There are several differences between nonprofit corporations and profit-driven corporations.
1. Nonprofit corporations cannot operate for profit. This means
They cannot distribute corporate income to shareholders.
Funds acquired by nonprofit corporations must stay within the corporate accounts to pay for:
- reasonable salaries
- expenses and
- the activities of the corporation
2. In a nonprofit corporation
Income cannot personally benefit any individual, as it does in a profit-driven corporation.
Salaries are not considered personal benefits because they are necessary for operation of the corporation
However, an excessive salary may cause a corporation to lose its nonprofit status.
3. No one owns a nonprofit organization in the way that shareholders own a for-profit corporation.
The typical nonprofit organization is a corporation controlled by a board of directors.
The board of directors elects officers who conduct the day-to-day business operations of the organization.
4. Many organizations qualify for nonprofit status under various definitions and can include everything from churches to sports leagues and public interest law firms. |