Non-Profit Organisations

[Rupert_Baehr]

and that - I suspect - is a part of the problem.

 

AFAIK, in the UK, 'Non-Profit' Organisations are generally thought of as being 'Charities'.

 

In other countries (notably in the US) 'Non-Profit' organisations are considered to include charities - but also to include those organisations which operate solely for the benefit of their customers/members and which return all premiums/monies not required for expansion/contingency reserves to those members.

 

Co-operative societies were (originally) formed with the purpose of providing benefits for their members (benefits ordinarily obtained through 'economies of scale'. They were - in the UK - the original 'non-profit' organisations.

 

'Mutual Societies' were (arguably) the same animal in a different pelt. I was a member of the Norwich Union Mutual Insurance (Assurance?) Society. When the Mutual society was sold off to the public (and I would have preferred it to have remained in Mutual ownership) I got about £3500 'compensation' for my loss of equity. (And I reckon I got a poor bargain! - I tend to take a very long-term view.)

 

I buy Insurance, Banking Services, Investment funds and a mortgage [when I had one] in the US from another Mutual company (actually, it's a massive Corporation - but it has no shareholders!)

 

I am one of the 'owners' of the company - in that I am a member and I am entitled to a share of the annual operating surplus - but I do not own 'Ordinary' (or any other kind of) shares.

 

I did not 'buy in' to the company and should I leave - by declining to deal with them - I would lose my right to annual rebates.

 

If they paid me a dividend, then that dividend would [presumably] be taxable. If they pay me a rebate representing the amount I overpaid, they are merely refunding some of the money I paid them. It was already my money, so there is no tax liability.

 

Given that they rebate surplus payments to their members, they are quite clearly a 'not for profit' organisation. A massive 'not for profit' corporation.

[Rupert_Baehr]

Addendum to my last post: Investment gains are (obviously) not an over-payment and are fully taxable.

 

Monies paid into an insurance pool - and not required to pay out claims - are treated as being an 'overpayment' and are refunded pro-rata.

[Mecky]

Spot on. A lot of these NFP organisations are set up by people to get their hands on tax payers money. They are often people who used to work in the public sector and know how to get public funding. The top people reward themselves handsomely while exploiting those lower down. Sheffield used to be the Chief Executive capital of such organisations. The "green" movement created loads of them. The council pour millions into such organisations and there is very little accountability as to how it gets spent.

 

More unsubstantiated drivel. So what you are saying overall is that society has to suffer and in some circumstances starve to death, just because you want to pay less tax?

[Jeffrey Shaw]

The law makes them register at companies house.

No. A 'not-for-profit' organisation can (if it wishes) be a company whether limited or unlimited.

Unless it is a company or similar corporate entity, Companies House is not involved at all.

[Jeffrey Shaw]

'Non-Profit' Organisations are generally thought of as being 'Charities'.

No. Let's assume a block of flats all owner-occupied by leaseholders who conscientiously pay their ground rent and service charge. They are nice people; the freehold reversioner is a nice person; and he gives the f/r to them without being forced to transfer under a statutory Notice of Claim which they might otherwise have served. They form a new company, limited by guarantee, and each of them is a member/guarantor. This company is certainly not a charity; but, equally, it's not for profit.

[HeadingNorth]

No. Let's assume a block of flats all owner-occupied by leaseholders who conscientiously pay their ground rent and service charge. They are nice people; the freehold reversioner is a nice person; and he gives the f/r to them without being forced to transfer under a statutory Notice of Claim which they might otherwise have served. They form a new company, limited by guarantee, and each of them is a member/guarantor. This company is certainly not a charity; but, equally, it's not for profit.

 

His point, though, is that most people (in Britain) who don't really understand business practices, think of charities when a non-profit organisation is mentioned. And I suspect he's right, although as he and you have both pointed out, there are a lot more non-profit organisations which are not charities, then there are which actually are charities.

 

This ties back to the point I was making, which is that most non-business-savvy people, like myself, consider any organisation which has more money in its account at the end of the year than it had at the beginning, to have made a profit. That's (very) probably not an accurate opinion, compared to business and accounting practices; but I suspect that it is a widely-held one.

[fake]

What do you understand by the term 'Non-profit organisation'?

 

As I understand it all charities operate as NFP organisations but not all NFP organisations are charities. Despite that distinction though I believe both get the tax breaks and pay little in the way of tax on the net profit.

 

There are many charities that get massive funding from the taxpayer and yet pay little in the way of tax on the profit. Now ask yourself.. where does that profit eventually go and what do these particular organisations give back to charity?

 

How many people realise that when they sign up for a charitable fun run such as the Cancer Relief Race For Life the £14.99 entrance fee is just to cover the organisational event and running costs on the day. In 2011 nearly 7,000 people in Sheffield took part. That's a potential of £105,000 just to cover the costs of one race, in Sheffield, on a Sunday!

 

Something is wrong when a charity can take in over £100,000 in one day and not give a penny of that to the very people its campaigning for.