Corporations Non Profit Law and Legal Definition

A non-profit corporation (also called "not for profit corporation") is an organization incorporated under state laws and approved by both the state's Secretary of State and its taxing authority as operating for educational, charitable, social, religious, civic or humanitarian purposes. A non-profit corporation is similar to a corporation for profit in that it is formed by incorporators, has a board of directors and officers, but differs by having no shareholders. These incorporators, directors and officers may not receive a distribution of (any money from) profits, but officers and management may be paid reasonable salaries for services to the corporation.

Upon dissolution of a nonprofit corporation, its assets must be distributed to an organization with similar purposes. For contributions to the corporation to be deductible as charitable gifts on federal income taxes, the corporation must submit a detailed application, along with a substantial fee, for an Internal Revenue Service ruling that it is established for one of the specific nonprofit purposes spelled out in the Internal Revenue Code. Informational state and fedeeral tax returns must be filed annually. In addition, the state Attorney General may monitor the corporation to ensure it is abiding by state laws by limiting its activities to its approved non-profit purposes and not milking the corporation for disguised profits.