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A non-profit corporation (abbreviated as "NPO," or also written as "nonprofit" or "not-for-profit") is an entity formed for purposes other than making a profit. Nonprofit corporations are formed pursuant to different state laws than standard for-profit corporations; however, the process of forming a non-profit is very similar. In most cases, non-profits are formed to improve communities, change lives, and to attempt to gain tax-exempt status.
While a non-profit corporation is not prohibited from making a profit, there are limitations on what it can do with its "profits." There also are limitations on how it can first make money. For example, if a non-profit corporation engages in unrelated profit-making activities, it must set up a separate corporation to engage in that activity or risk losing its non-profit, or tax exempt, status. They are also not owned by or distributed to individuals or stakeholders, but are run by a board of directors, who may draw a salary.
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