group, institution, or corporation formed for the purpose of providing goods and services under a policy where no individual (e.g., stockholder, trustee) will share in any profits or losses of the organization. Profit is not the primary goal of nonprofit entities. Profit may develop, however, under a different name (e.g., surplus, increase in fund balance). Assets are typically provided by sources that do not expect repayment or economic return. Usually, there are restrictions on resources obtained. Examples of nonprofit organizations are governments, charities, universities, religious institutions, and some hospitals. Most nonprofit organizations have been granted exemption from federal taxes by the Internal Revenue Service. Many of these organizations refer to themselves according to the IRS Code section under which they receive exempt status (i.e., 502(c)(3) organization). This identification lets donors know that their contributions to this organization may be deductible for income tax purposes.
association that is allowed to exist without paying income taxes. Most nonprofit organizations are in a socially desirable business (hospital, educational institution, charity) and those qualified by the Internal Revenue Service may receive contributions that are tax deductible to the donor.
