{"id":4848,"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-taxes-when-non-profits-make-a-profit.html"},"modified":"2025-10-23T15:11:00","modified_gmt":"2025-10-23T20:11:00","slug":"non-profit-taxes-when-non-profits-make-a-profit","status":"publish","type":"page","link":"https:\/\/www.findlaw.com\/smallbusiness\/incorporation-and-legal-structures\/non-profit-taxes-when-non-profits-make-a-profit.html","title":{"rendered":"Nonprofit Taxes: When Non-profits Make a Profit"},"content":{"rendered":"\n
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Nonprofit Taxes: When Nonprofits Make a Profit<\/h1>\n\n
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\n By Jade Yeban, Esq.<\/a> | Legally reviewed by Catherine Hodder, Esq.<\/a>\n | Last updated\n
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Editorial Note: We earn a commission from affiliate partner links on FindLaw. Commissions do not affect the editorial integrity of our legal content.<\/p>\n\n <\/div>\n \n

\n \n <\/i>\n Legally Reviewed\n <\/summary>\n\n
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This article has been written and reviewed for legal accuracy, clarity, and style by FindLaw\u2019s team of legal writers and attorneys<\/a> and in accordance with our editorial standards<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n\n

\n \n <\/i>\n Fact-Checked\n <\/summary>\n\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\n\n

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Key Takeaways<\/h2>\n

When a nonprofit<\/span> organization<\/span> makes a profit, often called a surplus, the surplus must be reinvested back into the tax-exempt organization<\/span> to support the charitable purposes<\/span>.<\/p>\n\n <\/div>\n <\/div>\n<\/div>\n\n\n

Despite the name,\u00a0nonprofits<\/span><\/a>\u00a0do sometimes make a profit.<\/p>\n

Unlike for-profit<\/span> businesses, nonprofit<\/span> corporations<\/span> aren\u2019t designed to make money for individuals. Instead, nonprofits<\/span><\/a> are formed to serve a government-approved purpose. So, they are given special\u00a0tax treatment<\/a>. Whether a nonprofit<\/span>\u2019s profit is taxable income<\/span> is based on whether the profit was generated from activities that are \u201crelated” or \u201cunrelated” to the nonprofit<\/span>\u2019s purpose.<\/p>\n

This article explains how these organizations handle making money and taxes. We\u2019ll talk about:<\/p>\n