People often interchange Non-profit vs Not-for-profit to refer to organizations that do not redistribute profits or funds to owners or shareholders. In the U.S., the term “non-profit” is used more common. However, not-for-profit is rising in popularity as some organizations want to emphasize that their main objectives do not include making a profit. Rather than revealing how to use those profits, the public sees this term “non-profit” as the organization makes no profits at all. But most non-profits and not-for-profits do make profits. Instead, reinvest the profits back into the organization.
Non-profits usually carry out larger, more organized activities that focus on environmental, social, political, or economic missions. For example, American Red Cross, United Nations Children’s Fund (UNICEF), and the American Heart Association are non-profits.
Not-for-profits often carry out smaller group activities that focus on sports, hobbies, or special interests. Examples include amateur sports leagues, clubs, or associations.
Non-profits classify as non-corporate associations that typically have a national or state charter to provide members with financial and legal protection separate from the legal entity of the organization. Furthermore, non-profits commonly function as official bodies with a charter and governing board of representatives.
Most often, not-for-profits are non-chartered organizations. Furthermore, not-for-profits commonly bring together a group of people with similar interests without forming a legal entity or governing board.
Non-profits normally qualify for tax-exempt status in the United States. Since non-profits are organized like a business, they expect to earn a profit. As a result of the profit, they both support their mission and keep operations going. This profit does not support any individual member of the organization.
Not-for-profits usually cannot qualify for tax-exempt status in the United States. Since the IRS clearly specifies that organizations for smaller group activities that focus on sports, hobbies, or special interests do not qualify as a business entity, a not-for-profit cannot qualify for tax-exempt status.
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Margin vs Markup