So you have heard the term before, but do you really know what
a nonprofit organization is? There are legal definitions, including
26 types of nonprofits recognized by the IRS, and there are common
perceptions of what people mean when they refer to an organization
as nonprofit. Let's start with perceptions.
For this site at About.com, a nonprofit is a tax-exempt organization
that serves the public interest. In general, the purpose of this
type of organization must be charitable, educational, scientific,
religious or literary. This is a common and broad definition that
fits the type of information likely to be found at this site.
The public expects to be able to make donations to these organizations
and deduct these donations from their federal taxes.
Legally, a nonprofit organization is one that does not declare
a profit and instead utilizes all revenue available after normal
operating expenses in service to the public interest. These organizations
can be unincorporated or incorporated. An unincorporated nonprofit
is somewhat rare for while it can be given federal tax-exempt
status or the designation of being a 501(c)(3) organization as
defined by the Internal Revenue Service, it does not enjoy the
legal protection a corporation provides. When a nonprofit organization
is incorporated, it shares many traits with for-profit corporations
except that there are no shareholders. |
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