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Running a Nonprofit · Level 1 of 5 · Intro

What a nonprofit is

Mission, ownership, and the difference between nonprofit and tax-exempt.

Study notes

  1. A nonprofit is usually a corporation formed under state law to pursue a mission rather than to pay profits to owners.
  2. Nonprofits can earn more than they spend, but surplus must serve the mission. It cannot be distributed to insiders like dividends.
  3. Being incorporated as a nonprofit under state law is different from federal tax exemption, which comes from the IRS.
  4. Section 501(c)(3) covers charitable, religious, educational, scientific, and similar organizations. Donations to most 501(c)(3) public charities are tax deductible for donors who itemize.
  5. A mission statement says who you serve, what you do, and why. Everything else should support it.

Quiz: 6 questions

Choose one answer for each question, then check your answers. Score 5 of 6 to pass. Then enter your name and email to download a PDF certificate and have a copy emailed to you. Answers are graded in your browser.

1. A nonprofit's surplus:

2. Federal tax exemption for a charity comes from:

3. Which code section covers most charities?

4. Incorporating as a nonprofit in your state means you are automatically tax exempt federally.

5. A strong mission statement says:

6. Donations to most 501(c)(3) public charities are:

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