Budgeting Basics and Beyond

24.16. Conclusion

A nonprofit is defined as a legal entity that does not conduct substantial commercial activity or earn a profit as its primary purpose. The goal of the nonprofit is typically to provide services. In nonprofit organizations, management decisions are intended to result in furnishing the best possible service given resource constraints; success is measured by how much service the organization provides and by how well these services are performed. Basically, the success of a nonprofit entity is measured by how much it contributes to the public well-being.

Nonprofit organizations include governmental and private nonprofit entities. The governmental category includes federal, state, and local governments. Within the private grouping, there is a key difference between charities, for which donor contributions are tax deductible, and commercial and membership organizations, whose donor contributions typically are not tax deductible. The former category includes health, educational, social service, religious, cultural, and scientific organizations. The latter category includes social clubs, fraternal organizations, labor unions, chambers of commerce, trade associations, and business leagues.