{"id":4846,"date":"2016-04-04T10:47:45","date_gmt":"2016-04-04T15:47:45","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-law\/smallbusiness\/incorporation-and-legal-structures\/non-profit-corporation-faq.html"},"modified":"2024-05-22T23:30:24","modified_gmt":"2024-05-23T04:30:24","slug":"non-profit-corporation-faq","status":"publish","type":"page","link":"https:\/\/www.findlaw.com\/smallbusiness\/incorporation-and-legal-structures\/non-profit-corporation-faq.html","title":{"rendered":"Nonprofit Corporation FAQ"},"content":{"rendered":"\n
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Nonprofit Corporation FAQ<\/h1>\n
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\n By Jade Yeban, Esq.<\/a> | Legally reviewed by Aviana Cooper, Esq.<\/a>\n | Last updated\n
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The last updated date refers to the last time this article was reviewed by FindLaw or one of our contributing authors<\/a>. We make every effort to keep our articles updated. For information regarding a specific legal issue affecting you, please contact an attorney in your area<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n<\/section>\n

Welcome to FindLaw’s FAQ on nonprofit corporations. This resource provides answers to common questions about nonprofits. These organizations are also called charitable organizations or 501(c)(3) organizations. This article offers guidance for business owners, board members, and the general public. Dive in to learn more about the nonprofit world.<\/p>\r\n

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What exactly is a nonprofit corporation?<\/h2>\r\n

A nonprofit corporation<\/a> is a type of organization. These organizations are dedicated to a particular social, educational, charitable, or religious purpose. The purpose could also be literary or scientific. Unlike a for-profit business, the main goal isn’t to make money for owners or shareholders. Instead, they focus on their mission. Common examples include public charities, private foundations, social welfare organizations, and trade associations. <\/p>\r\n

Nonprofits can vary in size. They can be small business entities or large, well-known charitable organizations. Nonprofit corporations are sometimes referred to as "501(c)(3) corporations." This is because the most common federal tax exemption that applies to nonprofit<\/a> corporations is in section 501(c)(3) of the Internal Revenue Code<\/a>. <\/p>\r\n

Unlike conventional corporations, a nonprofit<\/a> corporation does not pay state or federal income taxes<\/a>. The organization does not pay taxes on profits it makes from engaging in activities related to the corporation’s purpose. This tax exemption recognized by the IRS and state tax agencies supports the broader goal of serving the public.<\/p>\r\n

Are there benefits that come with forming a nonprofit corporation?<\/h2>\r\n

Absolutely! One of the main benefits of becoming a nonprofit<\/a> is gaining tax-exempt status. Tax-exempt organizations don’t pay federal income taxes on the money they earn. Additionally, donations made to them are usually tax-deductible for donors. This helps boost fundraising efforts.<\/p>\r\n

Nonprofits might also be eligible for partnerships and grants, and can also receive discounts only available to charitable groups. The tax laws are even set up in a way that encourages individuals and companies to donate to nonprofit<\/a> corporations.<\/p>\r\n

Another major benefit is that members of a nonprofit corporation enjoy limited personal liability. This means they are not responsible for any of the debts or lawsuits incurred by the nonprofit.<\/p>\r\n

How do I form a nonprofit corporation?<\/h2>\r\n

Starting a nonprofit involves several steps. Forming a nonprofit corporation<\/a> is much like forming a conventional, for-profit corporation. The first thing that you must do when forming a nonprofit corporation is to file a document called the articles of incorporation<\/a> with the appropriate division of your state’s government, likely a part of the secretary of state’s office<\/a>. When you file this document, you must also pay a filing fee. The articles of incorporation typically need to contain:<\/p>\r\n