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1. Definition:
• Non-Profit Organization or NPO is a legal
entity formed by a group of persons to
promote cultural, religious, professional, or
social objectives. (not business)
• Nonprofits can take the form of anything
from soup kitchens, homeless shelters, to
labor unions, museums, universities, and
hospitals.

2. • A Non-profit organization can generate
revenue, but this generated revenue is not
divided among shareholders but used to
promote or expand the organization.
• A non-profit is usually tax-exempt.

3. Functions:
The function of a nonprofit depends on the goal
of the organization.
There are many possible functions of a
nonprofit:
• Charity or Social Welfare
• Religious Functions
• Trade
• Education

4. Charity or Social Welfare
Charity and social welfare serve to provide
aid and relief to those without access to such
necessities.
An example is a women’s shelters where women
and children can seek refuge from abusive
situations, with the organization providing direct
relief and shelter for those in need.

5. Religious Functions
Religious functions are often directed to
sharing a certain belief and working to do
good in the name of said belief.
There are religious organizations which provide
charitable services to their communities, either
through the existing organization or by
establishing a new, separate nonprofit
organization to meet the needs of the people.

6. Trade
• A professional association (also called Trade
organization, professional organization,
or professional society) is usually a
nonprofit organization seeking to further a
particular profession, the interests of
individuals engaged in that profession and the
public interest.
• Examples:
‫غرف‬
‫التجارة‬
‫والصناعة‬
‫والزراعة‬
-
‫اتحادات‬
‫العمال‬
-
‫نقابات‬
‫أو‬
‫جمعيات‬
‫واتحادات‬
‫متخصصة‬

7. Education
• Education nonprofits seek to improve the
conditions through education. Non-profit
educational organizations seek to educate
students in places that need them most, like
in rural districts.
• Example: ‫المقاصد‬

8. Difference between Nonprofits and For-
Profits
• Nonprofits Use All Revenue to Further
Advance the Organization:
For-profits make excess revenue to use it as
income for the founders and members.
Nonprofits use all revenue and resources to
further advance the organization towards
attaining goals.

9. • Nonprofits Benefit Social Welfare:
A nonprofit organization is formed for the
purpose of benefitting societal welfare seeking to
answer a humanitarian need.
A for-profit organization typically seeks to
generate income for founders and the
employees who work under them.

10. • Nonprofits Rely on Donations and Grants:
For-profit companies rely on sales revenues in
order to sustain themselves.
Nonprofit organizations rely on donations and
grants from people, other organizations or
government entities.

11. • Nonprofits Are Tax Exempt:
Another major difference lies in taxation. For-
profit organizations are taxed in a number of
ways, while nonprofits can register for tax
exemption.

12. Frequently Asked Questions
• What is the difference between a non-profit
and charity?
In the simplest terms – not all nonprofits are
charities, but all charities are nonprofits.

13. • Is there a difference between a nonprofit and a
not- for- profit?
The terms “nonprofit” and “not-for-profit” are
often used interchangeably. Both are tax
exempt. Nonprofits and not-for-profits use
their incomes differently.
Use of income: Nonprofits and not-for-profits
are not allowed to make a profit, but they
might generate income.

14. Any income generated by a nonprofit must be
returned to the organization to accomplish the
goals for which it was established.
Any income generated by a not-for-profit may
be distributed to its members. For example, a
not-for-profit may pay trip expenses for a
member who participates in fund raising.

15. • In non profits, the salary employees earn
must be independent of the fundraising the
organization make.
• In not-for profit the members may have the
opportunity to benefit from the fundraising
efforts.