What is a Nonprofit Organization?

A nonprofit organization (or not-for-profit institution) is an organization traditionally dedicated to a particular social cause or advocating for a shared point of view.  Nonprofit organizations conduct their affairs for the purpose of providing assistance to other individuals, groups, or causes rather than seeking profits for themselves.  Nonprofit organizations have no shareholders; do not distribute profits in a manner intended to benefit members, directors, or other individuals in their private capacity; and often receive exemption from certain taxes as a result and in recognition of their contributions to bettering the community.

What is a 501(c)(3) Organization?

Majority of nonprofits are commonly established as 501(c)(3) organizations under the Internal Revenue Code.  Many of these qualify under the definition provided in Section 501(c)(3) of the Code, which stipulates that all of the following qualify for tax-exempt status: "Corporations, and any community chest, fund or foundation, organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary or educational purposes, to foster certain national or international amateur sports competition, or for the prevention of cruelty to children or animals," provided that the institutions adhere to established standards of behavior and requirements of net earnings allocation. 

Common Types of Nonprofit Organizations

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