Question – “Is there owners’ equity in a not-for-profit organization? Who “owns” a not-for-profit? Who is “responsible” for a not-for-profit? Explain.”
Response
It is indeed true that either stockholders' equity or owners' equity, is the capital given by the shareholders to a for-profit business less any dividends. For-profit organizations have accountability to their organization's shareholders and are privately owned. Not-for-profit organizations have no owner. The case means that there is no dividends or stock distribution. Hence, there is no stockholders' equity or owners' equity.
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Not-for-profits can obtain profits, but the profits are channeled into the organization once more to have enhanced programs based on the organization's mission and vision. The income generated from profits cannot be handed to any person. Noteworthy, even the founder of the not-for-profit does not own the organization (Jeter & Chaney, 2019). Therefore, having no clear owner means that either a voting board or a board of directors will manage the organization. Similar responsibilities of the board members are given to the founder of the organization but the founder would not be considered as the owner of the organization at any one point.
The people responsible for the not-for-profit organization are the board of directors who aims at achieving the organization's mission as put in the mission and purpose statement. The organization owes other people accountability. The case is so as the board ensures that the organization's goals are attained, and the organization's future is secured. The status of the not-for-profit organization is reported on annual and quarterly statements to know the level of accountability the organization has. The not-for-profit becomes accountable to the IRS, state agencies, and the community as a whole.
References
Jeter, D. C., & Chaney, P. K. (2019). Advanced accounting. John Wiley & Sons.
