Non Profit Corporations vs For Profit Corporations

Non-profit corporations have a similar structure than other types of corporations. Both entities will have leadership as well as employees that answer to those in management. Corporations will likely be for profit, while non-profit corporations have income which is then funneled back into the operations of that organization. Those monies are then used to meet the goals of the non-profit corporation, as well as paying the salaries of those employed there.

Non-profit corporations will likely take income and distribute it as a percentage into several different pools. The first pool will be the fees required to fund the operations of the organization, such as administrative fees and costs. The next pool will include the materials and work necessary to meet the goals of the organization. For example, this pool would include monies for supplies in the field in organizations that assist individuals after a natural disaster. The last pool would be monies used to pay the salaries of the management and employees of that organization.

The monies brought in by a corporation, on the other hand, are used in a different way. The salaries of those that work there must be paid with the profit of the company, and those salaries would not likely be capped as they generally are in an non-profit corporation. In addition, the profits of the company must pay for administrative costs and supplies, as well as pay for the building where the company exists.

NEXT: Starting A Non-Profit Organization