Non-profit organization

A non-profit organization (often called "non-profit org" or simply "non-profit" or "not-for-profit") is an organization whose primary objective is something other than the generation of profit. Such organizations are typically funded through a mix of private or public (ie. government) donations. They may also generate income through their own commercial activities, but the extent to which they are able to do this may be constrained, or the use of such income may be restricted in certain ways. The term is most widely used in the United States.

A charity is a type of non-profit organization, and some non-governmental organizations may also be non-profit organizations.



Most non-profits do not have members, although they may. The non-profit may also be a trust or association of members. The organization may be controlled by its members who elect the Board of Directors or Board of Trustees. Not-for-profit organizations may have a delegate structure to allow for the representation of groups or corporations as members. Alternately, it may be a non-membership organization and the board of directors may elect its own successors.

Although the characteristic of not earning or "making" a profit is widely believed by the general public to be definitive, most experts today agree that it is actually legal and ethical restrictions on the distribution of profits to owners or shareholders that is the defining characteristic of nonprofits.


In most countries, non-profit organizations may apply for a tax exempt status; this means that finacial donors may claim back any taxes paid on money donated. A primary difference between a non-profit and a for-profit corporation is that a non-profit does not issue dividends, and may not enrich its directors. However, like for-profit corporations, non-profits may still have employees and can compensate their directors within reasonable bounds.


Such "organizations" are often charities or service organizations; they may be organized as a not-for-profit corporation or as a trust, a cooperative or they may be purely informal. Sometimes they are also called foundations, or endowments that have large equity funds. Most foundations give out grants to other not-for-profit organizations, or fellowships to individuals. However, the name foundation may be used by any not-for-profit corporation -- even volunteer organizations or grass roots groups. A non-profit organization may be a very loosely organized group such as a block association, or a trade union, or it may be a complex structure such as a university, hospital, documentary film production company or educational book publisher.


Most countries have laws governing the setting up, running, and reporting requirements of these organizations. Most larger organizations are required to publish their financial reports detailing their income and expenditure for the public. In many aspects they are similar to business entities though there are often significant differences. Both non-profit and for-profit entities must have board members, steering committee members, or trustees who owe the organization a fiduciary duty of loyalty and trust.


The largest non-profit organization in the United States is the Bill and Melinda Gates Foundation, which has an endowment of approximately $27 billion. The second-largest is the Howard Hughes Medical Institute, which has an endowment of approximately $11 billion. The largest organisation of this kind in the rest of the world is probably the British Wellcome Trust, though it is a "charity" in British usage, not a "non-profit".

Laws on non-profit organizations

United Kingdom

In the United Kingdom non-profit organizations are rarely considered as a single class of entity. All philanthropic organizations have to be registered with the Charity Commission and they are referred to as charities, not as non-profits. Other groups which are classified as non-profit organizations in the U.S., such as trade unions, are subject to separate regulations, and are not conflated with charities in British usage.

Examples of non-profit organizations

Many non-profit organizations use the .org top-level domain when selecting a domain, though this is in no sense a requirement, legal or otherwise.

See also

External links

ja:NPO zh-tw:非營利組織 he:מלכ"ר simple:Non-Profit


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