A nonprofit is a tax-exempt organization that serves the public interest. In general, the purpose of this type of organization must be charitable, educational, scientific, religious or literary. These organizations can be unincorporated or incorporated. An unincorporated nonprofit is somewhat rare for while it can be given federal tax-exempt status or the designation of being a 501(c)(3) organization as defined by the Internal Revenue Service, it does not enjoy the legal protection a corporation provides. When a nonprofit organization is incorporated, it shares many traits with for-profit corporations except that there are no shareholders.
There are three main types of NPO?s: Public-benefit corporations, mutual benefit corporations, and religious corporations. Public benefit corporations can only distribute assets to other public benefit corporations. Mutual benefit corporations can distribute assets to their own members, and under certain conditions as well as for public benefit purposes. Religious corporations must follow the rules of their governing bodies.
Non profit public benefit corporations hold their assets in what is called charitable trust. A charitable trust is an entity that holds money or assets for charitable purposes. The difference for the NPO?s is that unlike profitable companies, if the charitable trusts have surplus revenue, they belong to the public
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