A
nonprofit organization (abbreviated
NPO, also
not-for-profit[1]) is an
organization that does not distribute its surplus funds to owners or shareholders, but instead uses them to help pursue its goals
[2]. Examples of NPOs include charities (i.e.
charitable organizations) ,
trade unions, and public
arts organizations. Most governments and government agencies meet this definition, but in most countries they are considered a separate type of organization and not counted as NPOs.
Whereas for-profit corporations exist to earn and distribute taxable business earnings to shareholders, the nonprofit corporation exists solely to provide programs and services that are of public benefit. Often these programs and services are not otherwise provided by local, state, or federal entities. While they are able to earn a profit, more accurately called a surplus, such earnings must be retained by the organization for its future provision of programs and services. Earnings may not benefit individuals or stake-holders.[3] Nonprofit organizations may put substantial funds into hiring leadership and management personnel. In the past many nonprofits considered this to be unreasonably businesslike and money-focused, but since the late 1980s there has been a growing consensus that nonprofits can achieve their missions more effectively by using some of the same methods developed in for-profit enterprises. These include effective internal management, ensuring accountability for results, and monitoring the performance of different divisions or projects in order to make the best use of their funds and people. Those require management and that, in turn, begins with the organization's mission.[4]
NPOs are often charities or service organizations; they may be organized as a not-for-profit corporation or as a trust, a cooperative, or they may be purely informal.
Sometimes they are also called foundations, or endowments that have large stock funds. A very similar organization called the supporting organization operates like a foundation, but they are more complicated to administer, they are more tax favored, and the public charities that receive grants from them must have a specially determined relationship.
