Reviewed by Aug 27, 2020| Updated on
Non-profit organisations are types of organisations which don't make money for their members. All of the money raised or donated to a non-profit organisation is used to fulfil the aims of the company and to keep it going.
Usually, charitable organisations are tax-exempt charities or other forms of public benefit organisations, and as such are not expected to pay any taxes. In a non-profit organisation, income is allocated to leaders, executives, or officers of the company.
For Profit vs Not for Profit
Apart from the distinctive aspect that a non-profit organisation is not distributing profits to its members, many non-profits have something in common with organisations for profit.
Although some non-profit organisations, for example, use only unpaid labour, other large or even medium-sized non-profits are likely to need full-time paying staff, administrators, and directors. Indeed, because non-profit organisations aim to accomplish their goals in the same way as for-profit businesses, business strategies and management methods also work well in non-profit organisations as well.
Finally, while for-profit businesses participate in a vast array of activities, non-profit businesses must function solely as a charity or for purposes of science, religious, or public health. In addition, there may also be non-profits that raise money for dispensing to other eligible charities.
Non-Profit & Not-For-Profit
The definition of "non-profit" and "not-for-profit" is basically the same. Legal and scholarly societies, however, make clear distinctions between the two words.
While various groups can use the terms differently, the best way to differentiate between them is to think of "not-for-profit" as an activity, like reading a book. The word "non-profit" refers to an organisation, like an adult literacy program, that is not expected to make a profit.