You hear about non-profit organizations all the time in the news doing good work but do you know exactly what a non-profit organization is? Do you know about the different kinds of non-profit organizations? Here is an explanation of what non-profit organizations are and what they do.
The Basic Definition of A Non-Profit Organization
A non-profit organization is an organization that does not exist to make a profit. Specifically, they are not seeking to earn a profit for the owners or shareholders. This is the defining characteristic of these groups. While you may think of this title as going exclusively to charities not all non-profit organizations are charities. They exist for the purpose of serving some chosen public interest. These public interests can cover a wide range of categories.
Exactly What Type Of Organizations Qualify As Non-Profits?
Not all the organizations that fall into these groups will be non-profit organizations but this will give you an idea of the types of groups that can. Universities, charities, religious organizations, social welfare groups, business leagues, and even some credit unions can fall under the banner of non-profit organizations. This is not a complete list of organizations that may be non-profits but it gives you an idea.
Some organizations that fall into this group are official while others are not. They are just organizations that seek to serve public interests and there are many public interests out there in the world to be served. Check out the difference between formal and informal non-profit organizations.
Informal Non-Profit Organizations
When you think about non-profit organizations you are probably thinking about the official ones. Technically, informal groups that get together for recreational purposes or to form a small self-help community can be non-profit organizations. These informal groups are less often thought of as non-profit organizations but that’s exactly what they are. They may be therapy groups, athletic leagues, or any other kind of group that fits the informal non-profit organization definition.
Formal Non-Profit Organizations
Formal non-profit organizations take more work. You have go through all the legal hoops to have your organization qualify as a non-profit which usually includes ensuring that your group gains the status of a corporation. If you want the tax-exempt status that is so common to non-profit organizations then you will need to do what it takes to obtain that status.
You and your donors should know, however, that just because your organization has that tax-exempt status it does not mean that any donations to your organization will necessarily be tax deductible. What donations are tax deductible and which ones are not is a separate matter that is determined by IRS regulations. Your status as a tax exempt non-profit organization has little to do with it.
Understanding what a non-profit organization means understanding the basic definition and then realizing that many different types of groups fall under this heading. These groups seek to further social causes in many ways and often use the non-profit organization title to help them do that. But when you get down to it a non-profit organization is an organization that does not have making a profit as its main goal.
Tom Rheinecker writes about searching for a high quality school offering a Masters in Nonprofit Management online.