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It has been suggested that this article or section be merged into Non-profit organization. () |
A not-for-profit corporation is a corporation created by statute, government or judicial authority that is not intended to provide a profit to the owners or members. A corporation that is organized to provide profits to its owners or members is a for-profit corporation. A non-profit corporation is always organized as a non-stock corporation.
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Non Profit Organizations
The term not-for-profit corporation may include any non-profit organization, since these organizations are generally incorporated (often as Societies, Associations, Trusts, etc.). Regarding the more general group of organizations created for non-profit purposes see: Non-profit organization.
Purpose
A non-profit corporation is usually created with a specific purpose, such as for educational, charitable or related to other enumerated purposes, it may be a foundation, a charity or other type of non-profit organization.
Legal
Such a corporation is subject to the general laws of corporations as adapted. In some cases it may also be a public corporation. In many countries these entities are subject to exemption from various tax laws, in certain circumstances. Regarding US tax law applying to these organizations see: intermediate sanctions, unrelated business activities.
Examples
Examples of not-for-profit organizations that have been formed in the past include the Electricity Supply Commission of South Africa (Eskom) and the New Zealand Electricity Department (NZED). Both of these organizations were set up to develop the electricity generation and electric power transmission needs of the respective countries by statute (The Electricity Act in each country).
Funding
One of the problems experienced by such corporations is their inability to fund growth from profits in the way that conventional businesses can. In the case of Eskom, the dilemma was solved by establishing a capital development fund, contributions to which were deemed to be costs and the investment of the fund was restricted to the loan stock (bonds) of Eskom. In New Zealand, the pricing of electricity was regulated to allow for the collection of a capital contribution. Ultimately the respective governments amended the legislation to bring the organisations into the normal commercial fold.
See also
- Business organizations
- Non-profit organization
- Religious corporation
- Public benefit nonprofit corporation
- Mutual benefit nonprofit corporation
External links
- Legal Information for Nonprofit Organizations Checklist for establishing and running a nonprofit corporation
- Nonprofit FAQs
- Non-Profit Corporations Paperwork required for a non-profit corporation
- Nonprofit Directory
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