I don't understand the difference, either, which is why I like the fact that our contribution looks and works just like an expense. For small orgs, certainly, there's only two numbers that matter: revenue and expenses. Figuring out how to set up a third bucket is overhead I'm not interested in now. :-)
That's why you have an accountant. Like wheels says, there are tax benefits, and if you're not taking advantage of them, you are likely wasting your company's money. Or, thinking of it another way, with the non-profit tax stuff, you could give more money to Clojure or whatever else.
It varies significantly by jurisdiction, but merely giving money to another company/organization/person may not count as an "expense" for deduction purposes. In most Western jurisdictions, you would need to be getting something in return - like consultancy, labor, product, a contractual obligation (as with a retainer), etc. I'd be quite unsure whether the "paying for hours spent working on Clojure" line would fly with all tax authorities - but, yeah, that's why people have accountants :-)
