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Difference Between Profit and Non-Profit Organisation

Our society wholly run by two kinds of organization viz. profit and non-profit organization.

What is Profit Organization?

An organization is set up for the motive of earning a profit is called Profit Organization. It surely develops a relationship between demand and supply as studied in Economics. Its example varies from a grocery shop too expensive restaurants. This kind of organization does not contribute exclusively to a community, unlike non-profitable institutions. The owners of the company get the maximum share of profit and other workers get their wages. A profit organization pays its share of tax yearly.

What is a non-profit organization?

An organization is set up solely for the betterment of society. The people associated with this kind of organization collects money for some social use, for example, the orphanage. There are many institutions that regulate each and every city for developing or providing an upper hand to those who have suffered a lot. For example in Jharkhand there were many tribal areas in which kids were deprived of education, women and men were at loss regarding job and sanitation.

A female started an NGO which started as a small room teaching kids. As time went on, the NGO started expanding and it collected money in the form of donations in the small amount. The female workers don’t demand any share of the fund which gets collected for providing their time. Instead, every single penny is used and again retained back in the institution.

Internal Revenue System (IRS) determines which non-profit organization will be qualified for tax and revenue redemption.

Difference between Profit and Nonprofit Organizations

  1. Asset Distribution in profit organization is entirely an entrepreneur’s property. In a non-profit organization, the fund is entirely subjected to the institution. There is another factor known as the transference of assets. For example, when a profitable organization like Nokia was dissolved due to the losses, it was sold to another company called Microsoft and the money was divided into the founders of Nokia. But for the non-profitable organization, the assets are transferred to another institution. There is no policy of dividing the money into its owners. The capital fund in profit organization is under the governance of the owner, but in non-profit organizations, the capital fund is organization property, not the founder’s property.
  2. Attracting employee is another vital factor which differs in both kinds of organizations. A profit organization ensures the money is given, such that people are attracted to the job. A non-profit organization does not sound fascinating to a fresher. But there are many people out there who want to serve the society and hence they work selflessly.

A popular myth about a non-profit organization is that it does not earn much or make a commendable profit. It makes money from performing various small acts, the way they handle their asset is different from the profit organization. They use it in such a manner that it goes on yielding them profit.

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