A nonprofit is an organization formed for the purpose of assisting others. Usually this assistance relates to community needs. Many people think of nonprofits as poor entitles. This may come from the title of Nonprofit. That’s one of the reasons that the term Not For Profit has emerged.

To be a recognized nonprofit, the leader(s) have to create the proper entity and get designation from the I.R.S. These two tasks server several purposes. Forming an entity (corporation or LLC), allows the nonprofit to purchase assets (such as realty) in its name, open bank accounts, have rights, continue after initial leader leaves and other benefits afforded. Getting the designation from the I.R.S. allows the nonprofit to be tax exempt, receive grants and allow others to make tax free donations.

Back to the not for profit: Nonprofit organizations are encouraged to have revenue beyond grants and donations. Many people don’t realize that universities, hospitals, and churches are examples of nonprofits that generate huge sums of money through services/goods provided. A nonprofit’s director can’t take the revenues in excess of expenses and disburse them anyway they want. That’s one of the main differences between a not for profit and a for profit entity.