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Not-For-Profit Organizations: Types & Examples

Not-For-Profit Organizations: Types & Examples
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  • 0:00 Not-for-Profit Organizations
  • 1:11 Organization Types
  • 2:41 Examples
  • 3:24 Lesson Summary
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Lesson Transcript
Instructor: Michael Cozad

Michael is a financial planner and has a master's degree in financial services.

This lesson will give an overview of not-for-profit organizations. The different types of not-for-profit organizations will be given and examples will be explored.

Not-for-Profit Organizations

Perhaps you have donated time or money to the American Red Cross or your church. These organizations are considered not-for-profit organizations. This isn't to say, however, that the ARC or your church cannot make a profit. Not-for-profit organizations can earn profits - just not for their owners. What is meant by this is that any profits earned must be used for the organization's objectives.

Not-for-profit organizations can still hire and pay staff as do for-profit organizations. Mainly, however, not-for-profits utilize volunteers to control costs. Not-for-profits don't have owners as for-profits typically do; rather, they're owned by themselves. Like for-profit organizations, not-for-profits typically have a board of directors.

Another difference is that not-for-profit organizations typically apply for tax-exempt status. This status grants the organization exemption from most forms of taxation (a main type of taxation typically avoided by tax-exempt organizations is sales tax). Not-for-profit status also enables these organizations to obtain funding, such as grants.

Organization Types

There are a lot of not-for-profits. A few of the more prominent not-for-profits include:

  • 501(c)(1) - Corporations organized under Act of Congress, such as Federal Credit Unions
  • 501(c)(3) - Religious, educational, charitable, scientific, and literary organizations
  • 501(c)(4) - Civic leagues, social welfare organizations, and local associations of employees
  • 501(c)(6) - Business leagues, chambers of commerce, and real estate boards

Do you bank with a federal credit union? It is most likely a 501(c)(1) organization. If you want to surprise the teller, ask the next time you go in!

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