non-profit vs. not-for-profit - what's the difference?

http://www.wausaudailyherald.com/apps/pbcs.dll/article?AID=/20070904/WDH0101/709040392/1581/WDHnews

Wisconsin's not-for-profit hospitals provided $202 million in such charity care in 2006, a 27 percent increase from the previous year, according to a new analysis by the Wisconsin Hospital Association.

I know there must be or the hospital would use the term non-profit - what's the angle?

We are having a public forum today at 4 to talk about the Healthy Wisconsin plan - it's a program to make sure that all the want health care can get it.

I know that I work for a non-profit sort of - we are bifurcated so that half of us can benefit from non-profit status while the other half does seek out compensation for services provided. I know that we aren't the only ones with this set up.

Bryant
Check it out --> http://politicalcomment.blogspot.com

Non-profits derive the bulk of their funding through charitable contributions. For example, the budgets of the American Heart Association, the Make-A-Wish Foundation or the Methodist church down the street come through contributions.

Not-for-profits derive the bulk of their funding by operating a business. They provide a service (in this case, medical care) as a charity and charge just enough to cover operating expenses. Very commonly, these businesses offer a sliding scale, with those less able to pay being charged less than cost and those able to pay more making up the difference. If they have sufficient resources (ie endowments, annual fund raising drive, etc.) they usually lower what they charge everyone.

There is no legal distinction between non-profit and not-for-profit; both can qualify as 501(3)(c) corporations under the US Tax Code. The difference between them is their business model and source of operating funds.

"Nonprofit" describes organizations. "Not for profit" describes their activities. The Legal Aid and Defenders Association, for instance, is a nonprofit organization dedicated to providing not for profit legal services to the poor and underserved.

The charitiable hospitals mentioned by the OP are, I expect, organized as 501(c)(3) corporations. Their business model is one of a not-for-profit, ie they operate as a business which lowers what they charge for lower income patients. The example you cite operates in the same fashion. Both not-for-profit hospitals and not-for-profit legal assistance operate under a fundamentally different model than a "classical" non-profit which relies on donor generosity rather than business income.

Nonprofit=organization itself
not for profit = services they provide

Legal aid is funded by Bar fees and donations, not by charging legal aid clients "break even" prices. So it has nothing to do with "business model".

Of course, this is all semantics. There is no legal distinction between the two terms.

to generate revenues through non-donor means that I think would be considered classically non-profit by almost anyone - they incude community heath centers, some preschools and others.

All of the organizations incorporated under section 501(c) of the IRS code are not permitted to accrue profit to private individuals such as owners, stockholders, etc.

Different provisions allow the excess of revenues over expenditures to be applied in different ways, but the commonality is that they must all accrue to the good of the cause for which the organization was incorporated, be that the activities of a fraternal society, the societal benefit of a charity, etc.

These organizations are called, variously, non-profit, not-for-profit, non-governmental organizations, charities, etc.

Not-for-profit is a fairly recent semantic invention and I think it's applied by people who want in some way to distinguish their organization from some of the negative connotations that have accrued to the term "non-profit." Non-profit, in some circles, carries the idea that an organization is sloppily run, unbusinesslike, inefficient, wasteful of resources, blah-blah-blah. "Not-for-profit" sounds all technical and businesslike. Big institutions seem to prefer it.

It's all havers, if you ask me.

grumpily,
Bright who hasn't had her second cup of coffee yet

that they can make the huge salaries that they do and still call it non-profit.

I would guess it has more to do with your impression of what a non profit is, rather than what a non profit actually is.

There is nothing about being a non profit that implies staff would be paid significantly less than market for similar work. The organization still doesn't have owners that profit from its business.

The one oddity, IMO, is non profits like hospitals that in almost every way function more like for-profits.

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However, there is a difference in what code of 501(c) they are registered as. 501(c)(3) is a charitable organization like a church, and donations to them are tax deductable to the individual. I work for a 501(c)(6), we are a membership organization, and take in dues. We are a non profit, but the money paid to us in dues is not considered a charitable contribution.

I don't remember the specific differences, but not-for-profit was designed for things like membership organizations that shouldn't be taxed like businesses, but were not charitable organizations. Dues and contributions are not tax-deductible (unless business-related). The organization does have to watch how much it takes in and where it comes from, although it's not required to give any away.

Non-profits are charitable, educational, religiou, etc, organizations that are also not taxed but contributions are tax-deductible. They have a lot more paperwork involved in maintaining this status, and also have to watch how much they take in, how much they give out, and just where the income comes from.