Differences Between Non Profit & Profit Organization

Difference between For Profit and Non Profit organizations can be divided into two categories: 1. Core Dimensions 2. Amplifying Dimensions

Core Dimensions 1. Social Dimensions “The Primary objective of a social enterprise is to maintain or improve social conditions in a way that goes beyond financial benefits created for the organization's funders”.

Social Objectives (Continued) Major Objectives of NGO are as follows: 1. Reduce conditions with socially undesirable side effects (Crime, Disease and Pollution Etc.) 2. Provide goods and service with socially desirable side effects (education and Health Etc.) 3. Create a safety net for the less fortunate and those in temporary distress. 4. Promote a more just distribution of benefits & Burden. 5. Advance Human rights

2. Social Method Non-pecuniary: Based on Non-monetary Motivations of workers and donors. Affiliative: Not a deal based relationship, continuous evolution of relationships. Altruistic: Giving other preference over yourself. Communal: Working for the whole Community and not individual benefits.

Amplifying Dimensions Sacrifice of financial return to funders Social Motivation of work force Below-Cost pricing to consumers Governance as mission-guided stewardship

Sacrifice of financial return to funders In NGOs the Donors do not expect financial returns. The financial altruism is an evidence of organizational priorities. Non profit cannot, by law, distribute economic return to the principals. Principals contribute for social objectives.

Social Motivation of work force Workers are motivated by the social mission of the organization. Volunteers is the clearest example of non- pecuniary rewards.

Below-Cost pricing to consumers Targeted consumers are unable to pay. Targeted consumers are unwilling to pay. Producers are unable to collect payments in any practical way. Charging full (or even partial ) cost is considered inappropriate. Full-cost pricing would result in a socially- unacceptable distribution.

Governance as mission-guided stewardship