What defines a nonprofit organization?

A nonprofit organization is defined as one that operates primarily for a purpose other than generating profit. Its main objective is to serve a social, educational, charitable, or other community-oriented mission rather than to maximize financial returns for owners or shareholders. Nonprofits can receive funding through donations, grants, and various fundraising activities, and any excess revenue they generate is reinvested back into the organization to further its mission rather than distributed to individuals.

The focus on a mission-driven approach allows nonprofits to contribute to society in various ways, such as addressing community needs, providing education, or supporting the arts. This commitment differentiates them fundamentally from for-profit entities, which seek to deliver profits to their owners or shareholders.