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

SearchCompliance

  • compliance framework

    A compliance framework is a structured set of guidelines that details an organization's processes for maintaining accordance with...

  • regulatory compliance

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

  • privacy compliance

    Privacy compliance is a company's accordance with established personal information protection guidelines, specifications or ...

SearchSecurity

SearchHealthIT

  • telemedicine (telehealth)

    Telemedicine is the remote delivery of healthcare services, such as health assessments or consultations, over the ...

  • Project Nightingale

    Project Nightingale is a controversial partnership between Google and Ascension, the second largest health system in the United ...

  • medical practice management (MPM) software

    Medical practice management (MPM) software is a collection of computerized services used by healthcare professionals and ...

SearchDisasterRecovery

  • crisis management plan (CMP)

    A crisis management plan (CMP) outlines how to respond to a critical situation that would negatively affect an organization's ...

  • disaster recovery (DR) test

    A disaster recovery test (DR test) is the examination of each step in a disaster recovery plan as outlined in an organization's ...

  • business continuity plan (BCP)

    A business continuity plan (BCP) is a document that consists of the critical information an organization needs to continue ...

SearchStorage

  • kilobyte (KB or Kbyte)

    A kilobyte (KB or Kbyte) is a unit of measurement for computer memory or data storage used by mathematics and computer science ...

  • megabytes per second (MBps)

    Megabytes per second (MBps) is a unit of measurement for data transfer speed to and from a computer storage device.

  • zettabyte

    A zettabyte is a unit of measurement used by technology professionals and the general public to describe a computer or other ...

Close