With reference to Non-Profit Organisations, which of the following statements are correct? NPOs are expected to be value-based and serve public or social purposes. They are legally required to distribute profits to shareholders. Examples include organisations like Pratham and Teach For India, which focus on education.

With reference to Non-Profit Organisations, which of the following statements are correct?

NPOs are expected to be value-based and serve public or social purposes.
They are legally required to distribute profits to shareholders.
Examples include organisations like Pratham and Teach For India, which focus on education.

A1 and 2

B1 and 3

C2 and 3

DAll are correct

Answer:

An NPO, also known as a non-profit institution or charitable organization, is a legal entity organized and operated for a collective, public, or social benefit, rather than for the profit of its members, directors, or officers.

Value-Based and Public Service: NPOs are inherently established to serve public or social purposes, often addressing issues like education, health, environmental protection, human rights, poverty alleviation, and arts & culture. Their operations are guided by their mission and values, aiming to create a positive societal impact rather than financial gain for owners.
Non-Distribution Constraint: A fundamental principle of NPOs is the non-distribution constraint. This means that any surplus revenue (often mistakenly called 'profit') generated by the organization must be reinvested back into the organization to further its mission. It cannot be distributed as dividends or profits to shareholders, owners, or members. This distinguishes them sharply from for-profit companies.
Funding Sources: NPOs primarily rely on donations, grants from foundations, government funding, membership fees, and sometimes revenue from related activities (e.g., ticket sales for a museum) that directly support their mission.

Pratham: This is one of India's largest non-governmental organizations working to provide quality education to underprivileged children. It focuses on improving foundational literacy and numeracy skills through various innovative programs.
Teach For India: Part of the global 'Teach For All' network, Teach For India recruits college graduates and young professionals to serve as full-time teachers in low-income schools for two years. Their aim is to build a movement of leaders committed to ending educational inequity.
Other notable examples include CRY (Child Rights and You), Akshaya Patra Foundation (mid-day meal program), Goonj (clothing and rural development), and numerous other trusts, societies, and Section 8 companies.

In India, NPOs can be registered under various legal frameworks, including:
- Trusts: Governed by the Indian Trusts Act, 1882 (or state-specific trust acts). Public charitable trusts are common.
- Societies: Registered under the Societies Registration Act, 1860. These are typically member-based organizations.
- Section 8 Companies: Incorporated under the Companies Act, 2013 (formerly Section 25 of the Companies Act, 1956). These are companies formed with the objective of promoting commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment, etc., and intend to apply their profits, if any, or other income in promoting their objects, and prohibit the payment of any dividend to their members

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