Non-profit organizations are the association of persons organized with an aim other than making a profit, such as to promote religious, cultural or educational objectives. In these organizations, no profit is distributed or transferred to the members, directors or trustees. It is often juxtaposed with non for profit organization, which is set up for the welfare of the society and provide service to a particular group or public in general.
Profit is not the primary motive of all the organizations, as there are a number of organizations which are established with an aim of providing services to its members and the public as a whole. These can be charitable institutions, religious organizations, clubs, hospitals, trade unions, welfare societies and so on. Such organization do not carry out any business or trading activity and are under the control of trustees. Two such organizations are a non-profit organization and not for profit organization.
There is a very thin line of difference between non-profit and not for profit organization, which we have discussed in the given article, take a look.
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 8 of the Indian Companies Act, 2013 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
The following points are substantial so far as the difference between non-profit and not for profit organization is concerned:
- 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.