Not-for-profit organization

A not-for-profit organisation (NFPO) is a legal entity that does not share extra money with its members. It is created to achieve special goals, like helping a community or supporting a cause.

Although not-for-profit organizations and nonprofit organizations (NPO) are different in law, people sometimes use the words as if they mean the same thing. Not-for-profit organisations are not made just to help the public, like nonprofit organisations must be. Instead, not-for-profit organisations are called “recreational organisations” because they do not try to make money, unlike nonprofit organisations.

Not-for-profit organisations are special because they focus on their goals instead of making profits.

Functions

A not-for-profit organization (NFPO) does not try to make money. It serves its members instead of the public. For example, a sports club is an NFPO because it exists for fun, and any money made helps improve the club.

In the United States, these groups can ask to be tax-exempt under section 501(c)(7) of the Internal Revenue Code. Common types of NFPOs include charities, sports clubs, foundations, private schools, universities, museums, churches, and social welfare organizations. For charities, money from donations or fundraising should support their cause, not go to members as profit.