from a few hours to a few days. Thank you for helping to improve wiseGEEK!