A non-profit organization (often called "non-profit org" or simply "non-profit" or "not-for-profit") is an organization whose primary objective is something other than the generation of profit. Such organizations are typically funded through a mix of private or public (ie. government) donations (Google)

Call me a cynic. I've always assumed that the only difference between a for-profit organization and a not-for-profit organization was simple. One made a profit and the other didn't. I never assume that the term "not-for-profit" and "charitable organization" are the same thing. This fellow's story about being able to liquidate non-profit assets simply underlined and reinforced my bias.

It nagged at me to the point that I needed to dig a little further. I want to underline the fact that I am exploring my understanding. I hardly have a perfectly clear picture hear. I just have some personal biases and assumptions that I want to hold up to the light.

It turns out that many state governments distinguish between public benefit oriented organizations and mutual benefit organizations. Your contributions to a charitable organization are tax-deductible only if that group qualifies for  501(c)(3) status. Otherwise, it's probably not interested in public benefit. Both are non-profits.

You know about some forms of mutual benefit organization. Golf-clubs and country clubs are often organized this way. They are not-for-profit but are hardly interested in things that would qualify as charitable. There are others. The thing that runs through them all is that they are interested in the welfare of the membership.

That's a great guideline. If charitable organization does not have 501(c)(3) status, anything they tell you about working for the "larger good" is very suspect. Being a non-profit does not inherently mean that the organization is pursuing a nobler cause. In many cases, though it's not supposed to be the way things are done, being a non-profit is simply a way to line the pockets of the management team.

A not-for-profit organization can not hold profits. These are usually distributed to the management of the group. Thus, rather than retaining the earnings and reinvesting them or returning them to stockholders (the basic accountability in a for-profit organization), bigger paychecks and fatter expense accounts are the hallmark of many non-charitable non-profits.

The 501 (c)(3) designation is a pretty important distinction. Without it, you can't know exactly what you are dealing with.

Outside of that simple distinction (is it charitable or not), the differences between a for profit and not-for profit seem simple:

In neither case (profit or non-profit) is the enrichment of the management team an intended outcome. For more information, see

• Wikipedia on NonProfits
• Not-for-profit.org (their tutorial)

 John Sumser. - .Permalink. - .Today's Bugler . - .Send To a Friend

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