Charity vs Non Profit
You might have encountered organizations asking for donations to support noble causes, such as disaster relief efforts or combating severe diseases like cancer and AIDS. These organizations are often referred to as charities or non-profit organizations. Although these terms may seem similar, they are not interchangeable. This article will explore the differences between charities and non-profit organizations based on their functions and features.
Non Profit
Don’t be misled by the name of an organization; even if it is a non-profit organization, it may not necessarily be a charity. A non-profit organization is essentially a business entity that does not generate profits. If there is a surplus, such organizations allocate it for salaries. The critical point to note is that a non-profit company does not report profits, meaning it is not there to make money.
Charity
A charity is an organization involved in activities such as relief operations or fighting against illiteracy, diseases, and other social causes. The money available to a charity is intended to be spent solely on these social causes. A charity raises funds through donations and typically has a workforce that is not salaried; workers often hold honorary positions and contribute voluntarily. Thus, it is evident that a charity is similar to a non-profit organization in the sense that it also does not make profits.
Key Takeaways
- One significant distinction between a charity and a non-profit organization is how they are taxed. While a non-profit organization is treated like any other ordinary company engaged in business activities, charities are granted special status by authorities and receive special concessions due to their social work for society.
- Another difference lies in their continuity. While a charity remains a charity forever, a non-profit company may change into a for-profit company in the future. The distinction between a non-profit organization and a charity allows many to exploit the public’s perception, making a lot of money and later converting into a for-profit company, which is unfortunate.
- In summary, although a non-profit organization may appear similar to a charity, there are significant differences. A charity is primarily involved in social causes like providing disaster relief and fighting epidemics and other severe ailments, whereas a non-profit organization is like any other company except that it does not report profits. While a non-profit organization distributes salaries to its employees (even the owner takes a salary), the workforce in a charity is voluntary and receives no compensation. It is essential to note that while all charities are non-profit organizations, not all non-profit organizations are charities.
