In this episode of Coffee with Carl, attorney Carl Zoellner clears up the difference between nonprofit vs.“not-for-profit” organizations.
Updated August 20, 2020
You’ve probably heard people refer to “nonprofits” vs. “not-for-profits.” Unsurprisingly, many use these terms interchangeably, but they are not the same. So, what’s the difference?
There’s a lot of confusion surrounding this distinction. Although many use the words “nonprofit” and “not-for-profit” as if they’re the same thing, these are two different terms that mean two different things.
Ultimately, the real difference comes down to the level of formality. When it comes to nonprofit vs “not-for-profit,” it’s important to keep in mind that acquiring a “not-for-profit” distinction involves fewer formalities. As a result, being a “not-for-profit” does not qualify the organization for the same tax benefits as nonprofits.
Thus, the IRS vets nonprofits more formally. Qualifying as a nonprofit involves an application and review process with the government and state. This results in nonprofits receiving better tax benefits, including donation basis and the ability to work with state governments.
If you’re interested in starting a nonprofit, schedule your complimentary Strategy Session with us today. Our experienced attorneys are familiar with creating IRS-qualified nonprofits that receive all possible tax-advantaged benefits.
Watch as Carl demystifies the differences between “nonprofit” and “not-for-profit” organizations.
As always, take advantage of our free educational content and every other Tuesday we have Toby’s Tax Tuesday, another great educational series. Our Structure Implementation Series answers your questions about how to structure your business entities to protect you and your assets. One of my favorites as well is our Infinity Investing Workshop.
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