Legal Definitions - non-profit corporation

A non-profit corporation is a type of organization legally established to serve a public or community benefit, rather than to generate profit for owners or shareholders. Unlike a typical business, its primary goal is not financial gain but to advance a specific mission, such as education, charity, religion, science, or social welfare.

Key characteristics of a non-profit corporation include:

• It is formally recognized by the state where it's created, often through a Secretary of State's office, and receives special tax-exempt status from both state and federal tax authorities (like the Internal Revenue Service, or IRS).
• It does not have owners or shareholders who receive a share of profits. Instead, it is governed by a board of directors and managed by officers.
• Any revenue generated beyond operating costs must be reinvested back into the organization to further its mission. While directors typically serve without pay, officers and employees can receive reasonable salaries for their work.
• Donations made to an approved non-profit corporation are often tax-deductible for the donor.
• Should the organization ever cease to exist, its remaining assets must be transferred to another non-profit organization with a similar purpose, ensuring the funds continue to serve the public good.

Here are some examples:

• Community Food Bank: "Feeding Our Neighbors" is a local organization that collects donated food and distributes it to families experiencing food insecurity in its city. This is a non-profit because its mission is charitable – alleviating hunger – not making money. It doesn't have shareholders expecting dividends; instead, a board oversees its operations, and any funds raised go directly towards purchasing food, operating a warehouse, and distributing meals. Donors can typically deduct their contributions on their taxes because "Feeding Our Neighbors" has secured its tax-exempt status.

• Animal Rescue Shelter: "Paws & Claws Rescue" operates an animal shelter, rescuing abandoned pets, providing veterinary care, and facilitating adoptions. This organization exemplifies a non-profit because its core purpose is animal welfare, a humanitarian and charitable goal. It relies on donations and volunteer efforts, reinvesting all funds into animal care, facility maintenance, and adoption programs. Its directors ensure the organization adheres to its mission, and no individual profits from its operations, even though staff members receive salaries for their work.

• Local History Museum: The "Riverbend Historical Society" maintains a museum and archives dedicated to preserving and educating the public about the history of its town and region. This is a non-profit because its aim is educational and civic – preserving cultural heritage and sharing knowledge – rather than generating profits for owners. It charges a modest admission fee and sells gift shop items, but all revenue supports the museum's operations, exhibits, and educational programs. Its board of trustees ensures the organization remains focused on its historical mission, allowing it to receive grants and tax-deductible donations to fund its activities.