Overview of Nonprofit and Not-for-Profit Organizations
A nonprofit organization aims to benefit the public, not make a profit. All money earned is used to pursue its goals. Typically, nonprofits are tax-exempt. Local businesses can be for-profit to earn money for owners. Some examples of for-profits are airlines and manufacturers.
Key Differences Between Nonprofit and Not-for-Profit
What qualifies as a not-for-profit?
A not-for-profit organization does not earn profit for owners. Money earned through business or donations is invested back into the organization. Not-for-profits are not required to benefit the public good. Examples are the Red Cross and United Way.
A "nonprofit" is an organization that does not operate to make a profit. Nonprofits, also called NGOs, work for a charitable purpose like promoting commerce, art, science, or public service.
Not for profits do fundraising, programs, and administration. Fundraising includes events, donations, selling goods, and major gifts to pay for programs and administration.
A nonprofit organization has tax-exempt status from the IRS because it furthers a cause and benefits the public. Examples are hospitals, universities, charities, and foundations. A nonprofit serves the public good.
Examples of for-profits are airlines, manufacturers, restaurants, and retailers. They earn profits for owners.
Not-for-profits also earn profits but don’t distribute them or take donations. They aren’t separate legal entities or tax-exempt. But they have specified purposes like community groups, sports leagues, business leagues like chambers of commerce, and college fraternities.
In the end, nonprofits and not-for-profits both work for good causes. One key difference is handling of profits.