Not-for-profit organizations do not earn profits for their owners. All of the money earned by or donated to a not-for-profit organization is used in pursuing the organization’s objectives and keeping it running; income is not distributed to the group’s members, directors, or officers.

Typically, organizations in the nonprofit sector are tax-exempt charities or other types of public service organizations; as such, they are not required to pay taxes. Some well-known nonprofit organizations include the American Red Cross, the United Way, and The Salvation Army.