what is a non profit business

A nonprofit business, also known as a nonprofit organization (NPO), is a legal entity organized and operated for a collective, public, or social benefit, in contrast with an entity that operates as a business aiming to generate a profit for its owners. Nonprofits are subject to the non-distribution constraint, which means that any revenues that exceed expenses must be committed to the organizations purpose, not taken by private parties. Nonprofits may receive funding from individuals, corporations, government entities, or other entities. To qualify as a nonprofit, the entity must serve the public good, meet filing requirements, be established as a 501(c)(3) or similar-type organization, and not earn profit for its owners. Donations made to a nonprofit organization are typically tax-deductible to individuals and businesses that make them, and the nonprofit itself pays no tax on the received donations or on any other money earned through fundraising activities. Nonprofits run like a business and try to earn a profit, which does not support any single member.