- Mark Clague
- and Michael Mauskapf
An organizational form that does not distribute profits to owners or shareholders, but instead reinvests them in pursuit of a goal or mission. A nonprofit organization (NPO) must serve some kind of public benefit and be privately governed by a board of volunteers. Any type of organization (e.g., association, corporation, trust, shareholder entity, membership or board managed) that meets these criteria may apply to receive tax exemption under section 501(c)3 of the United States Internal Revenue Code. State entities may also excuse NPOs from sales and property taxes. Such tax breaks reduce the cost of operation in exchange for public good and effectively provide public support for service innovation. Although nonprofit organizations have existed in some form or another for over 300 years, the legal criteria used to define the modern nonprofit have evolved mostly since about 1960. Nonprofits (typically known as non-governmental organizations or NGOs in Europe) include churches, universities, hospitals, service providers, and many arts and culture organizations....