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Non-profit vs not-for-profit organizations

Carter O'Brien's Profile

When referring to organizations, what's the difference between "non-profit" and "not-for-profit"?


Topic Expert
Vernon Reizman
Title: CFO
Company: RCM Industries, Inc.
(CFO, RCM Industries, Inc.) |

Interesting question. Never really thought about this. Fortunately others apparently have. Here is an informative article I located via a search covering the discussion.

Topic Expert
Dana Price
Title: Vice President, M&A
Company: McGraw Hill Education
(Vice President, M&A, McGraw Hill Education) |

Vernon, wonderful find! It figures the IRS would have a definition for them. I have been using them interchangingly, and even though the IRS distinguishes the difference, I am going to continue to use them the same way. That's me, the rebel.

Linda Manson
Title: Owner
Company: PAT Company
(Owner, PAT Company) |

Non-profits are generally thought of when talking about charitable organizations, although that is not always the case. There are restricted by how much money they can retain in order to be considered a non-profit and have the tax benefits, etc. that comes along with that.They usually rely on fund raising, donors and volunteers to keep going and are usually run by a board of directors.

Nonprofits are also called not-for-profit corporations. Nonprofit corporations are created according to state law.

Vik Agrawal
Title: President & Co-Founder
Company: ExpensePath, Inc.
(President & Co-Founder, ExpensePath, Inc.) |

Maybe an example helps: AAA is a not-for-profit (actually it is a confederation of regional entities but that's not important here). There are no shareholders but it isn't a charity. AAA is basically a business that is designed to benefit and be governed by its customers instead of any owners. And in fact they refund money to their insurance customers at the end of the year based on their profits - that essentially replaces a dividend to shareholders.


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