1. Non-profit organizations use all income and resources to further promote organizational development
Both non-profit organizations and for-profit organizations have the ability to establish and benefit missions. However, for-profit organizations still intend to use the excess income as income for founders and members. Non-profit organizations will use all income and resources to further promote the organization to achieve its goals.
2. Non-profit organizations benefit social welfare
The sole purpose of establishing a non-profit organization is to effectively solve social welfare problems in order to meet humanitarian or environmental needs. For-profit organizations usually generate income for the founders and the employees who work under them.
3. Non-profit organizations rely on donations and grants
For-profit companies rely on sales revenue to sustain themselves. These companies seek to earn income. On the other hand, non-profit organizations rely on donations and grants from people who support the cause and other organizations or government entities. The way they get funding has a lot to do with the way they spend it.
Since nonprofit organizations receive money from donors, they should use it in a way that promotes the organization’s mission to help its beneficiaries. For-profit organizations can earn income, so they can give them more space to spend money as they wish.
4. Tax exemption for non-profit organizations
Another major difference is taxation. For-profit organizations can collect taxes in a variety of ways, while non-profit organizations can register for tax exemption.0