{"id":21990,"date":"2022-05-22T19:40:13","date_gmt":"2022-05-22T17:40:13","guid":{"rendered":"https:\/\/www.humanrightscareers.com\/?p=21990"},"modified":"2022-05-28T18:03:47","modified_gmt":"2022-05-28T16:03:47","slug":"nonprofit-vs-for-profit-difference","status":"publish","type":"post","link":"https:\/\/www.humanrightscareers.com\/issues\/nonprofit-vs-for-profit-difference\/","title":{"rendered":"Nonprofit vs For-Profit: What’s the difference?"},"content":{"rendered":"

Whether you\u2019re entering the human rights\/activism field as a full-time career or you’re incorporating activism into your existing job, you\u2019ll encounter both nonprofit and for-profit organizations. In this article, we\u2019ll discuss the differences between nonprofits and for-profits, as well as what organizations should know before choosing a status.<\/p>\n

What are the differences between nonprofits and for-profits? <\/strong><\/h2>\n

A nonprofit\u2019s goal is to benefit the community, so instead of distributing profits to company stakeholders, profits return to the nonprofit. For-profits, on the other hand, aim to collect profit for their stakeholders, which includes their employees and leaders. Rather than putting profit back into the organization to further its mission, profits are distributed to stakeholders after any expenses and debts are paid. Beyond this central difference, nonprofits and for-profits diverge in a few ways. Indeed.com<\/a> lists several, including:<\/p>\n

Funding<\/h3>\n

Donations and grants<\/a> fund most nonprofits. For-profits depend on investors (and sales) to keep thriving. In exchange, investors usually get a share of the profits, which is not the case with nonprofits.<\/p>\n

Target audience<\/h3>\n

Because they depend on donations, nonprofits try to draw in as many people as possible. Their \u201ctarget audience\u201d is broad and includes possible donors, volunteers, the community the nonprofit wants to help, organizations that could partner with the nonprofit, and anyone who benefits from the services or products the nonprofit offers. For-profits tend to spend a lot of time researching their ideal audience and designing their marketing strategy around them. They don\u2019t want to waste resources targeting an audience that doesn\u2019t need or want their product or service.<\/p>\n

Taxes<\/h3>\n

How their taxes are set up is one of the major differences between nonprofits and for-profits. To operate, nonprofits in the United States must get a special tax designation. This is usually done by registering as a 501(c)3, which gives an organization tax benefits that for-profits can\u2019t access. There are certain rules<\/a> a 501(c)3 must adhere to. None of its earnings can go to any private shareholder or individual, it can\u2019t try to influence legislation as a \u201csustainable part\u201d of its activities, and it can\u2019t engage in campaign activities for or against political candidates.<\/p>\n

Which is the best status for an organization? <\/strong><\/h2>\n

It\u2019s not always obvious whether nonprofit or for-profit status is the right choice for an organization. Understanding the differences is the first step. It\u2019s also important to understand the pros and cons of each structure. Here\u2019s what to consider:<\/p>\n

Starting a nonprofit<\/a> can be expensive and complicated<\/h3>\n

The startup cost of a nonprofit can be high. There are filing costs for incorporation, tax exemptions, annual reporting requirements, and more. It\u2019s also trickier to start a nonprofit because they depend so much on donations. In the beginning, it can be very challenging to raise enough funds to start running. This entire process can be complicated and may require special accountants and lawyers, who have their costs, too.<\/p>\n

Nonprofits are scrutinized more than for-profits<\/h3>\n

Because of the tax rules surrounding nonprofits, their finances are more heavily regulated. They are also available for the public to see. By choosing nonprofit status, an organization must fully understand its responsibilities and that they\u2019re accountable in a way for-profit orgs are not. If a nonprofit is not up to the task, it can lose its 503(c)3 status.<\/p>\n

Nonprofits access special benefits<\/h3>\n

When organizations register as a nonprofit, they get exemption<\/a> from federal and\/or state corporate income taxes. They may also get an exemption from state sales and property taxes. Nonprofits are also allowed to apply for grants and other funds that for-profits can\u2019t access.<\/p>\n

Nonprofits enjoy limited liability<\/h3>\n

Nonprofits are not the same as limited liability companies (LLCs), but nonprofits can become incorporated (most do) and enjoy limited liability protection<\/a>. This means that directors, employees, and members will not be held liable for the organization\u2019s debts, lawsuits, and fines. One or more 503(c)3 organizations can form an LLC as an ancillary entity, but it isn\u2019t common because of how complex the process is.<\/p>\n

Alternatives to the nonprofit\/for-profit binary <\/strong><\/h2>\n

When it comes to which status is right, it isn\u2019t as simple as nonprofit = social good and for-profit = making money. Like nonprofits, for-profits can engage in activism and promote the public good. Common structures<\/a> include C corporations, LLCs, and sole proprietorships. For-profit founders and boards that prioritize social good can also have a meaningful impact even though that mission isn\u2019t part of the legal structure. For-profits can also sign on to private certificates, like the B Corporation (also known as B Corp), which is given out by B-Lab, a global nonprofit.<\/p>\n

Hybrid structures blend a for-profit entity with a nonprofit. The for-profit may create the nonprofit or vice versa. At least in the United States, a for-profit can\u2019t own a nonprofit, but a for-profit can structure it so it has control over the nonprofit. Nonprofits can legally own for-profits. You see this often with corporations that have charitable foundations. A hybrid structure can be a good choice because a subsidiary can protect the nonprofit\u2019s status and be easily sold. The parent nonprofit can also be protected from the for-profit\u2019s liabilities. Hybrid structures are often more complicated, however, and it can be risky for the nonprofit to depend on funding from the for-profit part. Whether a nonprofit, for-profit, or hybrid structure is right for your organization depends on factors beyond the organization\u2019s goals. Consider all your options and the pros and cons before making a decision.<\/p>\n","protected":false},"excerpt":{"rendered":"","protected":false},"author":19,"featured_media":22023,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[8805],"tags":[],"class_list":["post-21990","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-issues","generate-columns","tablet-grid-50","mobile-grid-100","grid-parent","grid-50"],"acf":[],"yoast_head":"\nNonprofit vs For-Profit: What's the difference? | Human Rights Careers<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.humanrightscareers.com\/issues\/nonprofit-vs-for-profit-difference\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Nonprofit vs For-Profit: What's the difference?\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.humanrightscareers.com\/issues\/nonprofit-vs-for-profit-difference\/\" \/>\n<meta property=\"og:site_name\" content=\"Human Rights Careers\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/HumanRightsCareers\/\" \/>\n<meta property=\"article:published_time\" content=\"2022-05-22T17:40:13+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2022-05-28T16:03:47+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.humanrightscareers.com\/wp-content\/uploads\/2022\/05\/nonprofit-vs-forprofit-res.jpeg\" \/>\n\t<meta property=\"og:image:width\" content=\"707\" \/>\n\t<meta property=\"og:image:height\" content=\"370\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Emmaline Soken-Huberty\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@HuRiCareers\" \/>\n<meta name=\"twitter:site\" content=\"@HuRiCareers\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Emmaline Soken-Huberty\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"4 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/www.humanrightscareers.com\/issues\/nonprofit-vs-for-profit-difference\/#article\",\"isPartOf\":{\"@id\":\"https:\/\/www.humanrightscareers.com\/issues\/nonprofit-vs-for-profit-difference\/\"},\"author\":{\"name\":\"Emmaline Soken-Huberty\",\"@id\":\"https:\/\/www.humanrightscareers.com\/#\/schema\/person\/6f1a5aa6d77a682162b2d76bcf1628e4\"},\"headline\":\"Nonprofit vs For-Profit: What’s the difference?\",\"datePublished\":\"2022-05-22T17:40:13+00:00\",\"dateModified\":\"2022-05-28T16:03:47+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/www.humanrightscareers.com\/issues\/nonprofit-vs-for-profit-difference\/\"},\"wordCount\":933,\"publisher\":{\"@id\":\"https:\/\/www.humanrightscareers.com\/#organization\"},\"image\":{\"@id\":\"https:\/\/www.humanrightscareers.com\/issues\/nonprofit-vs-for-profit-difference\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.humanrightscareers.com\/wp-content\/uploads\/2022\/05\/nonprofit-vs-forprofit-res.jpeg\",\"articleSection\":[\"Issues\"],\"inLanguage\":\"en-US\"},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.humanrightscareers.com\/issues\/nonprofit-vs-for-profit-difference\/\",\"url\":\"https:\/\/www.humanrightscareers.com\/issues\/nonprofit-vs-for-profit-difference\/\",\"name\":\"Nonprofit vs For-Profit: What's the difference? | Human Rights Careers\",\"isPartOf\":{\"@id\":\"https:\/\/www.humanrightscareers.com\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/www.humanrightscareers.com\/issues\/nonprofit-vs-for-profit-difference\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/www.humanrightscareers.com\/issues\/nonprofit-vs-for-profit-difference\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.humanrightscareers.com\/wp-content\/uploads\/2022\/05\/nonprofit-vs-forprofit-res.jpeg\",\"datePublished\":\"2022-05-22T17:40:13+00:00\",\"dateModified\":\"2022-05-28T16:03:47+00:00\",\"breadcrumb\":{\"@id\":\"https:\/\/www.humanrightscareers.com\/issues\/nonprofit-vs-for-profit-difference\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.humanrightscareers.com\/issues\/nonprofit-vs-for-profit-difference\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.humanrightscareers.com\/issues\/nonprofit-vs-for-profit-difference\/#primaryimage\",\"url\":\"https:\/\/www.humanrightscareers.com\/wp-content\/uploads\/2022\/05\/nonprofit-vs-forprofit-res.jpeg\",\"contentUrl\":\"https:\/\/www.humanrightscareers.com\/wp-content\/uploads\/2022\/05\/nonprofit-vs-forprofit-res.jpeg\",\"width\":707,\"height\":370},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/www.humanrightscareers.com\/issues\/nonprofit-vs-for-profit-difference\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/www.humanrightscareers.com\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Nonprofit vs For-Profit: What’s the difference?\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/www.humanrightscareers.com\/#website\",\"url\":\"https:\/\/www.humanrightscareers.com\/\",\"name\":\"Human Rights Careers\",\"description\":\"Opportunities, Courses, Jobs, Internships\",\"publisher\":{\"@id\":\"https:\/\/www.humanrightscareers.com\/#organization\"},\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/www.humanrightscareers.com\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-US\"},{\"@type\":\"Organization\",\"@id\":\"https:\/\/www.humanrightscareers.com\/#organization\",\"name\":\"Human Rights Careers\",\"url\":\"https:\/\/www.humanrightscareers.com\/\",\"logo\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.humanrightscareers.com\/#\/schema\/logo\/image\/\",\"url\":\"https:\/\/www.humanrightscareers.com\/wp-content\/uploads\/2018\/12\/stencil.default-15.jpg\",\"contentUrl\":\"https:\/\/www.humanrightscareers.com\/wp-content\/uploads\/2018\/12\/stencil.default-15.jpg\",\"width\":1200,\"height\":800,\"caption\":\"Human Rights Careers\"},\"image\":{\"@id\":\"https:\/\/www.humanrightscareers.com\/#\/schema\/logo\/image\/\"},\"sameAs\":[\"https:\/\/www.facebook.com\/HumanRightsCareers\/\",\"https:\/\/x.com\/HuRiCareers\",\"https:\/\/www.linkedin.com\/company\/human-rights-careers\/\"]},{\"@type\":\"Person\",\"@id\":\"https:\/\/www.humanrightscareers.com\/#\/schema\/person\/6f1a5aa6d77a682162b2d76bcf1628e4\",\"name\":\"Emmaline Soken-Huberty\",\"description\":\"Emmaline Soken-Huberty is a freelance writer based in Portland, Oregon. She started to become interested in human rights while attending college, eventually getting a concentration in human rights and humanitarianism. LGBTQ+ rights, women\u2019s rights, and climate change are of special concern to her. In her spare time, she can be found reading or enjoying Oregon\u2019s natural beauty with her husband and dog.\",\"sameAs\":[\"www.orf.at\"],\"url\":\"https:\/\/www.humanrightscareers.com\/author\/emmaline-soken-huberty\/\"}]}<\/script>\n<!-- \/ Yoast SEO Premium plugin. -->","yoast_head_json":{"title":"Nonprofit vs For-Profit: What's the difference? | Human Rights Careers","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.humanrightscareers.com\/issues\/nonprofit-vs-for-profit-difference\/","og_locale":"en_US","og_type":"article","og_title":"Nonprofit vs For-Profit: What's the difference?","og_url":"https:\/\/www.humanrightscareers.com\/issues\/nonprofit-vs-for-profit-difference\/","og_site_name":"Human Rights Careers","article_publisher":"https:\/\/www.facebook.com\/HumanRightsCareers\/","article_published_time":"2022-05-22T17:40:13+00:00","article_modified_time":"2022-05-28T16:03:47+00:00","og_image":[{"width":707,"height":370,"url":"https:\/\/www.humanrightscareers.com\/wp-content\/uploads\/2022\/05\/nonprofit-vs-forprofit-res.jpeg","type":"image\/jpeg"}],"author":"Emmaline Soken-Huberty","twitter_card":"summary_large_image","twitter_creator":"@HuRiCareers","twitter_site":"@HuRiCareers","twitter_misc":{"Written by":"Emmaline Soken-Huberty","Est. reading time":"4 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/www.humanrightscareers.com\/issues\/nonprofit-vs-for-profit-difference\/#article","isPartOf":{"@id":"https:\/\/www.humanrightscareers.com\/issues\/nonprofit-vs-for-profit-difference\/"},"author":{"name":"Emmaline Soken-Huberty","@id":"https:\/\/www.humanrightscareers.com\/#\/schema\/person\/6f1a5aa6d77a682162b2d76bcf1628e4"},"headline":"Nonprofit vs For-Profit: What’s the difference?","datePublished":"2022-05-22T17:40:13+00:00","dateModified":"2022-05-28T16:03:47+00:00","mainEntityOfPage":{"@id":"https:\/\/www.humanrightscareers.com\/issues\/nonprofit-vs-for-profit-difference\/"},"wordCount":933,"publisher":{"@id":"https:\/\/www.humanrightscareers.com\/#organization"},"image":{"@id":"https:\/\/www.humanrightscareers.com\/issues\/nonprofit-vs-for-profit-difference\/#primaryimage"},"thumbnailUrl":"https:\/\/www.humanrightscareers.com\/wp-content\/uploads\/2022\/05\/nonprofit-vs-forprofit-res.jpeg","articleSection":["Issues"],"inLanguage":"en-US"},{"@type":"WebPage","@id":"https:\/\/www.humanrightscareers.com\/issues\/nonprofit-vs-for-profit-difference\/","url":"https:\/\/www.humanrightscareers.com\/issues\/nonprofit-vs-for-profit-difference\/","name":"Nonprofit vs For-Profit: What's the difference? | Human Rights Careers","isPartOf":{"@id":"https:\/\/www.humanrightscareers.com\/#website"},"primaryImageOfPage":{"@id":"https:\/\/www.humanrightscareers.com\/issues\/nonprofit-vs-for-profit-difference\/#primaryimage"},"image":{"@id":"https:\/\/www.humanrightscareers.com\/issues\/nonprofit-vs-for-profit-difference\/#primaryimage"},"thumbnailUrl":"https:\/\/www.humanrightscareers.com\/wp-content\/uploads\/2022\/05\/nonprofit-vs-forprofit-res.jpeg","datePublished":"2022-05-22T17:40:13+00:00","dateModified":"2022-05-28T16:03:47+00:00","breadcrumb":{"@id":"https:\/\/www.humanrightscareers.com\/issues\/nonprofit-vs-for-profit-difference\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/www.humanrightscareers.com\/issues\/nonprofit-vs-for-profit-difference\/"]}]},{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.humanrightscareers.com\/issues\/nonprofit-vs-for-profit-difference\/#primaryimage","url":"https:\/\/www.humanrightscareers.com\/wp-content\/uploads\/2022\/05\/nonprofit-vs-forprofit-res.jpeg","contentUrl":"https:\/\/www.humanrightscareers.com\/wp-content\/uploads\/2022\/05\/nonprofit-vs-forprofit-res.jpeg","width":707,"height":370},{"@type":"BreadcrumbList","@id":"https:\/\/www.humanrightscareers.com\/issues\/nonprofit-vs-for-profit-difference\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/www.humanrightscareers.com\/"},{"@type":"ListItem","position":2,"name":"Nonprofit vs For-Profit: What’s the difference?"}]},{"@type":"WebSite","@id":"https:\/\/www.humanrightscareers.com\/#website","url":"https:\/\/www.humanrightscareers.com\/","name":"Human Rights Careers","description":"Opportunities, Courses, Jobs, Internships","publisher":{"@id":"https:\/\/www.humanrightscareers.com\/#organization"},"potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/www.humanrightscareers.com\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"},{"@type":"Organization","@id":"https:\/\/www.humanrightscareers.com\/#organization","name":"Human Rights Careers","url":"https:\/\/www.humanrightscareers.com\/","logo":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.humanrightscareers.com\/#\/schema\/logo\/image\/","url":"https:\/\/www.humanrightscareers.com\/wp-content\/uploads\/2018\/12\/stencil.default-15.jpg","contentUrl":"https:\/\/www.humanrightscareers.com\/wp-content\/uploads\/2018\/12\/stencil.default-15.jpg","width":1200,"height":800,"caption":"Human Rights Careers"},"image":{"@id":"https:\/\/www.humanrightscareers.com\/#\/schema\/logo\/image\/"},"sameAs":["https:\/\/www.facebook.com\/HumanRightsCareers\/","https:\/\/x.com\/HuRiCareers","https:\/\/www.linkedin.com\/company\/human-rights-careers\/"]},{"@type":"Person","@id":"https:\/\/www.humanrightscareers.com\/#\/schema\/person\/6f1a5aa6d77a682162b2d76bcf1628e4","name":"Emmaline Soken-Huberty","description":"Emmaline Soken-Huberty is a freelance writer based in Portland, Oregon. She started to become interested in human rights while attending college, eventually getting a concentration in human rights and humanitarianism. LGBTQ+ rights, women\u2019s rights, and climate change are of special concern to her. In her spare time, she can be found reading or enjoying Oregon\u2019s natural beauty with her husband and dog.","sameAs":["www.orf.at"],"url":"https:\/\/www.humanrightscareers.com\/author\/emmaline-soken-huberty\/"}]}},"_links":{"self":[{"href":"https:\/\/www.humanrightscareers.com\/wp-json\/wp\/v2\/posts\/21990","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.humanrightscareers.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.humanrightscareers.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.humanrightscareers.com\/wp-json\/wp\/v2\/users\/19"}],"replies":[{"embeddable":true,"href":"https:\/\/www.humanrightscareers.com\/wp-json\/wp\/v2\/comments?post=21990"}],"version-history":[{"count":5,"href":"https:\/\/www.humanrightscareers.com\/wp-json\/wp\/v2\/posts\/21990\/revisions"}],"predecessor-version":[{"id":22069,"href":"https:\/\/www.humanrightscareers.com\/wp-json\/wp\/v2\/posts\/21990\/revisions\/22069"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.humanrightscareers.com\/wp-json\/wp\/v2\/media\/22023"}],"wp:attachment":[{"href":"https:\/\/www.humanrightscareers.com\/wp-json\/wp\/v2\/media?parent=21990"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.humanrightscareers.com\/wp-json\/wp\/v2\/categories?post=21990"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.humanrightscareers.com\/wp-json\/wp\/v2\/tags?post=21990"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}