What is the difference between ‘not-for-profits’ and ‘non-profits’?

July 17th, 2010 by under Progyan Basu. No Comments.

In her recent book, “Zilch: The Power of Zero in Business”, Nancy Lublin makes a very interesting observation. She makes a clear distinction between ‘not-for-profit’ (NFP) businesses, such as Habitat for Humanity, and ‘non-profits’, such as most US airlines. Successful not-for-profits, while not attempting to make profits, have a clear objective to which its employees and volunteers have a personal commitment. Typically, the successful NFPs are highly efficient, because their resources (“zilch”) are much less than found in for-profit businesses. The author argues that NFPs do certain things that so-called ‘for-profits’ can learn from. NFPs tend to have flatter organization structures, and offer generous titles and higher job responsibilities, which for the right individuals (twentysomethings?), can be more motivating than monetary compensation. One may argue that startup companies such as Google and Facebook have been successful by hiring young, motivated employees, and creating a fun and unstructured work environment, similar to NFPs. Stock options, however, do not hurt!!