Non Profits
Around the world, there are many non-profits that help people with many different things, and many people know the more famous ones like Red Cross, Feeding America, and YMCA, but what is a nonprofit? According to Cornell Law School, a non-profit organization is “a group organized for purposes other than generating profit and in which no part of the organization’s income is distributed to its members, directors, or officers.” In simple terms, these kinds of organizations are created to provide charitable and social benefits to the public rather than to make money.
Before we learn more about nonprofits, we must learn about two other types of organizations: not-for-profits and for-profits. Not-for-profit organizations (NFPOs) tend to be smaller and serve members rather than the broader public. Some examples are homeowners’ associations or college fraternities and sororities. NFPOs have fewer rules and requirements which give them more flexibility; however, they are usually subject to more tax obligations. NFPOs are like non-profits in that they can qualify for tax-exempt status, but not as much as non-profits. To generate revenue, NFPOs receive grants, donations, and membership dues.
Switching gears now to talk about for-profit organizations. A for-profit organization is exactly as it sounds; it is an organization that earns a profit. They earn their profit through sales/services, secure investments, or by raising capital by loans or equity. These organizations have fewer public requirements, as they answer only to their owners, shareholders, or private investors. They can use their profit however they see fit, as they have no legal obligations. When they use their profit, it tends to go to the shareholders, employees, owners, and whoever and however else they see fit. Measuring success in a for-profit organization is based on financial performance and growth. Popular for-profit organizations span all sectors, are readily available, and include brands like Google, NFL, Hulu, etc.
Now getting more into the weeds about nonprofit organizations; a nonprofit organization’s purpose is to provide benefits and help to the public. In terms of income, it is invested back into the organization, and they are IRS tax exempt too. Nonprofits are overseen by a board of directors. To see if a nonprofit is succeeding, one must measure the impact and effectiveness in achieving its mission and how many people they are helping. To keep the organization afloat, nonprofits rely on donations, grants, and fundraising because their profits cannot be distributed to anything expect furthering the organizations’ advancements. Nonprofit financial and operating information is open to the public, so donors can see their contributions being used. Since nonprofits have 501(c)(3) status, when an individual or business donates, they deduct qualified donations from their tax return. This means that whoever donates can subtract the amount they donated from their taxable income, which makes their tax bill smaller.
In terms of managing these organizations, for-profits are much easier to manage than nonprofits. This is the case because for-profits have more control over how they run and how they use their funds, while nonprofits have fund restrictions and must comply with strict reporting guidelines which can make it challenging to support long-term programs. Nonprofits also have the challenge of funding stability. Since they rely on donors and grants for funding, this revenue stream is unpredictable. One week you might have a lot of donors donating, and another week you might have none. Also, right now grants are very unpredictable as a lot of federal funding has been frozen, so many nonprofits are relying on donations which can be a tricky slope. Additionally, many nonprofits rely on volunteers to do a lot of the heavy lifting, so when nonprofits have a good base of volunteer’s things run smoothly, but when they do not that can cause problems.
Even though it can be challenging to run a nonprofit organization, when you have passionate people who want to help and make lasting change in the world it is extremely rewarding. This is exactly how it is at Yad Ezra.
References
Fraraccio, M. (2025, March 17). Nonprofit, Not-for Profit & For-Profit Organizations Explained.
Https://Www.uschamber.com/Co. https://www.uschamber.com/co/start/strategy/nonprofit-vs-not-for-profit-vs-for-profit
Cornell Law School. (2019). Non-profit organizations. Legal Information Institute. https://www.law.cornell.edu/wex/non-profit_organizations