One type of not-for-profit corporation --the charity-- can measure its success by looking at a number of variables perhaps, such as efficiency (every 80 cents per dollar brought in went to children) along with total amount brought in. But while shareholders ultimately control a for-profit organization, who controls this type of organization?
Then there's the other type... for example, credit unions, and maybe some health insurance companies like Blue Cross Blue Shield (not sure if they're still not-for-profit actually).
I know "members" supposedly control credit unions with their votes... but is it the same for the not-for-profit health insurance companies like Blue Cross?
The Members decide who goes on a Board. They put it to the vote and can, in some cases, market themselves for election.
Some non for profit orgs are setup by a small number of members, who make good financial gains from it, limit the number of members, and elect themselves--pretty much. They then pay themselves directors allowances of all kinds and do well from it.
Some non for profit orgs struggle to make ends meet, don't pay their staff or directors, and do very good things for the world.
I am not saying all non for profits are dodgy, they are a good entity to assist people, however it would be good if some kind of registry existed, or law existed where entities of this kind had to provide an balance sheet detailing where their money goes and how much of it reaches the right person. This fact sheet should be law when ever the entity is involved in public dealing, a person can have this sheet on request.
In the begining stages of a non-profit entity, it's just a group of like-minded people working toward a common goal. They form the entity to give it a life past those currently involved, and possibly to obtain favorable tax status as well as the resulting contributions that seem to flow more freely than to what was just a handful of people.
At some time in the formation of the group, some higharchy developed and generally at first, those people get "voted" (more like self-selected) to the Board. As others become involved in the droup, some of the first Board members step aside and let others "take over". There are very valid reasons for changing the Board members from time to time. First is the ability to get others involved, and those who are that seeply involved will likely remain with the group for a longer period of time. It's the "Hey, I'm President. I can't not show up for the meeting." theory.
The charter documents often spell out how many can be on the Board, and what their terms and duties are. That of course, can be changed from time to time as the organization changes.
Not all non-profits are "member" organizations, and as such, do not have members to vote on matters.
After some stability is in the organization, the Board often times recruits folks to be Board members, especially those with special skills that help the Organization meet their stated purpose, to keep from violating their charter, or to meet governmental requirements. There may be an Organization that helps low-income people that to be able to obtain government grants would have to have a certain percent of their Board as low-income individuals. So - other Board members may go out and actively recruit low-income people.
That would most likely void the non-profit status for the entity. "No private gain" is a serious no-no.
Membership organizations get their money, pretty much from dues from the members. As such, the less "members" there are, the smaller the bank account, the less that might can go toward paid positions. "I'm going to form a non-profit entity, be the only member, elect myself to the Board, and vote myself a raise". Yeah. I can see it now. That first check would bouce like a baby on grandpa's knee.
In the US, all non-profits that are required to file returns (Form 990) are also required to make those public. Most do so on request, so if you have a non-profit in mind, just ask them. You can obtain copies of those returns from the IRS if you like, and they are available on the web at places like Guidestar. And while not as detailed as the original books and records are, the organization can attach any level of detail to the return, and they can update Guidestar with additional data if necessary.
It's the way they gear the income that avoids the void. Allowances and the like. It is not illegal here in AUS to be paid. And who decides how much a person gets? Directors. The amount of members doesn't always equate to dollars, many charitable non for profit orgs receive large donations from the public, who also receive the tax benefit of the donations.
By no means am I targeting this entity and looking at it from a profiteering angle, declaring that those in it are in it for the money - by no means - however I would imagine the position can be abused at times, like all entities. I am just clarifying some of the dimensions not so well seen - at least from an AUS viewpoint. I agree with the comments you have made Paul.
990) are > also required to make those public. Most do so on request, so if you have a > non-profit in mind, just ask them. You can obtain copies of those returns > from the IRS if you like, and they are available on the web at places like > Guidestar. And while not as detailed as the original books and records are, > the organization can attach any level of detail to the return, and they can > update Guidestar with additional data if necessary.
In Australia you can obtain the information. However, I think it would clean up a lot of the fat if Gov. Leg. required a disclosure document be readily available to people making donations, rather than having to hunt it down in a time consuming manner.
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