Charitable, educational, religious, literary, and other organizations created to benefit society may register as operate as nonprofits.
Nonprofits have the option to incorporate to become a nonprofit corporation and take advantage of more benefits.
Like many other business structures, nonprofit corporations usually file a certificate of formation with the state. Not all nonprofits incorporate, but nonprofits share the same feature. Forming a nonprofit corporation provides legal protection to directors and officers. The corporation also provides continuity as the organization will continue to exist even if a director dies or leaves the organization.
There are several restrictions that apply to nonprofits. For example, income from operating the organization cannot be distributed to members, officers, or directors. In addition, nonprofits can only use assets for certain charitable purposes.
Nonprofit corporations involved in charitable, educational, religious, and scientific, and other qualified purposes endeavors may also qualify for state and federal tax exemptions. This affords the nonprofit federal and state tax exemptions, a possible exemption for some property taxes, and lower postage rates. Donations made to a nonprofit with a 501(c) )(3) tax-exempt status may also be tax-deductible. Nonprofit corporations may also be eligible for both public and private grants.