Charity vs Non Profit
You must have come across organizations appealing you to donate for a noble cause such as relief operations in situations of natural or man made disasters or to fight against serious diseases and ailments such as cancer and AIDS. These are variously called as charity or non profit organizations. Though these are similar terms, they are not interchangeable. This article will try to find out the differences in a charity and a non profit organization on the basis of their functioning and features.
Non Profit
Do not confuse by the name of an organization. Even if it is a non profit organization, it may not actually be a charity. A non profit organization is just another name for a business entity except that it does not make profits. If there is a surplus, such companies set it aside for salaries. The only point to note is that a non profit company does not report profits, or in other words, it is not there to make money.
Charity
A charity is an organization that is involved in activities such as relief operations or to fight against illiteracy, ailments and other social cause. The money at the disposal of a charity is meant to be spent on these social causes only. A charity raises money through donations and has a workforce that is not salaried; workers often hold honorary posts and offer their contribution voluntarily. Thus it is clear that a charity is similar to a non profit organization in the sense that it too does not make profits.
Difference between Charity and Non Profit
One notable difference between a charity and a non profit organization is the way they are taxed. While a non profit organization is treated as any other normal company involved in business activities, charities are accorded special status by the authorities and get special concessions because of the social work they do for the society.
Another difference lies in their continuity. While a charity is a charity for ever, a non profit company may change over to a for profit company in future. The distinction between a non profit organization and a charity makes many to take advantage of common perception in the public and they make a lot of money and later convert into a for profit company which is a shame.
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In brief: • Though a non profit organization ostensibly seems to be much like a charity, it is much different. • A charity is mostly involved in social causes such as providing relief in disasters and fighting epidemics and other serious ailments, a non profit organization is just like any other company except that id does not report profits. • While a non profit organization distributes salaries to its employees (even the owner takes a salary), work force in a charity is voluntary in nature and receives no compensation. • While all charities are non profit organizations, not all non profit organizations are charities.
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It is quite important that people understand the differences between the two so it’s good to see this clarification.
It is very important to understand the difference between the two.
Charities do employ staff, and many do not rely on donations, using sponsorship, grants, government support or commercial activity to operate. (at least in the UK)
In the USA, Charities also have salaried employees and they also may participate in commercial activities. They must have a mission with a social cause and be registered with the IRS as a 501 (c).