For-profit organizations, such as a corporation, and nonprofit organizations function and hold assets in a different manner. They each need to generate revenue, but do so in contrasting ways.
Function
A corporation will work for the benefit of the owner or owners, chiefly by producing income. A nonprofit organization performs a social good or offers a service to the community, so it often has a different perceived value.
Distinction
The primary distinction between a corporation and a nonprofit is profit. A nonprofit is organized under rules that forbid the distribution of profits to owners. Although both profit and nonprofits need to generate money to survive, the way they acquire funds is different. Corporations receive revenue from the services or products they sell and can get funding from investors and loans. Unlike corporations, nonprofits are eligible for government and private grants, as well as tax-exempt charitable contributions from individuals.
Taxes
Nonprofits are exempt from paying state and local taxes, while for-profits, such as a corporation, pay business taxes. Both are required to document any source of income received, as well as expenses, on their tax statements.
Structure
Both nonprofits and corporations have rules regarding how they are governed and will have a board of directors or an executive director. A corporation and a nonprofit will require votes by the board on major decisions.
Dissolution
Investors can use assets, money or even talent to start a corporation. If the corporation is dissolved, its owners can receive some of the funds. A nonprofit will also get assets, money or talent, but the board of directors will not receive funds if the nonprofit dissolves.
