Not For Profit

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DEFINITION of 'Not For Profit'

A not for profit organization is a type of organization that does not earn profits for its owners. All of the money earned by or donated to a not for profit organization is used in pursuing the organization's objectives. Typically not for profit organizations are charities or other types of public service organizations. Generally, not for profit organizations can apply for a tax exempt status so that the organization is not subject to most forms of taxation. Donations made to a tax exempt not for profit organization may also be tax-deductible for the donor.

BREAKING DOWN 'Not For Profit'

Except for the distinguishing feature that a not for profit organizations does not distribute profits to it owners, many non-profits have much in common with for-profit organizations. For example, while some not for profit organizations use only volunteer labor, any sufficiently large non-profit is likely to require a staff of paid full-time employees, managers, and directors. Indeed, since not for profit enterprises wish to accomplish their objectives in the same way as for profit enterprises, business tactics and management techniques honed in the for-profit world often work well in not for profit organizations as well.

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RELATED FAQS
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    Under the generally accepted accounting principles, or GAAP, for-profit companies recognize revenue as it is earned through ... Read Full Answer >>
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    A non-governmental organization (NGO) is a non-profit, citizen-based group that functions independently of government. NGOs ... Read Full Answer >>
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  4. Do nonprofit organizations pay taxes?

    Section 501 of the Internal Revenue Service (IRS) tax code exempts qualified nonprofit organizations from federal taxes. ... Read Full Answer >>
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