Public Benefit Nonprofit Corporations

A public benefit nonprofit corporation is what people think of when they think nonprofit.  It is a charity that is advantageous to the public at large, meaning that anyone could benefit from the actions of the nonprofit. 

What is a Public Benefit Nonprofit?

 

A public benefit nonprofit corporation is what people think of when they think nonprofit.  It is a charity that is advantageous to the public at large, meaning that anyone could benefit from the actions of the nonprofit. Public benefit nonprofits usually engage in activities that are involved with social services, the arts, health, education, and other activities to improve the quality of life for those in their community. These types of nonprofits are generally formed to be 501c3 IRS tax-exempt. A public benefit nonprofit cannot participate in political campaigns or donate money or benefit any candidate running for political office. Most nonprofits in the US are public benefit, and they receive funding via public donation, government grants, and fundraisers. Should a public benefit nonprofit corporation dissolve, it will need to distribute all of its assets to either other public benefit corporations, or to state, or federal agencies which are considered federally tax exempt by the IRS.

 

 

How do they differ from other nonprofit types?

 

There are many different types of nonprofit organizations as well as federal nonprofit categories that differ in purpose and charitable scope from public benefit nonprofits.

1.       Religious nonprofit: A religious nonprofit is one that has been incorporated with a religious purpose. They often include churches, nondenominational ministries, interdenominational organizations, synagogues, temples, and other religious nonprofits that have a primary purpose of studying or advancing religion.
 

 

2.       Mutual benefit nonprofit: These types of nonprofit (can also be a for-profit) generally benefit a certain group and often get their funding from membership dues. A homeowner’s association or certain sports clubs are examples of mutual benefit organizations, and they benefit only a certain inclusive group. While able to be a nonprofit, mutual benefit corporations are not able to be classified as 501c3 status.
 

3.       501c: Many nonprofits, such as public benefit nonprofit corporations, can apply to be categorized as a 501c3 nonprofit with the IRS. However, there are there are thirty-four different categories. Public benefit corporations generally fall under the 501c3 status because of the charitable purpose behind the nonprofit.

 

About the Author

Drake Forester, Chief Legal Strategiest - Northwest Registered AgentDrake Forester is the chief legal strategist at Northwest Registered Agent, LLC. Throughout his career, Drake has researched many complicated nonprofit compliance issues and provided whitepaper and publications for many leading nonprofit organizations in the United States.