Updated August 1, 2023
Difference Between Non-Profit vs Not For Profit
Non-profit firms are the association of organized persons with an objective rather than profit, like promoting cultural, religious, or educational objectives. This firm prohibits distributing or transferring profits to its directors, members, or trustees.
It is often contrasted with non-for-profit firms, which are set up for social welfare and provide service to the public in general or a group. Here we will discuss the topic of Non-Profit vs Not For Profit.
As stated, profit or, say, income is not the sole motive of all these firms, as there is a number of established firms to provide services to the public and its members. These include religious organizations, charitable institutions, trade unions, clubs, hospitals, and welfare societies. Such firms will not carry out any trading activity or business. They are under the trustees’ control. 2 such firms are not-for-profit and non-profit organizations.
Not for profit is a firm that will not earn any profit for its owners. Instead, all the money earned or donated to a not-for-profit firm will be used to pursue the organization’s key objectives and keep it functioning.
A nonprofit firm or organization is a business granted tax-exempt status by the law or the Internal Revenue Service (IRS) in the USA.
Head To Head Comparison Between Non-Profit vs Not For Profit (Infographics)
Below is the top 6 difference between Non-Profit vs Not For Profit
Key Differences Between Non-Profit vs Not For Profit
Both Non Profit vs Not For Profit are popular choices in the market; let us discuss some of the major Difference Between Non-Profit vs Not For Profit.
- A Non-Profit Organization is a larger organization or firm than a Not for Profit Organization.
- A Non-Profit Organization has its own identity and is also a separate legal entity; the Not for Profit Organization is not a separate legal entity.
- A Non-Profit Organization can include a cooperative society or a charitable trust, while Not for Profit Organizations can include an association of persona or body of individuals or clubs.
- However, Non– profit firm or Organization may function as a Not-for-Profit firm or Organization. On the contrary, a Not for Profit Organization cannot work as a Non–Profit firm or Organization.
- Non-profit organizations do qualify for tax-exempted status, while on the other hand, Not-for-profit organizations do not qualify for tax-exempted status.
Non Profit vs Not For Profit Comparison Table
Below is the 6 topmost comparison between Non-Profit vs Not For Profit
| The basis of comparison |
Non-Profit Organization |
Not-for-Profit Organization |
| Basic Definition | A Non – Profit firm or organization is an organization that will promote commerce, science, art, or any other charitable objective. | A Not for Profit organization is an organization that does not distribute its income or, say, the profits to its owners but will retain it to fulfill the firm’s goals and objectives. |
| Scope | The scope of the non-profit organization is wide. | The scope of not for profit organization is narrow and is comparatively less than a non-profit organization. |
| Separate Legal Entity | The non-profit organization is a separate legal entity. | The not-for-profit organization is not a separate legal entity as it is just used as a term for the firms that do not distribute their profit. |
| Law Meeting
requirements |
The firm’s profits should be applied to achieve its key goals and objectives instead of distributing dividends to its owners. | The company or this kind of firm will not work to earn a profit. |
| Tax-Exempt status | Non-profit organizations will qualify for tax exemption status. | Not-for-profit types of organizations usually do not qualify for tax exemption status. |
| Donor Benefits | Donations made to a non-profit organization are usually tax-deductible to the individuals or businesses contributing to them. Still, nonprofits should publicly make the financial and operating information so that donors or contributors are certain about their contributions that have been used for a stated purpose and have been used effectively. | Donations are made to a tax-exempt, not-for-profit organization; the donor may also get a tax deduction. |
Conclusion
However, most people often interchange the terms Non-Profit vs Not For Profit to refer to firms or organizations that do not re-distribute their share of profits or funds back to their shareholders or the owners. Thus, “non-profit” is more commonly used in the United States. However, not-for-profit type of firms or organization is rising in popularity. This is because some firms want to emphasize that their key or main goals and objectives do not include making a profit. Rather than that, they are emphasizing more and trying to reveal how to use those profits; the public, in general, will see the term “non-profit” as the firm or the organization that makes no profits at all. But most of the non-profits organizations and not for profits organizations do make some profits. Thus, the key distinction is that non-profit and not-for-profit organizations reinvest their profits to achieve their objectives.
Non-profit and not-for-profit organizations share the common characteristic of not pursuing profit. Instead, these organizations actively direct their earned profits toward achieving their goals and objectives rather than distributing them to shareholders or owners as dividends.
However, some can use both terms interchangeably; a clear distinction between them is that a not-for-profit activity does not intend to earn any profits (such as taking pictures for personal use). At the same time, “nonprofit” refers to an entire firm whose products/operations are not intending to generate a profit (a firm offering free photography classes).
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