Differences Between Non Profit Profit Organization Difference between

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 nonpecuniary 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 sociallyunacceptable distribution.

Governance as mission-guided stewardship