Back To: BUSINESS ENTITIES, CORPORATE GOVERNANCE, & OWNERSHIP

What is a Nonprofit Organization?

A Nonprofit Organization is an organization established for good cause rather than making profits. This type of organization serves public interests and social responsibility. A nonprofit organization is not subject to taxation by the Internal Revenue Service (IRS), it is tax-exempt. Although, this organization generates income, the income is used to foster good cause. Oftentimes, organizations like this are called charitable organizations that are vested in helping individuals, groups and the society at large. Nonprofit organizations generate income through donations from individuals and groups, fundraising activities are other ways to source funds. These organizations provide periodic information that helps donors detect whether donations are effectively used or otherwise.

How Does a Nonprofit Organization Work?

A nonprofit organization is otherwise called a NPO OR a 501(c)(3) organizing. These are organizations that work for the benefits of individuals and groups in the society. These organizations can focus on different areas such as agriculture, research, science, education, religious, public health and safety, crime prevention, technology and others. Nonprofit organizations enjoy tax-exempt status, regardless of the field the operate in.

Rules, Employment and Examples

State or national charities, motherless babies homes, churches, non-governmental foundations, universities, literary organizations, and hospitals are examples of nonprofit organizations. Any organization that render goods and services for public interest or a good cause is a nonprofit organization. According to the employment laws in the United States, a non-profit organization can have employees which comprises of both paid and unpaid employees. The unpaid employees are volunteers who voluntarily showed interest in working with the organization without any expectation for salary. The paid employees of these organizations do not earn as much as other employees, they are on a lower pay scale and are subject to employment taxes and rules.

Nonprofit Versus Not-for-Profit

A not-for-profit organization (NFPO) is a general name that describes organizations that do not seek private gains, organizations that offer good and services for the benefits of individuals and groups at regular interval without any private benefit of a not-for-profit organization. NFPO comprises of non-governmental organizations (NGOs), civil society organizations (CSOs), private voluntary organizations (PVOs) and charities. In some cases, when emphasis is to be placed on the intention of a nonprofit organization, the term; 'not-for-profit' organization is used. It is however important to know that a non-profit organization makes profit or income but uses the profit for the projects and operations of the organization, which is to benefit the general public rather than for personal gains.

Related Topics

• Business Entities (Intro)
• Why is studying business entities important?
• Considerations When Forming a Business Entity
• Holistic (Detailed) Overview of Setting Up a Business Entity
• What are Business Entities?
• What is a Closely-held vs Publicly-held Business?
• What are the main types of business entity?
  
• What are the primary characteristics of business entities?
• What is Creation of a business entity?
• Where to Form a Business
• Incorporating in Delaware
• Forming an LLC in Nevada or Wyoming
• Creating a Company Offshore
• Promoter
• Promoter Liability
• De Jure Corporation
• Ultra Vires
• Brassplate Company
• What is Maintenance of a business entity?
• What is Continuity of a business entity?
• Business Continuity Planning
• Buy Sell Agreements
• Shotgun Clause
• Winding Up
• Dissolving a Foreign Qualification
• What is the Ownership structure of a business entity?
• Joint Stock Company
• Parent Company
• Subsidiary Company
• Wholly-Owned Subsidiary
• Operating Subsidiary
  
• Holding Company
  
• State-Owned Enterprise
• Mutual Company
• Conglomerate
• What is Control of a business entity?
• What is Personal liability of owners of a business entity?
• Entity Theory
• Piercing the Corporate Veil
• What is Compensation of business owners?
• What is Taxation of a business entity?
• What is Sales & Use tax?
• What are payroll and self-employment taxes?
• What are the major characteristics of a Sole proprietorship?
• Uniform Partnership Act
• Uniform Limited Partnership Act
• Partnership Agreement
• At-Will Partnerships
• Responsibilities of Partners to the Partnership
• Silent Partner
• Funding the Partnership
• How are Partners Compensated
• Splitting Equity in an Industrial Partnership
• Terminating the Partnership
• Types of Partnerships
• What are the main characteristics of a General partnership?
• Tort Liability of General Partner
• What are the main characteristics of a Joint venture?
• What are the main characteristics of a Limited partnership?
• Family Limited Partnership
• Master Limited Partnership
• What are the main characteristics of a Limited liability partnership?
• What are the main characteristics of a Limited liability company?
• Forming an LLC
• Articles of Organization
• Operating Agreement or LLC Agreement
• Why You Need an LLC Agreement
• LLC Compensation of Members
• LLC Taxation
• Converting to an LLC
• What are the main characteristics of a Corporation
• Articles of Incorporation 
• What to include in the Articles of Incorporation
• Corporate Bylaws
• Exiting the Corporation
• Dissenter's Rights
• What are the requirements to be an S Corporation?
• Non-Profit Organization
• NonProfit Business Entities
• Private Foundation
• A Detailed Explanation of the Sole Proprietorship
• Taxation of Sole Proprietorship
• A Detailed Explanation of the General Partnership
• 50/50 Partnerships: Never a Good Idea
• Publicly-Traded Partnerships
• A Detailed Explanation of the Limited Liability Company
• A Detailed Explanation of the Corporation
• Keepwell Agreement (Letter of Comfort)
• Personal Service Corporation Definition
• A Detailed Explanation of the Non-Profit Entity
• Public Limited Company (UK)