(redirected from Non-profit organization)
Also found in: Dictionary, Thesaurus, Financial, Acronyms, Wikipedia.


A corporation or an association that conducts business for the benefit of the general public without shareholders and without a profit motive.

Nonprofits are also called not-for-profit corporations. Nonprofit corporations are created according to state law. Like for-profit corporations, nonprofit corporations must file a statement of corporate purpose with the Secretary of State and pay a fee, create articles of incorporation, conduct regular meetings, and fulfill other obligations to achieve and maintain corporate status.

Nonprofit corporations differ from profit-driven corporations in several respects. The most basic difference is that nonprofit corporations cannot operate for profit. That is, they cannot distribute corporate income to shareholders. The funds acquired by nonprofit corporations must stay within the corporate accounts to pay for reasonable salaries, expenses, and the activities of the corporation. If the income of a corporation inures to the personal benefit of any individual, the corporation is considered to be profit driven. Salaries are not considered personal benefits because they are necessary for the operation of the corporation. An excessive salary, however, may cause a corporation to lose its nonprofit status.

Nonprofit corporations are exempt from the income taxes that affect other corporations but only if they conduct business exclusively for the benefit of the general public. State laws on corporations vary from state to state, but generally states give tax breaks and exemptions to nonprofit corporations that are organized and operated exclusively for either a religious, charitable, scientific, public safety, literary, or educational purpose, or for the purpose of fostering international sports or preventing cruelty to children or animals. Nonprofit organizations may charge money for their services, and contributions to tax-exempt nonprofit organizations are tax deductible. The Internal Revenue Service must approve the tax-exempt status of all nonprofit organizations except churches.

A vast number of organizations qualify for nonprofit status under the various definitions. Nonprofit organizations include churches, soup kitchens, charities, political associations, business leagues, fraternities, sororities, sports leagues, Colleges and Universities, hospitals, museums, television stations, symphonies, and public interest law firms.

A nonprofit corporation with a public purpose is just one organization that qualifies for tax-exempt status. Under Section 501 of the Internal Revenue Code (26 U.S.C.A. § 501), more than two dozen different categories of income-producing but not-for-profit organizations are exempt from federal income taxes. These other tax-exempt organizations include credit unions, civic leagues, recreational clubs, fraternal orders and societies, labor, agricultural, and horticultural organizations, small insurance companies, and organizations of past or present members of the armed forces of the United States.

The number of nonprofit corporations in the United States continued to increase into the twenty-first century. Although nonprofit corporations cannot produce dividends for investors, they provide income for the employees, and they foster work that benefits the public.

The activities of nonprofit corporations are regulated more strictly than the activities of other corporations. Nonprofit corporations cannot contribute to political campaigns, and they cannot engage in a substantial amount of legislative Lobbying.

Further readings

Barrett, David W. 1996. "A Call for More Lenient Director Liability Standards for Small, Charitable Nonprofit Corporations." Indiana Law Journal 71 (fall).

Hammack, David C., ed. 1998. Making the Nonprofit Sector in the United States. Bloomington: Indiana Univ. Press.

Ott, J. Steven, ed. 2001. Understanding Nonprofit Organizations: Governance, Leadership, and Management. Boulder, Colo.: Westview Press.


adjective altruistic, beneficent, charitable, eleemosynary, humanitarian, munificent, philanthropic, public service
Associated concepts: nonprofit corporation
References in periodicals archive ?
The non-profit organization transactional and precautional liquidities on sufficient level enable prompt fulfillment of internal (salary payments etc.
com) provides a simple way for individuals to elect to make tax-deductible donations to non-profit organizations while they shop on-line.
Non-profit organizations interested in participating can apply online beginning today through February 15, 2009.
1 million, 136-unit project in Mississauga, municipal non-profit organization of Peel Region for lower income senior citizens.
It's their dedication that enables Allstate in the Southeast Region to lend a helping hand, providing much-needed assistance for the invaluable work of these various non-profit organizations.
Deposits and Guarantees required: Lot 1 (Catholic schools, institutions and non-profit organizations located in the Roman Catholic Archdiocese of Mechelen-Brussels) bail (a fixed bail of 30,000).
Our mission is to empower all professionals in the MENA, regardless of their industry, sector, or type of work, and this includes non-profit organizations," said Suhail Masri.
4pc said they would 'never' work for a non-profit, said the 'Working for Non-profit Organizations in the Mena" poll, recently conducted by Bayt.
4: Diversity Competence for Non-Profit Organizations, Toronto, presented by: DIVUNA Tel.
April 4: Diversity Competence for Non-Profit Organizations, Toronto, presented by: DIVUNA Tel.
The estimates include the replacement value of volunteer labour, and is approximately $14 billion for the core non-profit organizations.
CCEDNet is a national association of non-profit organizations that work to address the social, economic and environmental needs of communities.