what is a not for profit organization

A not-for-profit organization (NFPO) is a legal entity that does not distribute surplus funds to its members and is formed to fulfill specific objectives. It is similar to a nonprofit organization (NPO) in that it does not earn profits for its owners, and all money earned through pursuing business activities or through donations goes right back into running the organization. However, not-for-profits are not required to operate for the benefit of the public good, and they can simply serve the goals of their members. Not-for-profits are considered "recreational organizations," meaning that they do not operate with the goal of generating revenue as opposed to NPOs. Some examples of not-for-profit organizations include credit unions, trade associations, professional organizations, sports clubs, and social clubs. Not-for-profit organizations must apply for tax-exempt status from the IRS, including exemptions from sales tax and property taxes. Even tax-exempt not-for-profit organizations are required to remit payroll taxes on behalf of their employees, who also must report income from nonprofits to the IRS.