Nonprofits vs. For-profits
Comparing Nonprofits to for-profits
Often potential clients will contact us wanting to start a nonprofit when their idea aligns with a for-profit. What's is the difference between a nonprofit and a for-profit? The simplest answer to compare the two is what you do with the #profit.
For-profit organizations such as Chick-fil-A, Apple, and Starbucks, revenue is distributed to the owners, including shareholders. Nonprofits such as State Fair of Texas, Child Care Group, YMCA, are forbidden to distribute profit.
Another important note, is no individual can own a nonprofit organization. Nonprofit earnings must go towards the organizations service programs, infrastructure, or kept in a savings account. Individuals such as your board of directors can't be paid.
One of the biggest myths are nonprofits can't make a profit. In actuality, nonprofits need to generate revenue that exceeds its expenses to support its service programs. This is how nonprofit organizations survive long-term. The nonprofit can thrive by receiving revenue from a variety of sources such as charge a fee for its services, fiscal sponsors, city and county contracts, grants and individual donors.