Browse Definitions :
Definition

non-profit organization (NPO)

Contributor(s): Matthew Haughn

A non-profit organization (NPO) is one which is not driven by profit but by dedication to a given cause that is the target of all income beyond what it takes to run the organization.

Non-profit organizations are often used for trusts, cooperatives, advocacy, charity, environmental and religious groups.

Many but not all NPOs have paid staff in management positions; almost all use volunteers. NPOs have no owners for surplus profits to go to and any surplus after operating expenses are used to further its goals instead of being distributed between members or employees of the organization. For an NPO to qualify as a government-recognized and tax-exempt organization it has to fulfill conditions set out by government agencies. In the United States, the IRS determines the validity and tax status of NPOs.

NPOs often rely on the dedication of employees who believe in their cause because it’s hard for them to compete with private sector wages. On the other hand, executive salaries are often quite high as a means of competing with equivalent positions in the private sector.

Funding can be an issue for non-profits as they often rely on external sources, such as donations. Scrupulous accounting, transparency and accountability are essential to continuation of operations, as mismanaged or misdirected funds could result in the loss of funding from both public and private sources and loss of status.

Non-profit and not-for-profit are both widely used to refer to NPOs but there are subtle differences. The United States Internal Revenue Service (IRS), for example, uses not-for-profit to refer to activities like hobbies in which revenues are not involved.

The terms NPO and NGO (non-government organization) are also often used interchangeably but they are different. NGOs are separate from government and require no government council but depend on the government for funding. However, most NGOs are also non-profit organizations.

This was last updated in January 2015

Continue Reading About non-profit organization (NPO)

Start the conversation

Send me notifications when other members comment.

Please create a username to comment.

-ADS BY GOOGLE

File Extensions and File Formats

Powered by:

SearchCompliance

  • California Consumer Privacy Act (CCPA)

    The California Consumer Privacy Act (CCPA) is legislation in the state of California that supports an individual's right to ...

  • compliance audit

    A compliance audit is a comprehensive review of an organization's adherence to regulatory guidelines.

  • regulatory compliance

    Regulatory compliance is an organization's adherence to laws, regulations, guidelines and specifications relevant to its business...

SearchSecurity

  • endpoint detection and response (EDR)

    Endpoint detection and response (EDR) is a category of tools and technology used for protecting computer hardware devices–called ...

  • ransomware

    Ransomware is a subset of malware in which the data on a victim's computer is locked, typically by encryption, and payment is ...

  • single sign-on (SSO)

    Single sign-on (SSO) is a session and user authentication service that permits an end user to enter one set of login credentials ...

SearchHealthIT

SearchDisasterRecovery

  • disaster recovery team

    A disaster recovery team is a group of individuals focused on planning, implementing, maintaining, auditing and testing an ...

  • cloud insurance

    Cloud insurance is any type of financial or data protection obtained by a cloud service provider. 

  • business continuity software

    Business continuity software is an application or suite designed to make business continuity planning/business continuity ...

SearchStorage

  • blockchain storage

    Blockchain storage is a way of saving data in a decentralized network which utilizes the unused hard disk space of users across ...

  • disk mirroring (RAID 1)

    RAID 1 is one of the most common RAID levels and the most reliable. Data is written to two places simultaneously, so if one disk ...

  • RAID controller

    A RAID controller is a hardware device or software program used to manage hard disk drives (HDDs) or solid-state drives (SSDs) in...

Close