Finance of non-profit organizations

Non-profit organizations are those organizations that, in the course of their activities, do not pursue the goal of generating profit and receiving it. In the event that the commercial profit is still received, it is not distributed among the participants of the organization. A legal person that is a non-profit organization can carry out any kind of entrepreneurial activity only when it serves the achievement of the goals for which it is actually created and to which it corresponds.

Such organizations may be established in one form or another, which are provided for by law. For example, it could be a consumer cooperative, a public association or a religious organization , a charity fund, or a state or municipal unitary enterprise.

Organizations of a non-commercial type carrying out similar activities serve to provide the following services:

• Various social services
• Management services
• Defense activities of the country
• Law enforcement services, including the protection of public order.

Finances of non-profit organizations are the material carrier of those various financial relations, in which these organizations enter into the process of their activities. Financial relations arise with the collective of the workers of the organization itself, with any other persons or organizations, as well as with state institutions regarding the payment of taxes and mandatory contributions to the budget.

Finance of non-profit organizations is money that is mobilized from various sources, both for the implementation of the enterprise's activities and for its expansion. The sources of this financial resource are the services provided by the enterprise, which in turn directly depend on what kind and nature of the service will be provided (paid, free of charge, mixed).

Full self-sufficiency or funding based on approved estimates, such are the ways to mobilize and use those monetary resources that make up the finances of non-profit organizations. This or that method is applied depending on the methods of managing the enterprise.

Estimated financing is the use by the organization of budgetary funds of various levels in order that it can cover its expenses, guided by the approved estimate. With such a method of financing the organization its services to consumers it provides free of charge. Those budgetary funds, which are provided in the expenditure-income estimates, will be the main part of the financial security that forms the finance of non-profit organizations.

Financing based on approved estimates is applied in the socio-cultural sphere. For the most part, these are budgetary institutions that provide the population with educational services, health services and social services. Similarly, the organizations providing law and order and defense, as well as state security bodies and various bodies, both state authorities and local self-government, are being financed.

Although the main source of financial support for non-profit organizations consists of budget funds, nevertheless, there are a number of reasons forcing such organizations to look for an additional extrabudgetary source of funding. This is due to the decrease in the quality of life of the population, the growth of social problems, the increase in the consumer level of both social and material goods, the growth of the budget deficit and similar phenomena.

Proceeding from this, it can be concluded that the specifics of the finances of non-profit organizations can be determined by the specific orientation of their activities. In addition to budgetary funds, sources of financial support for non-profit organizations can additionally be contributions from participants of the enterprise and donations. In the event that a non-profit organization has received a profit as a result of any entrepreneurial activity, by law, it should serve for the target expenses of the organization itself. However, it is possible to use this income in accordance with the organization's goals only after paying the profit tax.