Profit Vs. Not-For-Profit Organizations in America

For profit organizations exist to make money and benefit the owners of the company. Not-for-profit organizations exist to benefit the larger community and all revenues received are applied to the operation of the enterprise.

Types

Several types of not-for-profit organizations exist under a subsection of Section 501 of the Internal Revenue Service Code. These include social welfare, animal cruelty, horticultural and veterans organizations.

Benefits

Most not-for-profit organizations are exempt from paying income and other federal taxes. Unlike for-profit companies, a non-profit organization is also eligible for private and government grants to help support its business.

Considerations

A for-profit business can be sold at any time, with the proceeds distributed to shareholders. However, not-for-profit business can't be sold. Instead all assets are redistributed to another not-for-profit organization.

Expert Insight

According to Entrepreneur Media, the ability to offer to employees higher salaries, bonuses and equity stakes in the company puts for-profit businesses at an advantage in attracting desirable employees.

Geography

According to the small business counseling service SCORE, not-for-profit organizations can build in any neighborhood without zoning requirements. However, most for-profit organizations need to apply for approval or a variance before building can commence.

References

• For Profit versus Non-Profit
• Starting Up: Nonprofit Vs. For-Profit Social Ventures

Resources

• Nonprofit Versus For-Profit