Definition of a Non Profit Organization

The definition of a non profit organization is what sets them apart from other businesses and organizations. A non profit works for the good of a specific cause or group of people.

Defining a non profit organization!

What makes a non profit organization unique is the organization must be designated as such legally. There are specific tax and charitable requirements that an organization must meet in order to be considered a non profit organization. The IRS designates organizations as 501(c) 3 entities after they pass a screening and review to show that their activities are charitable in nature. The 501(c) 3 status makes them exempt from federal and corporate taxes. An organization can not simply declare themselves exempt or a non profit without following proper legal protocol.

The definition of a non profit organization depends on several factors. In addition to the legal designation requirements, there are other requirements as well. Most non profits are governed by a board of directors, usually volunteer, that oversee the staff. Upon forming, a set of by laws is written to clearly define the non profit organization in its mission and purpose and governing structure. The by laws can be amended as needed but the basic information should remain the same.

Non profit organizations do not have shareholders or pay dividends like a profit corporation. Their revenue must go toward specific charitable projects and must meet the organization's mission. There are certain limitations of how the money must be used and reported. Many non profits receive support through government and foundation grants. They also rely on individual and corporate donations along with money raised from special events and fundraising endeavors.

Non profits can come in different sizes, have different missions and areas of interest. There are several things that all non profit organizations have in common:

• Legal status
• Tax requirements
• Charitable in purpose

Non profits do not simply fall within one field or category. There are numerous areas that qualify for non profit status. Some categories include:

• Religious
• Scientific
• Educational
• Arts
• Health care and public health
• Prevention of animal cruelty
• Child welfare

In addition the following may also be considered non profit:

• Civic organizations and leagues
• Labor organizations
• Chambers of commerce
• Boards of trade
• Agriculture organizations
• Legal service groups

There are endless non profit organizations in existence. Many are national organizations while others operate locally. Many national organizations have local chapters while others have one central headquarter location. Some have been in existance for decades and other non profits may have formed out of necessity of the time.

Some well-known non profits are:

• American Red Cross
• World Wildlife Foundation
• Animal Humane Society
• Sierra Club Foundation
• Toys for Tots
• Bill and Melinda Gates Foundation

If you are still interested in learning more about non profit organizations, check out the following LoveToKnow articles on non profit organizations:

• Starting a Non Profit Organization
• Non Profit Organizations Graphic Design
• Non Profit Salary Review
• Nonprofit Organization Member Handbook

There is not one single definition of a non profit, but several factors that contribute to defining an organization as such. Most importantly, non profit organizations exist to support a charitable cause or mission.

• Tracking Charitable Donations for Taxes
• Fundraising Strategic Plan
• Request for Donation Letters

• List of Nonprofit Organizations
• Furniture Donation Pick Up
• Sample Letters Asking for Donations
• Samples of Non Profit Fundraising Letters
• Samples of Thank You Letter for Donations

• Facts About American Red Cross
• Importance of Volunteerism
• Category:Charitable Organizations