Difference between Profit and

Non-Profit Organization
 Definition

• Nonprofit Organizations are those organizations which are incorporated not

for earning some income from its activities rather their primary motive is to
enable activities which are generally for aiding or advancement of the society
at large and are not required to pay taxes.
• For Profit Organizations are those entities which are incorporated with a
primary objective of earning economic and monetary benefits either directly
or aiding in that process.
 Point of difference
For nonprofit organizations, society comes first; personal motives come next. For-profit organizations, it’s just the
opposite. Other than the purpose of handling the profits, these two organizations are different in scope also.
For nonprofit organizations, the sources of revenue are subscription, membership fees, donation, etc. For-profit
organizations, the sources of revenue are selling goods and services. Even the seed capital for nonprofit organizations
come from the government grant, donations from HNI (high net-worth individuals), etc. Whereas, for-profit organizations,
the seed capital is usually provided by the partners or the owners of the business.
If we talk about financial statements, for nonprofit organizations, cash flow statements, income statements, and balance
sheets are used.
And if we think about nonprofit organizations, we use receipts & payments account, income & expenditure account, and
balance sheet as well.
In regards to taxes, for profit organizations needs to pay taxes. Nonprofit organizations are exempted from paying any
taxes. Since the profit-making organizations make profits for their own benefits, Government levy taxes on them.
But because nonprofit organizations make profits to help the society at large, they’re given the benefit of no tax payment.
The culture of these two types of organizations is also quite different. In the case of profit-making organizations, the
culture is all about deadlines, finishing projects as quickly as possible for clients, adhering to different KPIs (key
performance indicators). On the other hand, for nonprofit organizations, the organizational culture is quite different. The
culture values the contributions of the members and how much each member can contribute even beyond the daily
schedule of work.
In the case of profit-making organizations, the ideal buyers are targeted. Otherwise, the motto of selling to the right
audience will not be achieved. On the other hand, nonprofit organizations have a broad view of the audience. In most
cases, people can join, contribute, become members voluntarily.