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Page 25 of 32 |
What is a not-for-profit corporation? |
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A "not for profit" corporation is one specifically formed for purposes other than operating a profit seeking business, such as a charitable, religious, education, or scientific purpose. There is, however, a mistaken belief that all "non-profits" cannot make money. It can -- either from its own charitable activities or from ways unrelated to the non-profit purposes.
For purposes of incorporating, set up a non-profit is similar to setting up a regular for-profit corporation and would enjoy some of the same common features (e.g, separate legal entity and limited liability protection). But it is distinctive in two ways: (1) the corporation cannot be organized for any person’s private gain, and (2) should it dissolve it must distribute its assets to a similar tax-exempt nonprofit group.
The mere fact that a corporation is organized under a not-for-profit corporation law does NOT mean that contributions to it are necessarily tax deductible. For donations to be "tax deductible" the charity must file an "Application for Recognition of Exemption" with the Internal Revenue Service and be approved pursuant to Internal Revenue Code Sec. 501(c)(3).
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