Non-profit organization

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Non-profit organization

A Non-profit organization (pronunciation: /ˌnɒnˈprɒfɪt ɔːrɡənaɪˈzeɪʃən/) is a type of business entity that uses its surplus revenues to further achieve its purpose or mission, rather than distributing its surplus income to the organization's directors (or equivalents) as profit or dividends. This is known as the non-distribution constraint. The decision to adopt a non-profit legal structure is one that will often have taxation implications, particularly where the non-profit seeks income tax exemption, charitable status and so on.

Etymology

The term "non-profit" comes from the fact that these types of organizations are not meant to generate profits for personal gain. Instead, any money they make is used to further their specific cause. The term "organization" refers to a group of people who have come together for a common purpose.

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