Everything about Non-profit Corporation totally explained
A
not-for-profit corporation is an
incorporated organization created by
statute, government or
judicial authority and registered at the Registry of Commerce, that isn't intended to provide a profit to the owners or members. It differs from a
for-profit corporation substantially as this is organized to provide profits to its owners or members. A non-profit corporation is always organized as a
non-stock corporation.===Non Profit Organizations===
The term not-for-profit corporation may include
non-profit organizations, if these organizations are incorporated and registered at a Registry of Commerce (often as
Societies,
Associations,
Trusts, etc.). However, non-profit organizations created through charter or statutes that are not required to register as corporations, are not included in this classification. 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 organizations into the normal commercial fold.
Further Information
Get more info on 'Non-profit Corporation'.
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