“Every charity is a non-profit, but not every non-profit is a charity.” This axiom describes the source of much confusion between “non-profits” and “charities”.
A non-profit organization is created under state law. Non-profits conduct activities which are not designed to create profits to benefit owners, but to conduct activities which have some socially desirable impact. For example, a farm cooperative may be formed by a group of farmers to give them better buying power as a group than any would have as an individual farmer. Non-profits do not pay income tax on the surplus of receipts over expenses.
Charities are formed to conduct activities for the sole benefit of the sick, economically disadvantaged, under-resourced, and under-educated members of society. Governments, including the United States federal government, view charitable activities as worthy not only of exemption from paying income taxes on surplus, but of allowing contributors to deduct the amount of contributions made to the charitable organization.
Contact The Law Office of John C. Grundy
The land of non-profit and charitable organizations is a legal minefield requiring competent and experienced legal counsel, like Attorney Grundy. Call today to schedule an appointment to discuss your organization or idea.