Colorado Technical University
Government & Not for Profit Accounting
You are part of a group of concerned citizens in your city and have approached the mayor to form a community organization that will provide a music outreach program for the local youth. He has given his approval and support and as the next step, chooses a board of directors and hires staff. This organization is going to be completely financed by city grants. Answer the following:
Is this a governmental or not-for-profit organization (NFPO)?
Explain your answer in detail. Support your response with a narrative containing facts or other relative information.
If you feel that it is an NFPO, what would need to happen to this organization for it to become a governmental organization?
If you feel that it is a governmental organization, what would need to happen to this organization for it to become an NFPO?
As a group of concerned citizens forming a community music outreach program for the local youth, we would be considered a Government Organization. “Governmental entities include the following:
• Federal government
• General-purpose political subdivisions (such as states, counties, cities, and towns)
• Special-purpose political subdivisions (such as school districts)
• Public corporations and bodies corporate and politic (such as state-operated toll roads and toll bridges)” (Patton, pp 3)
If we were funded by donations we would be considered a Not-For-Profit Organization, however, this is being completely funded by City Grants. This means there is a budget and Fund accounting process to follow, and therefore it is considered a Government Organization.
I was a City Clerk Treasurer for 3 years. We had a cardboard baler recycling program we used to improve the parks. Everyone who recycled their cardboard in the community contributed to new items for the City Parks. This also included ball fields. This could include dirt for the ball fields, a new fence, a new concession stand, equipment and more. One would not typically think of a new score board as a Government item, but it is at a municipal level. If as a community, or as a whole you agree to place funds from one program into a fund, you can. If the people collaborate and vote for certain funds to go in a certain location, it will happen. It is a designation of proceeds to one fund or another.
“Many not-for-profit organizations derive most of their resources from donor contributions, which may be subject to restrictions as to what they can be used for, when they can be used, or whether they must be maintained in perpetuity. Recipient organizations are legally bound to adhere to these donor restrictions.” (Patton pp 5) If we were raising these funds via fundraiser, I would consider this a NFPO, however, it is due to a City Grant, so this is a Governmental Organization.
I personally feel it is great for Municipal Governments to involve themselves in our youth programs. After all, our youth is our future. Small towns die when youth programs disappear. Most people have children they want to involve in some sort of activity. Staying actively involved within the community at any level helps communities prosper. If a community prospers, so does their revenue. The more people, the more purchases at local stores, which generate more sales tax and more.
References: Patton, Ives pp. Introduction to Government and Not for Profit Acccounting