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When viewing the structures of organizations, it is always important to identify the factors which differentiate the two. A For-Profit organization and a Non-Profit organization may seem similar in some senses but are two different types of structures.
A for-profit organization is one whose primary purpose is to generate a profit. The intent is to bring in funds that exceed the operating expenses of the organization. By doing so, the for-profit organization demonstrates their ability to generate positive income. Within this type of establishment, the owners are in control of the generated funds and can choose to allocate them as they wish. There is no distinct guidance related to the surplus of funds.
A nonprofit organization is one who that exists within a community to serve a prescribed role and function. The purpose and role can vary must be defined and meet the specific needs identified. The entity is organized and do not exhibit operational profit. Nonprofit organizations are also classified as self-governing and abide by specific state laws.
Nonprofits operate in a manner where there is no excess revenue or expenses which are beneficial to the owners of the nonprofit. They are established to serve a public benefit. “Most nonprofit organizations, however, are open systems and depend on external environments.” (Worth, 2017).
While nonprofit organizations have a commitment to public service, they operate in the private sector rather than as agencies of government (Worth, 2017). This designation is different from other organizations such as governmental or privately owned entities.