What is a Nonprofit?

There are many misconceptions surrounding the concept of charities and nonprofits. Most are familiar with these types of organizations but many don't understand or aren't aware of how they actually operate and function in the business world. The Giver’s Guide works with nonprofits frequently and we feel it is important for our readers to understand in depth what nonprofits actually are and their importance. 

In short, a nonprofit organization is an establishment that exists to serve a community or advance a social cause. Nonprofits raise money through donations, endowments, and grants and use those funds to support external causes. Nonprofits are granted tax exemption under section 501c(3) as they exist to serve the public good rather than generate profits for owners or shareholders. Nonprofits must comply with IRS regulations and disclose their finances to the public to preserve their tax-exempt status. 

In short, a nonprofit organization is an establishment that exists to serve a community or advance a social cause. Nonprofits are founded to provide for the public or their members. Nonprofits raise money through donations, endowments, grants, or sales and use those funds to support external causes. Nonprofits are granted tax exemption under section 501c(3) as they exist to serve the public good rather than generate profits for owners or shareholders. Nonprofits must disclose their finances to the public to remain with their tax-exempt status. There are many types of nonprofits, including charities and foundations. The difference is in how they receive their income. Nonprofits strictly benefit via revenues, donors, and public solicitation. At the same time, charities target giving to those in need and, like foundations, can receive their income from family or corporate entities.

More than 1.3 million nonprofits in the United States are commonly fundraising, researching, providing necessities for those in need, repairing the environment, educating, and inspiring everyone to do good for their community. We firmly believe in our power of serving our community, The Giver’s Guide is specifically dedicated to supporting nonprofit organizations.