“Non – Profit” and “Not for Profit Organisation” often describes the similar meanings, but they are distinct from each other. However, they too nearly resemble and that is why they are used interchangeably. Here in this article, we are going to distinguish the two. So come and let’s understand the difference between Nonprofit and Not for Profit Organization.
Content: Nonprofit Vs Not for Profit Organization
|Basis for Comparison||Non - Profit Organization||Not for Profit Organization|
|Meaning||A Non - Profit organization is an organization which works for promoting science, commerce, art or any other charitable purpose.||A Not for Profit organization is an organization that does not distribute its profits to owners but retains it for fulfilling organizations objectives.|
|Separate Legal Entity||Yes||No|
Definition of Nonprofit Organization
A nonprofit organization or NPO or the company licensed under section 25 of the Indian Companies Act, 1956 are the companies with limited liability. The organization is formed propagating charity, religion, science and art and can sometimes be operated as not for profit organization.
The profits earned by the organization must be applied for achieving the objects of the entity rather than distributing to its owners as dividends.
Definition of Not for Profit Organization
Not for Profit Organization refers to an organization whose sole purpose is to achieve the objects of the entity. The company does not work for earning the profit. These type of organizations can include club like women’s club, sport’s club, etc. or an association or any other group formed by people.
Key Differences Between Nonprofit and Not for Profit Organization
- A Non – Profit Organization is a larger than a Not for Profit Organizations.
- A Non – Profit Organization may include charitable trust or cooperative society while Not for Profit Organizations includes clubs and association of persons.
- A Non – Profit Organization is a separate legal entity, whereas Not for Profit Organization is not.
The two entities we discussed above are alike, but still there are differences between them. The major similarity between them is that both the organization is not working for earning the profit.
A Non – Profit Organization may work as a Not for Profit Organization, but a Not for Profit Organization cannot function as a Non – Profit Organization.