Account of Non-Profit Making Organization: Introduction - SS2 Accounting Lesson Note
Non-profit organizations are organizations that do not operate for the purpose of making a profit. Instead, their purpose is to provide services or support a particular cause or group of people. Examples of non-profit organizations include charities, educational institutions, and religious organizations.
Non-profit organizations have accounts that are similar to those of for-profit businesses, but with a few key differences. The accounts of a non-profit organization are designed to track the organization's revenue and expenses, as well as the use of restricted funds and grants. The goal is to ensure that the organization is operating within its budget and using its resources effectively to support its mission and purpose.
Types of accounts in a non-profit organization
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Contributions and Donations: Non-profit organizations often rely on donations and contributions from individuals, corporations, and other organizations to support their operations. These donations and contributions are recorded as revenue in the organization's accounts.
Grants and Contracts: Non-profit organizations may also receive grants and contracts from government agencies and other organizations. These funds are usually restricted to a specific purpose or program and are recorded separately in the organization's accounts.
Program Expenses: Non-profit organizations spend a significant portion of their budget on program expenses, which are expenses directly related to the organization's mission and purpose. These expenses may include salaries and benefits for staff working on programs, supplies, and other costs associated with delivering the organization's services.
General and Administrative Expenses: Non-profit organizations also have general and administrative expenses, which are expenses not directly related to the organization's mission and purpose. These expenses may include rent, utilities, office supplies, and salaries and benefits for administrative staff.
Fundraising Expenses: Non-profit organizations may also incur fundraising expenses, which are expenses related to raising funds for the organization. These expenses may include salaries and benefits for fundraising staff, advertising and marketing costs, and event expenses.