A non-profit organisation is one that many underprivileged humans always look forward to; at least, this is a sure way of being taken care of to some extent. Running NPOs in Africa at large can sometimes be strenuous, but it is a means of survival for the general public.
This article aims to explain what a non-profit organisation is, its current disadvantages and advantages, and also provide a way forward.
If you want to know about the non-profit organisation and what it entails, ensure you read to the end.
Table of Contents
What is a Non-Profit Organisation?
A non-profit organisation is an organisation that is driven by dedication and operates towards social benefit, opposing the profit standards that many other organisations are driven by.
They are entities that act in the best interest of the public. They are also known as non-business entities or non-profit institutions. Non-profit organisations are liable to a non-constraint system, meaning the profit generated cannot be shared amongst stakeholders or employees.
They could come in the form of political bodies, schools, churches, business associations, social clubs, or a football prediction site like SureWinTeams, and sometimes, they can seek approval from the government to be tax-exempt.
Importance of Non-Profit Organisations in Africa
The non-profit organisation plays a significant role in Africa because:
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They hire localized staff and volunteers
Non-profit organisations look to hire localized volunteers who have in-depth knowledge of how these things work and have a mindset of “charity work.”
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They aim to improve people’s quality of life at a community, local, or global level
They provide them with basic amenities like food, water, cash commodities, and the like.
These entities are solely driven by the interests of the people they provide for. Actively looking to make the lives of the people a lot better.
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It limits personal liability
Being a part of a non-profit organisation helps you gain ground in terms of liability protection. This protection goes further to separate your assets and movable property from the non-profit.
In any case of any infringement by a fellow employee or investor, you cannot be liable for that.
Characteristics of Non-Profit Organisations
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Separate entity status
A non-profit organisation has the right to a separate existence. They are responsible for their contracts and can be sued or otherwise. They have full responsibilities for themselves and can do as they please.
If the case was from an informal or statutory non-profit, the sole person entering the contract field can be held responsible if there is a breach of contract.
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Grants are accessible
Not all, but a few non-profits are eligible to access public grants, which makes accessing capital a lot easier. For organisations like 501(c)(3) organisations, certain grants, and some other allocations are available.
In situations of 501(c)(3) non-profit organisations (these are non-profit organisations that enjoy federal tax exemption; so far, the code requirement has been met), donations made to the organisations are non-deductible. And the benefits include exemptions from sales payments or property taxes.
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Credibility is assured
Because it is a non-profit organisation, there is more credibility than for a person or individual trying to accomplish a non-profit organisation’s purpose. Many sponsors or donors would rather give to a company than an individual because it is more credible.
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Registered professional
Every non-profit needs a professionally registered agent. This is an avenue for them to appoint a highly professional and registered agent. In critical, highly classified court cases or documents, this person can fill in and take responsibility or fight in the company’s name.
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Tax-exempt status
Non-profit organisations do not pay taxes, so every donation they get cycles back into capital for the company, and since neither employee is being paid for charity, all the money is going into capital for another event.
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Incentives
In line with trying to help out, donations made by individuals and companies are tax deductible, and this gives people morale or, in other words, incentivizes them to donate more to the organisation.
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Perpetual existence
In cases where the individuals who created the organisation have moved on to newer parties or better ventures, the benefits of this particular non-profit still exist.
This perpetual existence allows directors, donors, employees, and others to enjoy the benefits of the non-profit and its good works even after.
Although private sector business owners may appreciate it, it is mostly appreciated and useful for directors and business owners who want to improve the world.
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Factors That Aid Non-Profit Organisations in Africa
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Virtual learning
Nowadays, teaching classes virtually is an ideal way to learn, especially if you have other things you may be learning. It also means you do not have to be in a central place, which means transportation, accommodation, and the like are outside the budget, which is also a good saving technique.
But to effectively go on with virtual learning, especially for non-profits, you must understand the ins and outs of the earning process, how it works, the efforts that go into it, and time.
Non-profit organisations involved in knowledge teaching and sharing must create a very good online presence with their clients. They also need to be well familiar with their curriculum and teaching patterns so it can be smooth sailing for them.
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Crowdfunding
Crowdfunding is one-way non-profit organisations have gathered funds over the years, and the help of social media makes it easier. GoFundMe is one popular way that has helped NPOs build wealth over the years.
This is a website that people have become accustomed to over the years. It is a website where people can read about non-profits and their advocacies and donate to their causes.
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Non-tax payables
Because it is mostly volunteer work, they are often exempt from paying taxes.
Problems Faced by Non-Profit Organisations in Africa
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Risk management
Due to the essence and diverse quality that non-profit organisations offer, they are forced to operate in an environment that constantly changes. And, of course, with these changes come new troubles.
The COVID year is a perfect example of unforeseen circumstances that have drilled a reminder hole in their hearts regarding risk assessment and management. This has further put NPOs in a good spot, with adequate focus targeted at regulatory compliance as regards any matters.
This also boosts the morale of funders, who are in high spirits that every resource provided will be put to good use.
Read Also: Risk Management for Entrepreneurs and Business Owners in Nigeria
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Increase in demand, shortage of resources
During the COVID year (2020), a lot has dropped for corporate business, and even non-profit organisations are not left out. Statistics have shown that since the COVID year, 56% of NPOs have lost their funding, and 66% are expected to lose within the next three to six months.
This just summarizes how perilous the non-profit sector is. The African Civil Society Organisations conducted research between June and July 2021, concluding that only 8% of NPOs were able to get funding relief from the government.
The conclusion of their report further reiterates that the sector needs to be properly accounted for and organized, and they should start looking out for a much more extensive network that would be beneficial to them.
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Unfunded national youth service initiative for NGOs
Roughly 1.2 million youths who enter the labour market annually are still jobless and not in education or training, according to the Job Fund.
This is why the National Youth Industry brought about the National Youth Service initiative, which helps shape young adults fresh out of college or university and gives them a chance to help at non-profits, thereby increasing their potential, portfolio, and employability in the labour market.
This new initiative wasn’t very well funded or properly planned, and as a result, many non-profits didn’t bulge. Nevertheless, this was another window for non-profit organisations to contribute positively to the case of youth unemployment.
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Mental health crisis
Working in any organisation is supposed to give you room to develop, become better, and soar. There has to be a sense of inclusion, but with so many responsibilities awaiting your decisions, many times, these can prove abortive.
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Lack of community funding
In Africa, tons of communities are underresourced and try to help other people like them who may also be having it hard.
One of them is Community Action Networks (CANs), which are self-organizing and self-sustaining. This community has now grown bigger, with about 170 more communities running at large.
A few of these communities have begun formalization and registered to become standard organisations, while a few others would stay at the grassroots and continue their thing solo.
At the start, there were a few alliances formed, such as the Gugulethu-Seboard alliance, but in recent times, they have started to decline as a result of the economic downturn, with donors experiencing hardships and others realizing they have more pressing issues due to the COVID-19 aftermath.
How to Run Your NPOs in a Better Way
As you may have guessed, many people want to do it right but have little or no idea as to how it works. Here are a few bulleted points on what to do.
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Save money first, and raise funds
When you decide to start an NPO, you are looking at recruiting volunteers for this cause. There is no avenue to recruit staff that you will have to pay for. There is no room for spending unnecessarily in a non-profit.
Every fund that comes in is aimed at the well-being of the public, which you have decided to assist in one way or another, and because of this, there will be donations or sponsors, so here is where the savings come from.
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Run the non-profit organisation like a start-up
The first step is to have proper plans and execute accountability and responsibility because that is when your fellow volunteers will take you seriously.
Engage your fellow volunteers and buy their ideas. Be approachable and be available to receive new ideas at all times. Also, delegate tasks to appropriate people based on their strengths and activeness.
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Do not ignore expenses, and spend wisely
In non-profits, there will always be expenses, and knowing how to discern the important ones from the ones that are not necessary is very important. This is how you can avoid impulse spending.
You can have a financial advisor who can help with the spending and put you through; this will help a lot.
Reach out to philanthropists and sponsors to help facilitate the company’s well-being.
To run a non-profit effectively, reaching out to sponsors and philanthropists is advisable to help with funding. It is unlike any other start-up in that the aim is solely for profit.
You can only generate funds for the non-profit by crowdfunding and reaching out to sponsors who can help your cause because it is solely for charity.
Read Also: 8 Practical Tips for the Efficient Financial Management of Startups
Frequently Asked Questions Before Starting a Non-Profit Organisation in Africa
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How do I create a team?
Building a non-profit is not a sole proprietorship. You need to have people on board. These people’s mission and goals have to align with yours. They need to be aware of the team’s rules and regulations.
They must be aware that it is for charity; hence, they are volunteers. You may need a director, but not necessarily; it could be you. I just want someone who is goal-driven and can steer the team in the right direction.
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How can I fund this initiative?
Fundraising plays a very important role for non-profits. Since it is for charity, they often rely on sponsors or donors to help fund the initiative.
Fundraising can come in many formats, such as via calls, emails, peace walks, GoFundMe, social events, etc. Make people aware of your initiative and show the genuity of your initiative.
Read Also: Fundraising for Startups: 10 Easy Methods for Founders
Conclusion
It has been well established in this article that a non-profit organisation’s aim and sole drive is charity, with nothing in mind for the employees or the board of directors.
Running a non-profit is no small feat; it requires patience, activeness, and a lot of time to get up and running.
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Edited by Emmanuel Odebiyi
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