Nonprofit Organization

AAA

DEFINITION of 'Nonprofit Organization'

A business entity that is granted tax-exempt status by the Internal Revenue Service. Donations to a nonprofit organization are often tax deductible to the individuals and businesses making the contributions. Nonprofit organizations must disclose a great deal of financial and operating information to the public, so that donors can ensure their contributions are used effectively.


Nonprofit organizations are also called 501(c)(3) organizations after the section of the tax code that allows them.

INVESTOPEDIA EXPLAINS 'Nonprofit Organization'

Nonprofit organizations don't pay income tax on the money they earn from fundraising activities or donations. The organization must further a religious, charitable, scientific, literary, educational, public safety, amateur sports or cruelty prevention purpose to qualify for tax-exempt status; it must also provide a public benefit. Examples of nonprofit organizations include churches, hospitals and schools.

RELATED TERMS
  1. Service Corps Of Retired Executives ...

    A specific non-profit organization with members who provide free ...
  2. Accountants for the Public Interest ...

    An organization whose volunteer accountants provide free services ...
  3. Not For Profit

    A not for profit organization is a type of organization that ...
  4. Food And Agriculture Organization ...

    A United Nations agency that works on international efforts to ...
  5. Private Foundation

    A charitable organization that, while serving a good cause, does ...
  6. Philanthropy

    Charitable giving to human causes on a large scale. Philanthropy ...
Related Articles
  1. Taxes

    Cut Your Tax Bill With Donor-Advised Funds

    Beat the tax man come April 15 by investing in a charity-friendly fund.
  2. Entrepreneurship

    Social Finance Careers: Creating A Better World

    A financial career can be used to do more than just bring in profits. Find out how to get a career with a more social objective.
  3. Taxes

    Deducting Your Donations

    Generosity may be its own reward, but some charitable giving also provides personal tax benefits.
  4. Retirement

    Gifting Your Retirement Assets To Charity

    There are several things to consider when it comes to this type of charitable giving. Make sure you're well informed.
  5. Retirement

    The Best Way To Borrow

    There are many avenues from which to drum up funding. Find out the pros and cons of each.
  6. Investing

    Do nonprofit organizations pay taxes?

    Section 501 of the Internal Revenue Service (IRS) tax code exempts qualified nonprofit organizations from federal taxes. A nonprofit organization is an organization that engages in activities ...
  7. Budgeting

    It Is Better To Give AND Receive

    You give to benefit others, but there can be perks for you too.
  8. Retirement

    Navigating Government And Nonprofit Financial Statements

    Learn how to trace where your tax dollars and charitable donations are going.
  9. Taxes

    Top Fund-Raising Strategies For Nonprofits

    Top fund-raising strategies for nonprofit organizations
  10. Taxes

    The Top Nonprofit Organizations

    Did you know basketball and volleyball were invented by instructors at a charity?

You May Also Like

Hot Definitions
  1. Prospectus

    A formal legal document, which is required by and filed with the Securities and Exchange Commission, that provides details ...
  2. Treasury Bond - T-Bond

    A marketable, fixed-interest U.S. government debt security with a maturity of more than 10 years. Treasury bonds make interest ...
  3. Weight Of Ice, Snow Or Sleet Insurance

    Financial protection against damage caused to property by winter weather specifically, damage caused if a roof caves in because ...
  4. Weather Insurance

    A type of protection against a financial loss that may be incurred because of rain, snow, storms, wind, fog, undesirable ...
  5. Portfolio Turnover

    A measure of how frequently assets within a fund are bought and sold by the managers. Portfolio turnover is calculated by ...
  6. Commercial Paper

    An unsecured, short-term debt instrument issued by a corporation, typically for the financing of accounts receivable, inventories ...
Trading Center