What is a Non-Profit Organization?

Most people have heard of “nonprofit organizations,” and you probably associate the phrase with charitable and service-based groups in your community. But what is a nonprofit, and how does an organization qualify as one? We’re answering a few of the most commonly asked questions about nonprofit organizations below:

What is a nonprofit organization and how does it work?

A nonprofit organization is a group that is considered a public charity and is tax-exempt under the Internal Revenue Code’s Section 501(c)(3) because they are intended to provide services and benefits to the general public. Unlike regular businesses, which are structured to produce a financial profit, nonprofits are instead focused on offering the public (or members) benefits, services, and/or aid.

Community (public) and private foundations are both included in the nonprofit categorization, though each type is regulated according to slightly different tax rules.

What is a not-for-profit organization?

A not-for-profit organization is simply another term for a nonprofit. Both terms can be used interchangeably.

What qualifies a nonprofit?

In order to qualify as a nonprofit, an organization but be formed with the intent to directly benefit either the public, a specific group of people, or the members of your nonprofit.

What kinds of nonprofits exist?

Under Section 501(c)(3), there are 10 broad categories of organizations (and over 600 subcategories) that can qualify for tax-exempt status. Nonprofits include everything from small, local groups like your local animal shelter to nationwide organizations like Volunteer for America. Examples of nonprofits include religious groups, political organizations, charitable and service groups, and membership-based clubs.

The largest nonprofit category includes those that provide human services, counting for more than 35 percent of all organizations. Other common nonprofit missions include education, the arts, health, and the environment.

Volunteers of America: One of the best-known nonprofits in the U.S.

For more than a century, Volunteers of America has operated hundreds of different human services programs across the U.S., making an impact in the lives of 1.5 million people every year. Thanks to the efforts of more than 60,000 volunteers working in all fifty states, our organization is able to provide much-needed support and aid to veterans, the elderly, at-risk youth, the homeless, and many other populations.

Learn more about how you can become part of one of America’s largest, longest-running nonprofits by contacting your local Volunteers of America office today.