The for-profit model In a sole proprietorship, one person owns a business. They typically adhere to other standards of business (like licensing), but the person is the business. They're responsible for debts, liabilities, and income, which is reported on their tax return.

Nonprofits have salary costs, just as for-profit businesses do. Thus, they may pay reasonable compensation to anyone providing services (like employees). Nonprofits are allowed to make a profit, but they must be funneled back into the organization's activities. Making money gets two big thumbs up from David!

Nonprofits are formed explicitly to benefit the public good; not-for-profits exist to fulfill an owner's organizational objectives. Nonprofits can have a separate legal entity; not-for-profits cannot have a separate legal entity.