What are Nonprofit Organizations?
According to the National Center for Charitable Statistics nonprofits are formal organizations in the United States that qualify for tax-exempt status under the Internal Revenue Code because they are organized for the specific purposes stated in the Code.
Although there are legal distinctions among nonprofit organizations and different reporting requirements, all are exempt from paying federal income taxes. About half of nonprofits - called charitable organizations - are exempt under Section 501(c)(3). This status permits donations to charities to be tax-deductible to the donor.