A nonprofit organization (NPO), also known as a non-business entity, not-for-profit organization, or nonprofit institution,
is an organization traditionally dedicated to furthering a particular
social cause or advocating a shared point of view. In economic terms, it
is an organization using the surplus of its revenues
to further its objective, rather than distributing its income to the
organization's shareholders, leaders, or members. Being public
extensions of a nation's revenue department, nonprofits are tax-exempt
or charitable, meaning they do not pay income tax on the money that
they receive for their organization. They can operate in religious,
scientific, research, or educational settings.
The key aspects of nonprofits are accountability, trustworthiness, honesty, and openness to every person who has invested time, money, and faith into the organization. Nonprofit organizations are accountable to the donors, founders, volunteers, program recipients, and the public community. Public confidence is a factor in the amount of money that a nonprofit organization is able to raise. The more nonprofits focus on their mission, the more public confidence they will have, and as a result, more money for the organization. The activities a nonprofit is partaking in can help build the public's confidence in nonprofits, as well as how ethical the standards and practices are.
The key aspects of nonprofits are accountability, trustworthiness, honesty, and openness to every person who has invested time, money, and faith into the organization. Nonprofit organizations are accountable to the donors, founders, volunteers, program recipients, and the public community. Public confidence is a factor in the amount of money that a nonprofit organization is able to raise. The more nonprofits focus on their mission, the more public confidence they will have, and as a result, more money for the organization. The activities a nonprofit is partaking in can help build the public's confidence in nonprofits, as well as how ethical the standards and practices are.
Statistics in the United States
According to the National Center for Charitable Statistics (NCCS), there are more than 1.5 million nonprofit organizations registered in the United States, including public charities, private foundations,
and other nonprofit organizations. Private charitable contributions
increased for the fourth consecutive year in 2017 (since 2014), at an
estimated $410.02 billion. Out of these contributions, religious
organizations received 30.9%, education organizations received 14.3%,
and human services organizations received 12.1%. Between September 2010 and September 2014, approximately 25.3% of Americans over the age of 16 volunteered for a nonprofit.
Mechanism of money-raising
Nonprofits
are not driven by generating profit, but they must bring in enough
income to pursue their social goals. Nonprofits are able to raise money
in different ways. This includes income from donations from individual
donors or foundations; sponsorship from corporations; government
funding; programs, services or merchandise sales; and investments.
Each NPO is unique in which source of income works best for them. With
an increase in NPO's within the last decade, organizations have adopted
competitive advantages to create revenue for themselves to remain
financially stable. Donations from private individuals or organizations
can change each year and government grants have diminished. With
changes in funding from year to year, many nonprofit organizations have
been moving toward increasing the diversity of their funding sources.
For example, many nonprofits that have relied on government grants have
started fundraising efforts to appeal to individual donors.
Challenges
NPO's
challenges primarily stem from lack of funding. Funding can either come
from within the organization, fundraising, donations, or from the
federal government. When cutbacks are made from the federal government,
the organization suffers from devolution. This term describes when there
is a shift of responsibility from a central government to a local,
sub-national authority. The shift is due to the loss of funds;
therefore, resulting in changes of responsibilities in running programs.
Because of this frequent challenge, management must be innovative and
effective in the pursuit of success.
Nonprofit vs. not-for-profit
Nonprofit and not-for-profit are terms that are used similarly, but
do not mean the same thing. Both are organizations that do not make a
profit, but may receive an income to sustain their missions. The income
that nonprofit and not-for-profit organizations generate is used
differently. Nonprofit organizations return any extra income to the
organization. Not-for-profits use their excess money to pay their
members who do work for them. Another difference between nonprofit
organizations and not-for-profit organizations is their membership.
Nonprofits have volunteers or employees who do not receive any money
from the organization's fundraising efforts. They may earn a salary for
their work that is independent from the money the organization has
fundraised. Not-for-profit members have the opportunity to benefit from
the organization's fundraising efforts.
In the United States, both nonprofits and not-for-profits are
tax-exempt under IRS publication 557. Although they are both
tax-exempt, each organization faces different tax code requirements. A
nonprofit is tax-exempt under 501(c)(3)
requirements if it is either a religious, charitable, or educational
based organization that does not influence state and federal
legislation. Not-for-profits are tax-exempt under 501(c)(7) requirements if they are an organization for pleasure, recreation or another nonprofit purpose.
Nonprofits are either member-serving or community-serving.
Member-serving nonprofit organizations create a benefit for the members
of their organization and can include but are not limited to credit
unions, sports clubs, and advocacy groups. Community-serving nonprofit
organizations focus on providing services to the community either
globally or locally. Community-serving nonprofits include organizations
that deliver aid and development programs, medical research, education,
and health services. It is possible for a nonprofit to be both
member-serving and community-serving.
Management
A
common misconception about nonprofits is that they are run completely
by volunteers. Most nonprofits have staff that work for the company,
possibly using volunteers to perform the nonprofit's services under the
direction of the paid staff. Nonprofits must be careful to balance the
salaries paid to staff against the money paid to provide services to the
nonprofit's beneficiaries. Organizations whose salary expenses are too
high relative to their program expenses may face regulatory scrutiny.
A second misconception is that nonprofit organizations may not
make a profit. Although the goal of nonprofits isn't specifically to
maximize profits, they still have to operate as a fiscally responsible
business. They must manage their income (both grants and donations and
income from services) and expenses so as to remain a fiscally viable
entity. Nonprofits have the responsibility of focusing on being
professional, financially responsible, replacing self-interest and profit motive with mission motive.
Though nonprofits are managed differently from for-profit
businesses, they have felt pressure to be more businesslike. To combat
private and public business growth in the public service industry,
nonprofits have modeled their business management and mission, shifting
their raison d’être to establish sustainability and growth.
Setting effective missions is a key for the successful management of nonprofit organizations. There are three important conditions for effective mission: opportunity, competence, and commitment.
One way of managing the sustainability of nonprofit organizations is to establish strong relations with donor groups. This requires a donor marketing strategy, something many nonprofits lack.
Functions
NPOs
have a wide diversity of structures and purposes. For legal
classification, there are, nevertheless, some elements of importance:
- Management provisions
- Accountability and auditing provisions
- Provisory for the amendment of the statutes or articles of incorporation
- Provisions for the dissolution of the entity
- Tax statuses of corporate and private donors
- Tax status of the founders.
Some of the above must be (in most jurisdictions in the USA
at least) expressed in the organization's charter of establishment or
constitution. Others may be provided by the supervising authority at
each particular jurisdiction.
While affiliations will not affect a legal status, they may be
taken into consideration by legal proceedings as an indication of
purpose. Most countries have laws that regulate the establishment and
management of NPOs and that require compliance with corporate governance
regimes. Most larger organizations are required to publish their
financial reports detailing their income and expenditure publicly.
In many aspects, they are similar to corporate business entities though there are often significant differences. Both not-for-profit and for-profit corporate entities must have board members, steering-committee members, or trustees who owe the organization a fiduciary duty of loyalty and trust. A notable exception to this involves churches, which are often not required to disclose finances to anyone, including church members.
Formation and structure
In the United States, nonprofit organizations are formed by filing bylaws or articles of incorporation
or both in the state in which they expect to operate. The act of
incorporation creates a legal entity enabling the organization to be
treated as a distinct body (corporation) by law and to enter into
business dealings, form contracts, and own property as individuals or
for-profit corporations can.
Nonprofits can have members, but many do not. The nonprofit may also be a trust or association of members. The organization may be controlled by its members who elect the board of directors, board of governors or board of trustees.
A nonprofit may have a delegate structure to allow for the
representation of groups or corporations as members. Alternatively, it
may be a non-membership organization and the board of directors may
elect its own successors.
The two major types of nonprofit organization are membership and board-only.
A membership organization elects the board and has regular meetings and
the power to amend the bylaws. A board-only organization typically has a
self-selected board and a membership whose powers are limited to those
delegated to it by the board. A board-only organization's bylaws may
even state that the organization does not have any membership, although
the organization's literature may refer to its donors or service
recipients as 'members'; examples of such organizations are FairVote and the National Organization for the Reform of Marijuana Laws. The Model Nonprofit Corporation Act imposes many complexities and requirements on membership decision-making. Accordingly, many organizations, such as the Wikimedia Foundation, have formed board-only structures. The National Association of Parliamentarians
has generated concerns about the implications of this trend for the
future of openness, accountability, and understanding of public concerns
in nonprofit organizations. Specifically, they note that nonprofit
organizations, unlike business corporations, are not subject to market discipline
for products and shareholder discipline of their capital; therefore,
without membership control of major decisions such as the election of
the board, there are few inherent safeguards against abuse.
A rebuttal to this might be that as nonprofit organizations grow and
seek larger donations, the degree of scrutiny increases, including
expectations of audited financial statements.
A further rebuttal might be that NPOs are constrained, by their choice
of legal structure, from financial benefit as far as distribution of
profit to members and directors is concerned.
Tax exemption
In many countries, nonprofits may apply for tax-exempt
status, so that the organization itself may be exempt from income tax
and other taxes. In the United States, to be exempt from federal income
taxes, the organization must meet the requirements set forth in the Internal Revenue Code.
Granting nonprofit status is done by the state, while granting
tax-exempt designation (such as 501(c)(3)) is granted by the federal
government via the IRS. This means that not all nonprofits are eligible
to be tax-exempt. NPOs use the model of a double bottom line
in that furthering their cause is more important than making a profit,
though both are needed to ensure the organization's sustainability.
By jurisdiction
Australia
In Australia,
nonprofit organizations include trade unions, charitable entities,
co-operatives, universities and hospitals, mutual societies, grass-root
and support groups, political parties, religious groups, incorporated
associations, not-for-profit companies, trusts
and more. Furthermore, they operate across a multitude of domains and
industries, from health, employment, disability and other human services
to local sporting clubs, credit unions, and research institutes.
A nonprofit organization in Australia can choose from a number of legal
forms depending on the needs and activities of the organization:
co-operative, company limited by guarantee, unincorporated association,
incorporated association (by the Associations Incorporation Act 1985) or
incorporated association or council (by the Commonwealth Aboriginal
Councils and Associations Act 1976). From an academic perspective, social enterprise
is, for the most part, considered a sub-set of the nonprofit sector as
typically they too are concerned with a purpose relating to a public
good. However, these are not bound to adhere to a nonprofit legal
structure, and many incorporate and operate as for-profit entities.
In Australia, nonprofit organizations are primarily established
in one of three ways: companies limited by guarantee, trusts, and
incorporated associations. However, the incorporated association form is
typically used by organizations intending to operate only within one
Australian state jurisdiction. Nonprofit organizations seeking to
establish a presence across Australia typically consider incorporating as a company or as a trust.
Belgium
By Belgian law, there are several kinds of nonprofit organization:
- Non-profit membership associations, called Vereniging zonder winstoogmerk (abbreviated vzw) in Dutch), or Association sans but lucratif (abbreviated asbl) in French, or Vereinigung ohne Gewinnerzielungsabsicht in German
- Internationale vereniging zonder winstoogmerk (Dutch, often abbreviated ivzw) or Association internationale sans but lucratif (French, often abbreviated aisbl) for international nonprofit organizations.
- Stichting van openbaar nut (Dutch, abbreviated son) or Fondation d’utilités publique (French, abbreviated fup); a non-membership organization for the common good.
These three kinds of nonprofit organizations contrast to a fourth:
- Feitelijke vereniging (Dutch) or Association de fait (French), an informal organization, often started for a short-term project, or managed alongside another NPO that does not have any status in law so cannot purchase property etc. (association sans personnalité morale).
Canada
Canada
allows nonprofit organizations to be incorporated or unincorporated.
They may incorporate either federally, under Part II of the Canada Business Corporations Act,
or under provincial legislation. Many of the governing Acts for
Canadian nonprofits date to the early 1900s, meaning that nonprofit
legislation has not kept pace with legislation that governs for-profit
corporations, particularly with regards to corporate governance. Federal, and in some provinces (including Ontario), incorporation is by way of Letters Patent,
and any change to the Letters Patent (even a simple name change)
requires formal approval by the appropriate government, as do bylaw
changes. Other provinces (including Alberta) permit incorporation as of right, by the filing of Articles of Incorporation or Articles of Association.
During 2009, the federal government enacted new legislation repealing the Canada Corporations Act, Part II – the Canada Not-for-Profit Corporations Act. This Act was last amended on 10 October 2011, and the act was current until 4 March 2013. It allows for incorporation as of right, by Articles of Incorporation; does away with the ultra vires
doctrine for nonprofits; establishes them as legal persons; and
substantially updates the governance provisions for nonprofits. Ontario
also overhauled its legislation, adopting the Ontario Not-for-Profit Corporations Act during 2010; the new Act is expected to be in effect as of 1 July 2013.
Canada also permits a variety of charities (including public and private foundations). Charitable status is granted by the Canada Revenue Agency
(CRA) upon application by a nonprofit; charities are allowed to issue
income tax receipts to donors, must spend a certain percentage of their
assets (including cash, investments, and fixed assets) and file annual
reports in order to maintain their charitable status. In determining
whether an organization can become a charity, CRA applies a common law test to its stated objects and activities. These must be:
- The relief of poverty
- The advancement of education
- The advancement of religion, or
- Certain other purposes that benefit the community in a way the courts have said is charitable
Charities are not permitted to engage in partisan political activity;
doing so may result in the revocation of charitable status. However, a
charity can carry out a small number of political activities that are
non-partisan, help further the charities' purposes, and subordinate to
the charity's charitable purposes.
France
In France, nonprofits are called associations. They are based on a law enacted 1 July 1901. As a consequence, the nonprofits are also called association loi 1901.
A nonprofit can be created by two people to accomplish a common goal. The association
can have industrial or commercial activities or both, but the members
cannot make any profit from the activities. Thereby, worker's unions and
political parties can be organized from this law.
In 2008, the National Institute of Statistics and Economic Studies (INSEE) counted more than a million of these associations
in the country, and about 16 million people older than 16 are members
of a nonprofit in France (a third of the population over 16 years old).
The nonprofits employ 1.6 million people, and 8 million are volunteers
for them.
This law is also relevant in many former French colonies, particularly in Africa.
Hong Kong
The Hong Kong
Company Registry provides a memorandum of procedure for applying to
Registrar of Companies for a Licence under Section 21 of the Companies
Ordinance (Cap.32) for a limited company for the purpose of promoting
commerce, art, science, religion, charity, or any other useful object.
India
In India, non-governmental organizations
are the most common type of societal institutions that do not have
commercial interests. However, they are not the only category of
non-commercial organizations that can gain official recognition. For
example, memorial trusts, which honor renowned individuals through
social work, may not be considered as NGOs.
They can be registered in four ways:
- Trust
- Society
- Section-25 company (Section 8 as per the new Companies Act, 2013)
- Special licensing
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 new Companies Act, 2013)
- Foreign Contribution (Regulation) Act, 1976.
Republic of Ireland
The
Irish Nonprofits Database was created by Irish Nonprofits Knowledge
Exchange (INKEx) to act as a repository for regulatory and voluntarily
disclosed information about Irish public-benefit nonprofits. The
database lists more than 10,000 nonprofit organizations in Ireland. In 2012 INKEx ceased to operate due to lack of funding.
Israel
In Israel
nonprofit organizations (NPOs) and non-governmental organizations
(NGOs) are usually established as registered nonprofit associations
(Hebrew amutah, plural amutot) or public benefit companies (Hebrew Chevrah LeTo’elet Hatzibur, not to be confused with public benefit corporations). The structure of financial statements of nonprofit organizations is regulated Israel's Accounting Standard No. 5, and must include a balance sheet, a report on activities, the income and expenditure for the particular period, a report on changes in assets, a statement of cash flows,
and notes to the financial statements. A report showing the level of
restriction imposed on the assets and liabilities can be given, though
this is not required.
‘'Amutot'’ are regulated by the Associations Law, 1980. An amutah is a body corporate, though not a company. The amutah
is successor to the Ottoman Society which predated the State of Israel,
and was established by the now-superseded Ottoman Societies Law of
1909, based on the French law of 1901. Public benefit companies are
governed solely by company law; if their regulations and objectives meet
the two conditions specified in Section 345A of the Companies Act, they
will in effect be amutot in all but name.
An amutah must register with the Rasham Ha’amutot ('Registrar of Amutot'); a public benefit company must register with the Rasham HaChavarot [Registrar of Companies]. Both are under the purview of the Rashot Hata’agidim ('Corporations Authority') of the Ministry of Justice.
Japan
In Japan,
an NPO is any citizen's group that serves the public interest and does
not produce a profit for its members. NPOs are given corporate status to
assist them in conducting business transactions. As at February 2011,
there were 41,600 NPOs in Japan. Two hundred NPOs were given
tax-deductible status by the government, which meant that only
contributions to those organizations were tax deductible for the
contributors.
New Zealand
In New Zealand, nonprofit organizations usually are established as incorporated societies or charitable trusts. An incorporated society requires a membership of at least 15 people.
Russia
Russian
law contains many legal forms of non-commercial organization (NCO),
resulting in a complex, often contradictory, and limiting regulatory
framework.
The primary requirements are that NCOs, whatever their type, do not
have the generation of profit as their main objective and do not
distribute any such profit among their participants (Article 50(1),
Civil Code). Most commonly there are five forms of NCO:
- Public associations – A public association is the form most comparable to an 'association' as used in international parlance. A public association is a membership-based organization of individuals who associate on the basis of common interests and goals stipulated in the organization's charter.
- Foundations – Foundations are property-based, non-membership organizations created by individuals or legal persons (or both) to pursue social, charitable, cultural, educational, or other public benefit goals.
- Institutions – The institution (uchrezhdeniye) is a form that exists in Russia and several other countries of the former Soviet Union. Like foundations, institutions do not have members. Unlike foundations, however, institutions do not acquire property rights in the property conveyed to them (Article 120, Civil Code, and Article 20, NCO Law). Moreover, the founders are liable for any obligations of the institution that it cannot meet on its own.
- Non-commercial partnerships – A non-commercial partnership (NP) (Article 8, NCO Law) is a membership organization pursuing activities for the mutual benefit of members. Therefore, assets that have been transferred to an NP as donations can be used for purposes other than those having public benefit.
- Autonomous non-commercial organizations – An autonomous non-commercial organization (ANO) (Article 10, NCO Law) is a non-membership organization undertaking services in the field of education, social policy, culture, etc., which in practice often generates income by providing its services for a fee.
South Africa
In South Africa,
certain types of charity may issue a tax certificate when requested,
which donors can use to apply for a tax deduction. Charities/NGOs may be
established as voluntary associations, trusts or nonprofit companies
(NPCs). Voluntary associations are established by agreement under the
common law, and trusts are registered by the Master of the High Court.
Nonprofit companies (NPCs) are registered by the Companies and Intellectual Property Commission.
All of these may voluntarily register with The Directorate for
Nonprofit Organisations and may apply for tax-exempt status to the South African Revenue Service (SARS).
Ukraine
In Ukraine, nonprofit organizations include non-governmental organizations, cooperatives (inc. housing cooperatives), charitable organizations, religious organizations, political parties, commodities exchanges
(in Ukraine, commodities exchanges can't be organized for profit) and
more. Nonprofit organizations obtain their non-profit status from tax
authorities. The state fiscal service is the main registration authority
for nonprofit status.
United Kingdom
In the UK a nonprofit organization may take the form of an unincorporated association, a charitable trust, a charitable incorporated organisation (CIO), a company limited by guarantee (which may or may not be charitable), a charter organization (which may or may not be charitable), a charitable company, a community interest company (CIC) (which may or may not be charitable), a community benefit society (which may or may not be charitable), or a cooperative society (which may or may not be charitable). Thus a nonprofit may be charitable (see under Charitable Organisation) or not, and may be required to be registered or not.
United States
After a nonprofit organization has been formed at the state level, the organization may seek recognition of tax-exempt status with respect to U.S. federal income tax. That is done typically by applying to the Internal Revenue Service
(IRS), although statutory exemptions exist for limited types of
nonprofit organization. The IRS, after reviewing the application to
ensure the organization meets the conditions to be recognized as a
tax-exempt organization (such as the purpose, limitations on spending,
and internal safeguards for a charity), may issue an authorization
letter to the nonprofit granting it tax-exempt status for income-tax
payment, filing, and deductibility purposes. The exemption does not
apply to other federal taxes such as employment taxes. Additionally, a
tax-exempt organization must pay federal tax on income that is unrelated
to their exempt purpose. Failure to maintain operations in conformity to the laws may result in the loss of tax-exempt status.
Individual states and localities offer nonprofits exemptions from other taxes such as sales tax or property tax.
Federal tax-exempt status does not guarantee exemption from state and
local taxes and vice versa. These exemptions generally have separate
applications, and their requirements may differ from the IRS
requirements. Furthermore, even a tax-exempt organization may be
required to file annual financial reports (IRS Form 990) at the state and federal levels. A tax-exempt organization's 990 forms are required to be available for public scrutiny.
Governance
The board of directors has ultimate control over the organization, but typically an executive director
is hired. In some cases, the board is elected by a membership, but
commonly, the board of directors is self-perpetuating. In these 'board-only' organizations, board members nominate new members and vote on their fellow directors' nominations.
Part VI Governance, Management, and Disclosure, section A, question 7a
of the Form 990 asks 'Did the organization have members, stockholders,
or other persons who had the power to elect or appoint one or more
members of the governing body?'; the IRS instructions added '(other than
the organization's governing body itself, acting in such capacity)'.
Problems
Founder's syndrome
Founder's syndrome
is an issue organizations experience as they expand. Dynamic founders,
who have a strong vision of how to operate the project, try to retain
control of the organization, even as new employees or volunteers want to
expand the project's scope or change policy.
Resource mismanagement
Resource
mismanagement is a particular problem with NPOs because the employees
are not accountable to anyone who has a direct stake in the
organization. For example, an employee may start a new program without
disclosing its complete liabilities. The employee may be rewarded for
improving the NPO's reputation, making other employees happy, and
attracting new donors. Liabilities promised on the full faith and credit
of the organization but not recorded anywhere constitute accounting fraud.
But even indirect liabilities negatively affect the financial
sustainability of the NPO, and the NPO will have financial problems
unless strict controls are instated.
Some commenters have argued that the receipt of significant funding
from large for-profit corporations can ultimately alter the NPO's
functions. A frequent measure of an NPO's efficiency is its expense ratio (i.e. expenditures on things other than its programs, divided by its total expenditures).
Competition for talent
Competition
for employees with the public and private sector is another problem
that nonprofit organizations inevitably face, particularly for
management positions. There are reports of major talent shortages in the
nonprofit sector today regarding newly graduated workers, and NPOs have for too long relegated hiring to a secondary priority,
which could be why they find themselves in the position many do. While
many established NPOs are well-funded and comparative to their public
sector competitors, many more are independent and must be creative with
which incentives they use to attract and maintain vibrant personalities.
The initial interest for many is the remuneration package, though many
who have been questioned after leaving an NPO have reported that it was
stressful work environments and implacable work that drove them away.
Public- and private-sector employment have, for the most part,
been able to offer more to their employees than most nonprofit agencies
throughout history. Either in the form of higher wages, more
comprehensive benefit packages, or less tedious work, the public and
private sectors have enjoyed an advantage over NPOs in attracting
employees. Traditionally, the NPO has attracted mission-driven
individuals who want to assist their chosen cause. Compounding the issue
is that some NPOs do not operate in a manner similar to most
businesses, or only seasonally. This leads many young and driven
employees to forego NPOs in favor of more stable employment. Today,
however, nonprofit organizations are adopting methods used by their
competitors and finding new means to retain their employees and attract
the best of the newly minted workforce.
It has been mentioned that most nonprofits will never be able to match the pay of the private sector
and therefore should focus their attention on benefits packages,
incentives and implementing pleasurable work environments. A good
environment is ranked higher than salary and pressure of work.
NPOs are encouraged to pay as much as they are able and offer a
low-stress work environment that the employee can associate him or
herself positively with. Other incentives that should be implemented are
generous vacation allowances or flexible work hours.
Online presence
Many NPOs often use the .org or .us (or the country code top-level domain of their respective country) or .edu top-level domain (TLD) when selecting a domain name to differentiate themselves from more commercial entities, which typically use the .com space.
In the traditional domain noted in RFC 1591,
.org is for 'organizations that didn't fit anywhere else' in the naming
system, which implies that it is the proper category for non-commercial
organizations if they are not governmental, educational, or one of the
other types with a specific TLD. It is not designated specifically for
charitable organizations or any specific organizational or tax-law
status; however, it encompasses anything that is not classifiable as
another category. Currently, no restrictions are enforced on
registration of .com or .org, so one can find organizations of all sorts
in either of these domains, as well as other top-level domains
including newer, more specific ones which may apply to particular sorts
of organization including .museum for museums and .coop for cooperatives. Organizations might also register by the appropriate country code top-level domain for their country.
Alternative names
Instead
of being defined by 'non' words, some organizations are suggesting new,
positive-sounding terminology to describe the sector. The term 'civil
society organization' (CSO) has been used by a growing number of
organizations, including the Center for the Study of Global Governance.
The term 'citizen sector organization' (CSO) has also been advocated to
describe the sector – as one of citizens, for citizens – by
organizations including Ashoka: Innovators for the Public.
Advocates argue that these terms describe the sector in its own terms,
without relying on terminology used for the government or business
sectors. However, use of terminology by a nonprofit of self-descriptive
language that is not legally compliant risks confusing the public about
nonprofit abilities, capabilities, and limitations.
