What business purposes are valid for a nonprofit?
A. To qualify for federal tax-exempt status under 501(c)(3) of the Internal Revenue Code, the nonprofit must be organized and operate for some religious, educational, charitable, scientific, literary, testing for public safety, fostering of national or international amateur sports, or prevention of cruelty to animals or children purpose permitted under this section of the code. Nonprofits may also be formed for other purposes pursuant to different sections of the Internal Revenue Code. To qualify for federal tax-exempt status as a nonprofit under a different section of the code, your corporation must comply with the requirements of that federal tax code section. The business purpose of the nonprofit must be listed in the articles of incorporation, and to apply for tax-exempt status, it is very important that the purpose be well described. Additionally, certain states require approvals from state departments prior to approving the formation of a nonprofit.
