26 What is a non-profit corporation?

A non-profit corporation is a corporation set up for a social cause, such as to promote a religious, charitable, educational, or scientific purpose. It enjoys limited liability, like a corporation, but does not have shareholders. It often enjoys tax exemptions under state and federal laws (such as 501(c)(3) organizations, which are certain non-profits to whom tax-deductible donations may be made). Non-profit corporations may have highly compensated employees and make massive amounts of profits. The difference between a for-profit and non-profit is what happens to those profits: in a for-profit corporation they are distributed to shareholders through dividends. In a non-profit corporation, they are employed to continue the mission of the corporation.

Our primary concern is for-profit business, and so we limit analysis of non-profit corporations to this brief venture. If you wish to support a social cause through a non-profit, they can be wonderful vehicles to accomplish powerful goals. If you wish to strongly support a social cause while still being a profit-making entity, the following Question will show you how.