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Comparing for-profits to nonprofits

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The main difference between a for-profit corporation and a nonprofit corporation is what happens to the profit. In a for-profit company like Amazon, Google, United Parcel Service, or your favorite fast-food chain, profits are distributed to the owners (or shareholders). But a nonprofit can’t do that. Any profit remaining after the bills are paid has to be plowed back into the organization’s service programs, spent to strengthen the nonprofit’s infrastructure, or stored in reserve for a rainy day. Profit can’t be distributed to individuals, such as the organization’s board of directors.

What about shareholders — do nonprofits have any shareholders to pay off? Not in terms of a monetary payoff, like a stock dividend. Rather than shareholders, nonprofit organizations have stakeholders — they’re the people who benefit from the nonprofit’s mission and services to their target population (those in need, from animals to humans). These people are often called stakeholders because they’re committed to the success of the nonprofit, such as board members, volunteers, community partners, and the people whom the nonprofit serves directly and indirectly.

Nonprofit Kit For Dummies

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