Nonprofit Operational Manual

Home Acknowledgements

What Is A Nonprofit ?

For us at the Nigeria Network of NGOs, we define a nonprofit as an organisation that operates for the good of the public, does not operate for the profit, personal gain or the benefits of people who run it. A nonprofit can make profit but any profit made must be used for the purpose to which the organisation is founded and must pay applicable taxes on any business or trade conducted outside of its purpose.

There are five distinctive features that make up a nonprofit:

  1. It must be an organisation (institutionlaised to some extent, although not necessarily legally registered or constituted)
  2. It must be self-governing (fully responsible for the economic risks and rewards of the organisations operations)
  3. It must be non-compulsory in nature (involving meaningful degree of free choice on the part of individuals working for it or participating in its activities)
  4. It must be significantly limited in its distribution of surplus (profit), meaning prohibited by law , governing document or set social custom from distributing any of any surplus it generates to its directors, employees, stakeholders
  5. It must be private (not controlled by government).