Non-Profit vs For Profit: Shedding light on the differences

There are many individuals I interact with at a daily basis who consider starting what they call a “non-profit” business before they even understand what a non-profit is. They emphasize their desire to help the community and not turn a profit from it before they even understand how difficult and demanding NPO’s can be. As if non-profits run themselves , people talk as if it were as simple as rolling a snowball down a hill picking up accomplishments and progress by itself. Unfortunately for them this is not true. Non-profits are for people who have time to work for charity and have their financial futures already secured.

Non profit organizations are companies that use surplus revenues to achieve its goals, rather than distributing them as profit or dividends. Non profit organizations are permitted to generate surplus revenues that must be retained by the organization strictly for self-preservation, expansion, or planning. This means working long hours not for your own financial gain, but for the gain of your organizations purpose alone. Designation as a non-profit and an intent to make money are not necessarily related.

Non-profit organizations have diverse structures and purpose. They are formed by filing bylaws and “articles of incorporation” in the specific state in which they intend to operate in. Non-profits may apply for tax exempt status so that the organization can function more as a community resource rather than a taxable participant in the capitalist system.

If you are thinking about starting a Non-profit organization you need to take a good look at whether or not you have the time to work basically for free. If you can afford to spend long hours as a CEO for literally no monetary return then starting a Non-profit may be the right choice for you. Otherwise, you may end up getting in over your head. If you are a young college graduate with grand aspirations for helping the community, it may be better for you to secure your own financial stability first in order to be able to contribute more to your Non-profit. The first step is familiarizing yourself with a NPO that you are interested in. Find out what makes them tick and how they deal with the day-to-day responsibilities. Only then will you understand whether or not starting an NPO is for you. Nothing is worse than a failed attempt at a charity so make sure you do your homework and prepare for a long road of working without turning a profit for yourself!


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