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Benefiting the public for the greater good

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People form nonprofit organizations to create a public benefit for the greater good of all. In fact, nonprofit corporations are sometimes referred to as public benefit corporations. A nonprofit organization can’t be created to help a particular individual or family, for example. If that were possible, we’d all have our separate nonprofit organizations. You can start a nonprofit to aid a specific group or class of individuals — everyone suffering from diabetes, for example, or chronically homeless individuals — but you can’t create a nonprofit for individual benefit or gain.

Just because you’re working for the public’s benefit doesn’t mean you can’t receive a reasonable salary for your work when your revenues are stable and the drawing of your salary won’t result in a budget deficit. And despite the name nonprofit, such an organization can have surplus funds — essentially, a profit — at the end of the year. In a for-profit business, the surplus money can be distributed to employees, shareholders, and the board of directors; however, in a nonprofit organization, the surplus funds are used to strengthen the organization or are held in reserve by the organization to respond to emergency needs or invest in future programming.

Nonprofit Kit For Dummies

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