Non-profit vs non-profit – is there a difference?

For people who are new to the world of nonprofits, there is often great confusion over the use of the terms “nonprofit” and “not-for-profit.” Many organizations insist on referring to themselves as one or the other, and even some legal and accounting professionals try to draw a bright line between which organizations fall under these terms. Although there are some technical differences between the two, they are used interchangeably.

There are those who would argue that “non-profit” should refer to organizations that operate with the intent of never making a profit – every penny being used for the organization’s primary purpose. This includes basically every charity, NGO, civil society, private volunteer organization, and every other type of non-profit organization. Often what is meant is to make it clear that the company is only asking for what it needs to survive—an attempt to reassure members and potential donors that not a single person benefits from the money that comes in.

Some attempt to distinguish nonprofit organizations as unrestricted groups, such as social clubs, civic associations, professional organizations, and the like, while placing publicly supported charitable organizations under the umbrella of the nonprofit organization. While this distinction can make sense, the inconsistency of the definition makes it difficult to apply. The bottom line is often the group’s intention to emphasize its inherent definition – an organization that by design does not distribute a profit to individuals at the end of the year.

Statutes (federal and state) make it clear that “nonprofit” and “nonprofit” are synonyms. However, the IRS makes a practical distinction in its own definitions. According to the Infernal Revenue Service, “non-profit” refers to a specific activity, such as a hobby. The word “non-profit” refers to an organization that is set up for purposes other than making a profit. This definition does not necessarily mean that it is a charitable act, but it does include any organization that does not intend to make a profit. Amateur sports federations, quilt unions, social clubs, and charitable organizations fall under this definition.

In addition to the IRS, a distinction between the terms can also be found in the background of the people who use them. Lawyers, accountants, and academics tend to prefer the term nonprofit, while experienced fundraisers (and many people involved in the nonprofit field) prefer not-for-profit. Again, fundraisers are more likely to prefer non-profit organizations because it is more indicative of the fact that no individual benefits from the fundraising effort. Or it could just be an exclusionary tactic helping those in the know to identify strangers…but it is highly unlikely that it was an organized plot!

A final problem that raises unreasonable contention is whether or not a nonprofit should have a hyphen. Nonprofit does not have an inherently different meaning than nonprofit, but the hyphen is often used in nonprofit references. Active do-gooders tend to exclude the hyphen. Technically, a hyphen refers to another modulating adjective. Here, “non” modifies “profit”… Not that this clarification provides any particularly useful knowledge, except that the singular word nonprofit is a noun, whereas nonprofit would technically be a modifying adjective, so an additional noun would need to be made Attach them, such as a non-profit organization.

Whatever term you intend to use for your nonprofit, just make sure you have a well-developed argument ready. Someone will ask about it…maybe several people. As long as you know what you’re talking about, your argument will be repeated and when they They ask for the difference.

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