The differences between for-profit vs.

non-profit
1. Funding
One of the biggest differences between for-profit and non-
profit organizations is the manner in which they raise capital
for their ventures. Traditionally, for-profit companies seek
investors to help start their company and keep it growing.
Usually, these investors receive a share of any profits made
in return for their investment. Non-profits, by contrast, seek
donations rather than investments. Any individual,
organization or institution that gives money to a non-profit
will not receive a share of profits. It's a pure donation rather
than an investment.
2. Purpose
Another key difference between a for-profit and non-profit
organization is the institution's purpose or mission.
Generally, for-profit companies seek to provide a product or
service to consumers and make a profit by doing so. A non-
profit organization's purpose is to provide a service or benefit
to the community with no intention of earning a profit.
Instead, they're fully focused on improving the social aspect
of their community and not on making money.
3. Audience
In most cases, for-profit companies have a very specific,
defined audience they target with their product or service.
Many for-profit businesses perform extensive research and
analysis to find their ideal customer and then devote
resources to ensuring that a segment of the population
knows about the company's product or service. non-profit’s
usually have a much broader audience. Most must appeal to
a market that includes potential donors, the community the
non-profits serves, consumers who will purchase the non-
profits’ service or product and volunteers or other
stakeholders who work with the organization.
4. Leadership
The leadership committee that oversees the operations of
the company differs substantially from a for-profit company
to a non-profits organization. In a for-profit business, often
the top leaders have a firm and substantial financial stake in
the company's success. This group of leaders may be a single
owner, a group of owners or a compendium of stockholders.
These leaders are concerned primarily with increasing the
company's profits.
In a non-profit organization, the leadership committee is
often a board of directors who gain no financial benefit from
their affiliation with the company. Instead, they guide the
organization by considering how well the company meets the
outlined mission and find ways to improve community
outreach, recognition and donations.
5. Culture
The company culture in a for-profit company is often focused
on how to best improve sales and profits. Most
organizational discussions and the overall group mindset
centres on the best ways to meet financial goals. In a non-
profit organization, by contrast, the culture is often more
community-minded. Instead of discussing ways to make
more money, employees, volunteers and leaders spend time
brainstorming ways in which they can further benefit their
community and increase the social effectiveness of their
organization's efforts.
6. Taxes
Tax law differs substantially between for-profit companies
and non-profit institutions. In most cases, for-profit
businesses must pay taxes on their business endeavours and
profits as stipulated by the federal and state government.
Non-profit organizations must receive a special tax
designation from the government, usually by registering as a
501(c)3, but once they've done so, they receive tax benefits
not available to for-profit companies. When considering the
implications of taxation, it's always best to consult a tax
professional for the most up-to-date and applicable
information for your situation.
7. Staff
Generally, the staff for a for-profit company is made up of
paid employees, and potentially a few unpaid interns. The
employees who work for a for-profit business often do so in
order to earn a living for themselves rather than singularly
for a commitment to the company's cause or mission. non-
profit’s, however, often operate with a team of volunteers
and a few paid employees. These volunteers give their time
with no compensatory benefit because they believe in the
work the organization does and want to provide a service to
their community.
8. Ownership
Another key difference between a for-profit and non-profit
organization is ownership. For-profit companies can have a
number of different ownership models, but the physical and
intellectual property the company uses is technically owned
by whoever maintains control of the company. In a non-profit
organization, there are no true owners. It's a publicly owned
entity, and none of the physical or intellectual property the
organization uses can be taken by a member of the
organization as compensation for their work with the
institution.
9. Accountability
Since most non-profit organizations are tax-exempt, they're
required to file information about their financial and business
practices with local and federal organizations for
accountability purposes. Usually, non-profit’s do this annually
with a document called IRS Form 990. For-profit institutions
are not required to file accountability information since they
pay taxes on their earnings and profits. As always, it's best to
consult with a tax professional when determining how to
maintain compliance.