Incorporate non profit or institutes are those whose main objective is not to earn profit but to provide services to the society. These institutions can broadly be divided into three categories.

1) Institutions, which work for the general welfare of their members example clubs, staff associations, residents associations etc.

2) Charitable institutions like educational institutions, hospitals etc.

3) Professional firms like Charted Accountants, Advocates, Tax Consultants and Doctors etc.

All around the world now a days many non-profit making organizations has come into existence. Earlier many concerns which were remained out of sight of

people, now with the popularity of internet it has become easier for both the donor and the organization to come in contact with each other. Worldwide many organizations are being run to fight against various deadly diseases like AIDS, Thellessmia, polio etc. Apart from normal educational institutes, in various parts of world including India many such organizations are running Adult education camps also to bring the literacy from the base and open the mind of people so that they can be protected from any kind of harassment.

The Non profit making organizations or institutions are different from profit making institutions in several respects. They have not to purchase or sale goods or receive bills of exchange nor do have to make credit transactions. Most of their transactions are cash transactions and therefore they need not maintain detailed books of accounts like Incorporate non profit making concerns.

Items peculiar to non-trading concerns:

1. Subscription: It is the amount received by members of the organizations. In case of trading concerns, subscriptions are usually given like subscription for trade journals, subscription for membership of a club etc.

2. Donation: Donation is the amount received by organization either from external entity or it can be from internal one also. A charitable institution may receive donations from time to time. The amount of donations may be taken as income or capitalized. Donation can be broadly classified into two categories.

a) Specific donation: If In case a donation has been received for a specific purpose then it is termed as a specific donation. For example, an institution may receive donation for construction of building or for giving prizes to the best sportsman. The amount of such donation cannot be therefore used for any other purpose.

b) General donation: A donation not received for a specific purpose is termed as a General Donation. Its treatment depends upon the amount received. In case, the donation is of a substantial amount, it can be fairly taken for granted that such donation is of a non-recurring nature.

c) Special funds: A non-profit making organization may keep special funds for some special purpose. For example, a sports club may keep special funds for meeting sports expenses or for awarding of sports prizes.

d) Legacy: Legacy refers to the amount which one gets on account of a will. The amount received on account of a legacy is as good as donation and is considered as of non-recurring nature.

e) Entrance fee: Entrance Fee or Admission Fee is usually charged by a club or a society or an educational institution from new entrants. It is usually taken as an item of income. However, in case of clubs and similar institutions some people favour capitalizing the entrance fee on the ground that it is of a non-recurring nature and being charged by the club as a premium from the new members towards the capital cost involved in establishing and maintaining the club by older members. This agreement, of-course is not applicable in case of educational institutions or hospitals where admission fee is charged from students or patients.

Accounting for non profit making organizations:

1. Accounting for Educational institutions:

These institutes like schools, colleges, institutes prepare their yearly accounts which apart from general accounting features which are as similarly followed as by the profit making organizations, accounting of Incorporate non profit making organizations include some special features.

i) Organizational pattern: Most of educational institutions in India are functioning as Societies registered under Indian Societies Act, 1860.However, some of the states have enacted Public Trust Acts requiring the societies to also get themselves registered under such Acts.

The societies function as autonomous bodies. The office bearers consist of President, Secretary, Treasurer and Executive Committee Members. In case of societies/ trusts running a number of schools or colleges, etc., there is a governing body for each school or college. The Boards and University Acts have made formation of Governing Body for each college and school a statutory requirement.

ii) Sources of finance:

a) Grants from Government: This is a major source of finance for most of the educational institutions. Grants are generally of 4 types:

* Maintenance grants

* Equipment grants

* Building grants

* Other grants

Maintenance grant is of a recurring nature while equipment grant and building grant are of non-recurring nature. Other grants include grants, which may be sanctioned by the government under special circumstances from time to time.

b) Donation from Public: Donation may be of recurring or non-recurring nature. These may be in the form of cash or kind. Donations in kind example land, building, shares, securities, utensils, furniture and fixtures are of non-recurring nature.

c) Capitation Fee: This fee is collected in lumpsum from the students seeking admission in a school or college. This amount is quite heavy and is meant for development of educational institution or incurring some capital expenditure.

d) Library and laboratory Deposits: These are collected from students who utilize these facilities. They are of nature of security deposits to be refunded to the students on their leaving the educational institute.

e) And the last and major source is admission fee received by students.

2) Accounting for other type of organizations: Here only one special feature is included in preparing their final accounts.

Client Disbursements features Account: Professionals have to make payments to different authorities on behalf of their clients

All these grants, donations and funds accumulated by such organizations are kept on liabilities side of books of their accounts. Now at present 80% of liabilities comes under mandatory relief of tax. But all this is not an issue to discuss when we talk about an organization, Incorporate non profit which is running only to provide services and help to general people and not for the purpose of making profit.