Non-Profit Organisations

• Reasons for becoming a shareholder

  • dividends
  • provide financial support
  • make money by selling shares
  • acquire a business via takeover
  • to have a percentage of control
  • have a role in decision making
  • shareholder influence - try and influence how the business acts
• Private and public limited companies can sell ordinary shares
• Ordinary share capital is the money given to a company by shareholders in return for a share certificate that gives them part ownership of the company
• Ordinary share capital is permanent, so a business will never be required to repay the value of these shares
• Sometime ordinary shares can also be referred to as risk capital or equity capital
• Total Ordinary Share Value = number of share issued by the business x share price at time of issue
• A shareholder owning 1% of a company's ordinary shares would receive 1% of any profit given to ordinary shareholders and would be entitled to 1% of the votes at the annual general meeting
• There is no guaranteed level of dividend and sometimes no dividend is paid at all
• Market capitalisation is the value of outstanding shares in a public limited company at today's share price
• Outstanding shares are the total of all ordinary shares issues and fully paid up
• Market Capitalisation is calculated by multiplying the total outstanding shares by the current market price of an individual share
• Market Capitalisation = Total outstanding shares x Today's individual share price
• Market capitalisation is used as an indicator of investor's opinion of a companies net worth or its overall value
• Market capitalisation is a good judgement of performance
• Market capitalisation is also a good way of measuring the size of a public limited company
• Share price is the price of a single share in a business, share prices are normally decided by demand and supply for shares
• Anything that increases demand for shares or restricts supply will cause the share price to increase
• Influences of Share Price

  • expanding into other countries
  • releasing new products
  • diversification
  • takeover of another business
  • time of year
  • demand
  • profits
  • investor speculation
  • economic climate
  • market they operate in
  • government actions
  • how overall market is doing
  • overall performance
  • reputation of the business
• Non-profit organisations do not have a defined structure and such businesses can take many different forms
• Non-profit organisations are also known as the third sector
• A voluntary group or union is a group of inividuals who enter into an agreement usually as volunteers, to form a body to accomplish a purpose e.g. British Red Cross, Church
• Community organisation refers to organisation aimed at making desired improvements to a community's social health, well-being, and overall functioning
• Community organisation occurs in geographically, culturally, spiritually bounded communities e.g. brownies/guides
• In England and Wales, a charity is an organisation that is established for charitable purposes only and subject to the High Court's charity law jurisdiction, they are regulated by the charity commission e.g. British Heart Foundation
• A social enterprise businesses with primarily social objectives whose surpluses are principially reinvested for that purpose in the business or in the community, rather than being driven for the need to maximise profit for shareholders and owners e.g. Jamie Oliver Fifteen
• A pressure group is a non-profit and usually voluntary organisation whose members have a common cause for which they seek to influence political or corporate decision makers to achieve a declared objective e.g. Just Stop Oil
• A trade union is an organised association in a trade, group of trades, or profession, formed to protect and further their rights and interests e.g. ASLEF, RMT
• A co-operative are businesses owned and run by their members, members have an equal say in how the business is run and profits are used to benefit the business and its members e.g. Co-op
• A mutual society is an organisation owned by its members and managed for their benefit, such as a building society or friendly society
• Common characteristics of Non-profits

  • non-governmental organisations
  • a governing body responsible for managing their affairs
  • value driven and have social, environmental, community, welfare, or cultural aims and objectives
  • usually established for purposes other than financial gain, with any profits or surpluses being reinvested into the company
  • may use volunteer staff in addition to paid employees
• Factors affecting choice of business form

  • need for finance to expand further
  • size of the business and the level of investment required
  • need for limited liability
  • degree of control desired by the original owners
  • nature of the business and its objectives
  • level of risk involved