A trading concern’s primary objective is to maximize shareholder wealth through legal business activities. On the other hand, the basic objective of a non-profit organization is to provide social services to a group of people. The non-profit organizations are funded through donations, and their purpose is to serve people without profiting. The surplus funds of a non-profit organization are used to provide additional social services to the community.
When it comes to defining the purpose of a nonprofit, it’s like trying to answer twenty trivia questions. It’s not just important to answer the questions, but to be specific and memorable. Besides being specific, the purpose should be memorable and easily shared with others. It should also be wide enough to enable expansion while remaining narrow enough to prove tax-exempt status. A mission statement is crucial to the success and differentiation of a nonprofit.
Nonprofit corporations, in addition to charitable organizations must have a purpose statement which outlines their long-term goals. The purpose statement should be concise and easily remembered. The purpose statement should be included in the nonprofit’s bylaws. In addition to the purpose statement, nonprofits must include a written mission statement. While the mission statement should be as specific and precise as possible, it should also be broad enough to show tax-exempt status.