A non-profit organization is basically an organization that is not considered as a government agency or a business entity. It is an organization that is dedicated to pursue a specific mission, usually for the common good and not for profit. Here are some of the characteristics of a non-profit organization.

A Non-Profit Purpose

Unlike a business entity or organization, a non-profit's main purpose is to serve for the common good of the community rather than by trying to earn profits.

The purpose of a non-profit organization should be specified clearly and it should be clearly stated from the beginning on how their purpose, mission, or objectives may eventually benefit the public and the community, large and small alike. That is why some of these organizations are also known as public benefit corporations.

Non-Profit Earnings

Since a non-profit organization does not exist to earn profits, it does however gain a considerable amount through fund raising and other activities.

Whatever money is earned during such activities should be used only to advance the organization's mission and purpose.

Distribution of profits among individuals in the organization is prohibited. Individuals are only allowed to receive a salary and benefits package.

Whatever earnings there are in the non-profit organization should find its way back into running the organization.

Asset Ownership

A non-profit organization's assets do not belong to any individual or group of individuals inside the organization.

Unlike a for profit corporation, a non-profit's assets virtually belongs to the organization itself and cannot be distributed to any person or group.

In case of a dissolving non-profit organization, the assets can only be distributed to another non-profit entity.

Tax Exemption Status

Non-profit organizations generally enjoy a tax exempt status although this is not automatic. A non-profit may need to apply for tax exemption in order to attain such a status.

Since non-profits exist to serve for the common good of the public, being tax exempt only serve a good purpose.

But in order to attain such a status, the organization may have to comply with the rigid requirements set forth by the IRS for non-profits.