Difference Between Non-Profit vs Not For Profit
Non-profit firms are the association of persons that are organized with an objective rather than making a profit, like to promote cultural, religious, or educational objectives. In this kind of firm, no profit will be distributed or either transferred to its directors, members, or trustees. It is often contrasted with non-for-profit firms, which is set up for the social welfare and that provides service to the public in general or a group. here we will discuss the topic Non-Profit vs Not For Profit.
As stated, profit or say income is not the sole motive of all these firms, as there is the number of firms that are established with an objective of providing the services to the public and to its members. These can be religious organizations, charitable institutions, trade unions, clubs, hospitals, welfare societies, and the list goes on. Such firms will not carry out any trading activity or business and they are under the control of the trustees. 2 of such kind of firms are a not for profit organization and non-profit organization.
Not for profit is a type of firm that will not earn any kind of profit for its owners. All the money that is earned by or is donated to a not-for-profit firm the same will be used in pursuing the organization’s key objectives and keeping it functioning.
A nonprofit firm or organization is a kind of business which is 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 the firm when compared with a Not for Profit Organizations.
- A Non-Profit Organization has its own identity and is also a separate legal entity, on the contrary 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.
- A Non–Profit firm or the Organization may function as a Not-for-Profit firm or Organization, but to 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 other hands 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 comparison between Non-Profit vs Not For Profit||
Not for Profit Organization
|Basic Definition||A Non – Profit firm or the organization is kind of an organization that will work for promoting commerce, science, art or any other charitable objective.||A Not for Profit organization is a kind of an organization that does not distribute its income or say the profits to its owners but will retain it for fulfilling 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||Non-profit organization is a separate legal entity.||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 its profit.|
|The profits that are earned by the firm should be applied for achieving the key goals and objectives of the firm instead of distributing as dividends to its owners.||The company or this kind of firm will not work for earning the profit.|
|Tax Exempt status||Non-profit organizations will qualify for tax exemptions status.||Not for profit type of organizations usually, do not qualify for tax exemption status.|
|Donor benefits||Donations that are made to a non-profit type of organization are usually tax deductible to the individuals or businesses that contribute them, but the nonprofits should publicly make the financial and the operating information so that donors or the contributors are certain about their contributions that have been used for a stated purpose and have been used effectively.||Donations that are made to a tax-exempt which is a not-for-profit type of organization, then the donor may also get the tax deduction.|
Most of the people often interchange the terms Non-Profit vs Not For Profit to refer to the type of firms or the organizations that do not re-distribute their share of profits or funds back to its shareholders or the owners. In the United States, the phrase “non-profit” is more used commonly. However, not-for-profit type of firms or the organization is rising in popularity as some of the firms want to emphasize that their key or the main goals and objectives do not include making a profit for itself. Rather than that they are emphasis more and trying to reveal how to make use of those profits, the public, in general, will see this 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. But the key point here to note is that instead, they will reinvest those profits back into the firm or the organization and will try to achieve the key objectives for which they have been created.
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The 2 entities or the type of organizations that we discussed so far are almost alike, but still, there are certain notable differences between Non-Profit vs Not For Profit. The major similarity thing between them is that both Non-Profit vs Not For Profit firms or the organization are not working for earning the profit. The profits that are earned by these organizations or the firms should be applied for achieving the key goals and the objective of the firm or the entity instead of than distributing those profits to its shareholders or owners in the form of dividends.
Concluding remarks while some can use both terms interchangeably, a clear distinction between them is that a not for profit is a kind of activity that is not intended to earn any profits, (as taking pictures for personal use), while “nonprofit” refers to an entire firm whose products/operations are not intending to generate a profit (a firm offering free photography classes).
This has been a guide to the top difference between Non-Profit vs Not For Profit. Here we also discuss the Non Profit vs Not For Profit key differences with infographics, and comparison table. You may also have a look at the following articles to learn more.