A nonprofit organization[1] is a type of legal entity that operates primarily for the collective, public, or social benefit, rather than for the personal profit of its owners or shareholders. These organizations are characterized by their accountability, trustworthiness, and openness. They can apply for tax-exempt status which allows them to receive contributions that are tax-deductible for the donor. Nonprofits encompass a wide range of organizations, including political entities, schools, and churches. In the United States, there are over 1.5 million registered nonprofit organizations. They largely rely on various income sources such as donations, sponsorships, and government funding. Nonprofits face unique challenges such as balancing staff salaries with expenses for beneficiaries and competition for talent with the public and private sectors.
A nonprofit organization (NPO), also known as a nonbusiness entity ou nonprofit institution, and often referred to simply as a nonprofit (not followed by a noun), is a legal entity organized and operated for a collective, public or social benefit, as opposed to an entity that operates as a business aiming to generate a profit for its owners. A nonprofit is subject to the non-distribution constraint: any revenues that exceed expenses must be committed to the organization's purpose, not taken by private parties. An array of organizations are nonprofit, including some political organizations, schools, business associations, churches, social clubs, and consumer cooperatives. Nonprofit entities may seek approval from governments to be tax-exempt, and some may also qualify to receive tax-deductible contributions, but an entity may incorporate as a nonprofit entity without having tax-exempt status.
Key aspects of nonprofits are accountability, trustworthiness, honesty, and openness to every person who has invested time, money, and faith into the organization. Nonprofit organizations are accountable to the donors, founders, volunteers, program recipients, and the public community. Theoretically, for a nonprofit that seeks to finance its operations through donations, public confidence is a factor in the amount of money that a nonprofit organization is able to raise. Supposedly, the more a nonprofit focus on their mission, the more public confidence they will gain. This will result in more money for the organization. The activities a nonprofit is partaking in can help build the public's confidence in nonprofits, as well as how ethical the standards and practices are.
There is an important distinction in the US between non-profit et not-for-profit organizations (NFPOs); while an NFPO does not profit its owners, and money goes into running the organization, it is not required to operate for the public good. An example is a sports club, whose purpose is its members' enjoyment. The names used and precise regulations vary from one jurisdiction to another.