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Pickwick: Difference between non-profit and charity

Pickwick about the difference between a non-profit organization and a charity:

A charity needs to be non-profit, but not every non-profit organisation is automatically a charity.

A Non-Profit Corporation can’t pay the owner a dividend. He has to pay himself (or others) a salary instead, which he does ($88,150.22 since 2005, for salaries, payroll taxes, and temporary help). The rest of the money needs to be piled up on the company’s books: there’s an ‘emergency fund’ of $30,000 and accumulated ‘net income’ of $40,135.89 from 2004 to date. Other than that, a Non-Profit Corporation, which is NOT a charity, can do whatever it wants with its money like any other privately owned company. This includes the possibility of one day dissolving the company, or changing its status to For-Profit, and cashing in.

A CHARITABLE non-profit corporation will have a clause in its corporate bye-laws where corporate assets are dedicated to charitable purposes. It receives tax privileges, and in exchange comes under public supervision and is subject to reporting and disclosure duties. It will be much more difficult for individuals to profit, and if done right, even impossible.

The confusion is understandable because colloquially the terms ‘charity’ and ‘non-profit’ are sometimes used as if synonym. The problem here is that this misunderstanding might be intentionally exploited. Ultimately the proof whether an organisation is or isn’t a charity lies in the public register of charities, both on State and Federal level, neither of which contains an entry for this company.

So the logical conclusion is that either it is NOT a charity and claims that it is are false, or it IS a charity, in which case it has not complied with registration, reporting and disclosure duties. In either case, as a NON-charity, or as a NON-REGISTERED (unrecognised) charity, any charitable solicitations, for money or volunteers’ time, might be illegal.

16 Responses to “Pickwick: Difference between non-profit and charity”

  • dr harpal singh malhotra

    Very True:–
    every non-profit organisation is automatically NOT a charity.
    And Scenario has changed a lot people are making money on the name of NGO’s OR have NGO’S an instrument to have rebate on their taxes.

  • what is the difference between and NGO and a 503c3 nonprofitr organization? Are they one in te same?


  • What a shame that filing for non profit status has become a hustle.
    Yes, there are some serious groups out there, doing their work, but their reticence to explain how they spend their money, creates a climate that is incompatible with giving to ensure not being ‘taken”.

  • i agree,it is a shame that people use non profits as a hustle instead of its purpose..You reap what u sow..

  • thanks for enlightening me.. I sm plsnning to put up a non profit …

  • Tony Scott even made a fairly good short film of One of the Missing. ,

  • ok, i have a question-

    i volunteer for a youth hockey association, and am wondering if they are simply non-profit or if they are charity. the management (such as board members, hockey directors, etc.) are paid, coaches such as myself are not paid (except for some reimbursment costs), and the kids who play pay fees to the association. I know they can file as a non-profit, however i dont think they should be considered charity, since they do charge for their services. is this correct, or would they be considered a charity? also, is the difference between charity and non-profit a legal difference?


  • hey Jon
    the youth hockey association for which you volunteer is likely both considered a charity and a non-profit, and probably has the IRS 501(c)(3) tax exempt designation. Youth sports orgs, that promote the sport and fund raise for scholarships, equipment, and coaching fees, are quite typical “charities” that qualify for this federal tax exemption….even tho they are not feeding orphans, or doing other stereotypically charitable work.
    You can find a lot more information on what constitutes a public charity worthy of the 501c3 here:,,id=136459,00.html

  • Michael North east

    Hi All

    i am interested in setting up a company helping and training youth in bad areas of the north east, what would you lot say would be the best sort of company? regeneration and training?

    thanks Mike

  • Hey,
    So Im the president of a small group…so far we havent been seeking money donations,but now we’re at the point that we need funds to accomplish our goals. Does anyone know the correct steps to being able to start accepting donations? Do we need to file with the IRS even if we’re small group?

  • wow, i cant even tell you how wrong your entire post is. First of all, there are two types of non profits; public charities (which is the charity you were talking about), and private foundations, bot of which are held to the laws and legal channels the IRS sets. A private foundation can by no means do ‘whatever it wants with its money’. There are distribution laws and reports required by the IRS at the end of each year before the 990 for is due. And again, you are wrong about what is legal in regards to soliciting donations. Both public charities and private foundations are registered on the state and federal level, that is why they are able to offer tax write-offs for donations, thus the entire point of being a non profit. That is all that a non profit is. And AGAIN, it is in no way illegal to recieve donations if you are not a registered non profit. Say you offered a beggar $10, or you volunteer at a neighbor’s yard sale, both ideas that are donating money or services, you aren’t going to get arrested or frowned upon. Do a little research before you go and write an article thinking you are educating people on laws that you have no experience with. On another note, organization is spelled with a Z and not an S, and an organiZation’s BY-laws are not it’s BYE-laws.
    Nice job.

    • the one thing that does suck about non profits are tight ass idiots such as yourself thinking that they are so much smarter than everyone else.
      btw-depending on what country you are from – organisation can be spelled with an “s”.
      You’re a bloody fool – get a life.

  • “organization is spelled with a Z and not an S”

    Sweet Jesus! And you needed three and a half years to come up with THAT?

    • Pickwick???, in England (English) organisation is spelt with and “s”, in America, it is spelt “organization”. Just like your “color” American; and “colour” England. Do not insult other countries because you are by no means superior. If anyone has told you that in the past, I am truly sorry that they lied to you.

  • I have a question. I volunteer for an organization in our town that solicits goods that get auctioned off for scholarship money for our graduating seniors. The organization is NOT a 501c3 corporation, and therefore, truly it is not a Charitable organization, however, the money collected DOES in fact all go to graduating seniors. Is this organization a Non-Profit? How can the donors receive the “benefit” of their donation? Please help!!! Thank you!

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