Definition of Nonprofit Organization

Despite different naming framed along the years
and in different countries according to different
traditions, a distinctive feature of every nonprofit
organization is the prohibition, or limit, as in the
case of some specific organizations like social
cooperatives and social enterprises in Europe,
from distributing their assets or surpluses regardless
of the presence or absence of tax breaks.
A nonprofit organization finds its essence in having
the mission of producing and delivering public
goods together with advocacy actions, having
as inspiring mission, a social objective rather than
the search for profits. A nonprofit organization
belongs to an institutional sector between state
and market.
Introduction
Private organizations having the mission of delivering
public goods produced neither by the market
nor by the public system, which fulfill both economic
and social missions and pursue a general
interest, and whose final objective is not the redistribution
of profit, have always existed. In the last
few decades they have, however, increasingly
become the object of specific attention, due to
the increase in both their number and different
fields of intervention.
Since the early 2000s, at an institutional level,
the necessity has been recognized of considering
these “new” organizations within a different specific
institutional sector from those of the public
and the private market. This has triggered the
search for a generally accepted definition for
these organizations. The point is that, considering
the different traditions developed in Europe and
North America, as well as the development, since
the second half of the twentieth century, of such
organizations also in developing countries, there
is not yet a unique univocal definition.
Some basic features have been distinguished
and their fields of activity have also been clearly
defined as the 12 described by the International
Classification of Nonprofit Organizations
(Salamon and Anheier 1997). However, it is not
easy to have a “simple common label” agreed
upon at an international level, due to the fact that
over the years this bewildering array of entities,
such as hospitals, day care centers, universities,
social clubs, sports clubs, grassroots development
organizations, environmental groups, self-help
groups, religious congregations, job training centers,
human rights organizations, community
associations, have been variously known as
belonging to the “nonprofit,” the “voluntary,” the
“civil society,” the “third,” the “social economy,”
the “NGO,” or the “charitable” sector. All these
different terms are derived from different traditions
in different countries and underline specific
aspects. After the alignment of the principal
aspects regarding definitions both at institutional
and academic level, this entry reviews all the
different common appellations reading them
according to cultural traditions and general
contexts.