Why the government requires so much information from not-for-profit organizations
Not-for-profit or non-profit making organizations are independent entities that operate with the aim of delivering vital services to targeted communities. The main sources of funding for non-profit organizations are charities and donations from well-wishers. Although non-profit organizations are largely expected to be neutral and be of goodwill to people, some organizations under this category may easily be counterproductive to society by engaging in unlawful activities.
The first and core reason why governments often demand a lot of information from non-profit organizations is to establish the nature of their activities. For example, the diversity of structures for non-profit organizations is extremely diverse. In other words, these organizations operate in different platforms, systems, and values. For example, the government may be interested to know the tax status of those who have formed a non-profit organization in order to find out whether the founder(s) have an acceptable track record.
Information from private and public donors as well as their respective tax statuses are also crucial for governments when it comes to analysis. In fact, a number of non-profit organizations are funded by individuals and corporations who have not complied with tax submission.
In regards to provisions related to auditing and accounting, some non-profits often fail to declare their financial inflows and outflows. In any case, some of them are out to make profits even though they have been registered as non-profit organizations.
On the other hand, several non-profit organizations have access to a vast amount of vital information that government organs can hardly access. Some of the information includes the local unemployment index, disease burden, and school drop-out rate. By assessing the activities of such non-profit organizations, governments can gain better insights on how to handle emerging and persistent social challenges. In other words, government organs can learn a lot from the operations of non0profit organizations.
The mission of the organization
The organization being studied is referred to as People for Ethical Treatment of Animals (PETA). It is a non-profit organization that champions the rights of animals across the globe. As at mid of 2015, the organization was already being supported by over 3 million members.
The key mission goal of PETA is to safeguard the well-being of animals. Hence, the organization has identified four main areas where animals are frequently abused. These include the entertainment industry, laboratories, clothing trade, and in factory farms.
Some other issues are also addressed by PETA. The mission is geared towards agitating for peaceful co-existence between man and domestic animals, careful handling of pests and birds, and stopping the cruel killing of animals.
The major programs
PETA’s mission is also embedded in major programs such as educating members of the public, carrying out Research and Development, pushing for the enactment of appropriate legislation that can guard animals, and organizing protest campaigns regularly. PETA is also keen on soliciting funds that can be used to propel its agenda across the world. When it comes to education, PETA has been in the frontline of coming up with programs and forums that sensitize people on animal protection.
In order to extend its services globally, PETA has a large pool workforce. It also actively engages itself in the training, capacity building, and hiring of a skilled workforce who can champion its agenda. The intern and volunteer programs are also on course. Most importantly, PETA comes up with its own legislation geared towards animal protection. However, the legislation is not supposed to contravene national laws.
Who prepared Form 990?
The Department of the Treasury Internal Revenue Service prepared the form.
The financial statements
The statements were audited by PETA’s auditing committee and later approved by the Board of Directors.
The major sources of contributions
The major sources of contributions include donations from members, grants, program service revenue, investment revenue among other small scale investment incomes from local sources.
Other sources of revenue/income
Other sources of revenue include support from government organs, interest, dividends, royalties, donations from the private sector companies, gross merchandise sales, and contributions from interested non-members of the organization.
Did the organization have any program service revenue?
From the records, it is evident that the organization has program service revenue-bearing in mind cash inflows (income) and outflows (expenses) were documented. This service revenue indicates the various sources of funding directed towards PETA. On the other hand, it shows the incurred expenses and final net balance.
Was it related to the organization’s exempt purpose?
Yes, figures generated by the program service revenue are mapped out under the endowment funds. The latter are major determining factors that authorities use to screen non-profit organizations and establish whether they are supposed to pay tax and how much for that matter.
Did the organization have any unrelated business income?
No, all the revenues generated by the organization were related to its mission, goals, and objectives. In other words, all the revenues were generated from either donations or income from internal activities.
Did the organization receive donated services?
There is evidence of any donated service received by PETA. Although donations were largely in form of cash and goods, donated services amounted to $US8,661,112.