What is a Nonprofit?

We hear the phrase " non-profit" all the time-- but what exactly does this mean?  What criteria does it require to constitute as a non-profit?

United Way. Big Brother, Big Sisters of American, or Make a Wish-- these are some examples of large, nationally known non-profit organizations.  

What do all of these groups have in common as a non-profit? It means they're tax-exempt as a public charity. Ever see the note 501(c)(3) next to an organization or article about a cause? That refers to an IRS (Internal Revenue Code Section that states that a public charity like that does not have to pay any taxes because they are providing services, goods, supplies, to the community.

Community foundations and private foundations also fall under the 501(c)(3) jurisdiction as well and include organizations that are centralized to a certain area of the US such as NY Cares, Do Good LA, and Chicago Abused Women Coalition.  The size of a nonprofit can range from a nationally known one (like the above discussed) to a smaller scaled one, one of a couple of people. Regardless of the size, they all have something in common: they're working together, on usually a very tight budget, to make good things happen in this world and your community.

There are nearly thirty types of organizations that fall under the "blanket" of what we consider a non-profit organization. Each type of organization has a different set of taxes they are exempt from and guidelines or criteria they must adhere to.

Nonprofit organizations are divided into the following sectors (or categories):


Human Services




Humanities (Arts, Culture, Music)

Public/Social Benefits

Foreign and International Affairs

Non-profit organizations have an array of rules, guidelines, and stipulations for their events, fundraisers, and campaigns. It's also recommended as a supporter of a non-profit to truly know the organization well, what they stand for and their vision for the future before dedicating your time, effort, and money to a particular one.  With over 1.5 million nonprofit organizations registered (Source: NCCS) in the US, you'll find this can be an overwhelming, but necessary task as a supporter.

"For me, it boils down to three questions: Do you care about the cause or the mission that the nonprofit is addressing; does the information you have to give you confidence that the nonprofit is effective in their work; and do you believe that the people leading the nonprofit are capable and trustworthy?"- Kate Barr, CEO of the Nonprofit Assistance Fund  (Source: National Council of Non-Profits)

We've touched on the basics of a non-profit and what it means to constitute as one. What is a cause you feel strongly about? What nonprofit are you looking towards supporting, or perhaps starting?