Non-Profit
Business Management: IB Diploma, topic 1.2.3
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, 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 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
- 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.
Test yourself on Non-Profit
What are charities like Oxfam?
What do the people who run 'unincorporated associations' have?
What are some types of not-for-profit organisations?