The Difference Between Non-Profit Corporations & For-Profit Corporations


Nonprofit (or not-for-profit) organizations' sole purpose for existing is to serve a public or mutual benefit that excludes the pursuit or accumulation of profits. Non-profits work with a variety of groups that provide a public benefit in a scientific, literary, education, artistic or charitable way. On the other hand, corporations are entities that act like an individual, though they can be made up of a single individual or a group of people. Corporations exist to make a profit, and they can issue dividends on stocks either privately or publicly, or they can be classified as non-stock corporations.


Non-profit organizations are not restricted from earning a profit, but Congress does impose specific regulations and limitations on them. Donors cannot receive a tax deduction for charitable donations if a organization has not applied for exempt status under IRS 501(c)(3). No charitable deduction can be received for personal benefits, such as life insurance, annuity, or endowment contracts transferred to a nonprofit organization.

For Profit

Bylaws are created setting up a corporation’s governing rules, including decision-making guidelines and voting rights. Corporations issue stock; unlike with nonprofits, voting rights belong to the shareholders of the corporation, not the board of directors.


A nonprofit organization's goal is to obtain funds either through government grants or private foundations. Generally, the organization tries to keep a low operating cost by using donated facilities and equipment. Employees are generally paid less, or the organization relies on volunteers to execute day-to-day activities. Revenues generated by a nonprofit are often less than what is actually needed to meet the organization’s financial needs.

A for-profit corporation should generate private interest in service to the public while pursuing the goal of turning a profit. Each corporation should have its own purpose, and sometimes that purpose may be in conflict with society. Environmental groups like Greenpeace often protest and demonstrate when society's well-being is damaged by a corporation. Ideally, a corporation should be an extension of its society, and obligated to manage and explain its impact on human rights, social well-being, the natural environment and future generations.


Nonprofit organizations are exempt from paying taxes on any and all activities related to the organization’s purpose. The Internal Revenue code, section 501(c)(3), exempts nonprofits from paying federal and state taxes. An additional benefit for those who donate to non-profit organizations is that they are free to take a tax deduction for their charitable contribution.

A corporation is organized in order to conduct business, realize a net profit or loss, and distribute profits to its shareholders. As a recognized, separate tax-paying entity, corporations are double-taxed, paying taxes on money earned as well as on dividends when profits are disbursed to shareholders.


Protection for a nonprofit against lawsuits is extended to directors, officers and members of the organization from personal liability or from the corporation’s debts. Judgment against a nonprofit can only reach the assets of the business and not the accounts, houses and other properties owned by individuals who operate or participate in the business.

Corporations operate as a virtual being, granting limited protection to all who are involved with the business of the corporation. Protection can be lost if the owner and/or the corporate shareholder(s) act illegally, unethically or irresponsibly.

Related Searches


Promoted By Zergnet


You May Also Like

Related Searches

Check It Out

Are You Really Getting A Deal From Discount Stores?

Is DIY in your DNA? Become part of our maker community.
Submit Your Work!