What is the Actual Profit of Nonprofit Services?
The nonprofit organizations are those which focus more on the development and growth of their missions than the economic benefits. In fact the charitable organizations and missionaries generate the major part of their revenue through donations. It is also to be noted that the nonprofits sell products and services aiming the development of their missions rather than any personal benefits. The range of revenue generation varies among the non profits service providers. There are two kinds of nonprofits. One kind is like the large missionary hospitals and colleges and the other is the pure charitable organizations.
The former survives by the income as the fees and charges from the users while the latter depend fully on the donations from outside individuals. In many countries in the world, charitable organizations are exempted from the taxation unless the activities are correspondent to the objectives and missions. The determination whether an activity is mission oriented or business related is circumstantial. The judiciary in every country is competent enough to determine the issue. There are many nonprofit organizations in which a service charge is applied. For instance, in an organization where assistance is given to the unemployed to seek job opportunities fees for the service is charged and is channelized to the general funds. The general fund is used for the achievement of mission.
Every country which exempts the charity activities from taxation has clear distinction measures for differentiating earned and unearned income. The donations made voluntarily or gifts from unknown persons are also exempted from taxation subjected to some rules. The donations given by the non profit service providers also subject to certain legal applications in different countries. This is to prevent the evasion and planning of tax. This has been strictly followed since many tax evaders use non profit organizations for decisive activities.