A nonprofit organization is an organization that does not operate for financial gain purpose, but uses its funds to achieve its goals. Its surplus funds cannot be redistribute to its owners and shareholders. Examples of non-profit organizations include charities, trade unions, trade associations and public arts organizations
Many types of groups can seek nonprofit status. The following ones may be eligible: childcare centers, shelters for the homeless, community health care clinics and hospitals, museums, churches, synagogues, mosques, and other places of worship, schools, performing arts groups, and conservation groups.
Non-profit groups can gain tax exemptions when they obtain corporate status. Nonprofit corporations usually get their tax exemptions from Section 501(c)(3) of the Internal Revenue Code. It not only enables a nonprofit to be free from paying taxes, but also allows people and organizations that donate to the nonprofit can take a tax deduction for their contributions.
The two major types of nonprofit organization are membership and board-only. A membership organization elects the board and has regular meetings and power to amend the bylaws. A board-only organization typically has a self-selected board, and a membership whose powers are limited to those delegated to it by the board. A board-only organization’s bylaws may even state the organization does not have any membership, although the organization’s literature may refer to its donors as members.