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Not-For-Profit Organisations

Any profit made by not-for-profit organisations is reinvested (put back) in the business. Any profit cannot be kept by the owners. There are lots of types of not-for-profit organisations and they can have different aims:

Charities

Charities

  • Charities, like Oxfam or Save the Children, are a type of not-for-profit organisation.
  • Getting charitable status lets a business get tax relief and lets it apply for certain grants. For a business to get charitable status, they must follow rules and regulations.
Social enterprise

Social enterprise

  • Social enterprises, like the Big Issue or TOMs are another form of not-for-profit organisation.
  • They are more similar to for-profit businesses in that they make a surplus through selling goods or services. This profit is reinvested to support the social enterprise’s aim.
Unincorporated association

Unincorporated association

  • Not-for-profit organisations can choose to be an ‘unincorporated association’ but, like sole traders and partnerships, the people who manage it have unlimited liability.
  • This means that they get no profit and they are legally responsible for all of the organisation’s debt.
  • Bigger organisations, like Oxfam, tend to be incorporated so that the people running it are protected from unlimited liability.
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