Nonprofit organization (abbreviated as NPO) is neither a legal nor technical definition but generally refers to an organization that uses surplus revenues to achieve its goals rather than to distribute them as profit or dividends. States in the United States defer to the IRS designation conferred under United States Internal Revenue Code Section 501(c), when the IRS deems an organization eligible. They may or may not have shareholders.
While not-for-profit organizations are permitted to generate surplus revenues they must be retained by the organization for its self-preservation, expansion, or plans. NPOs have controlling members or boards. Many have paid staff including management, while others employ unpaid volunteers and even executives who work without compensation (or that work for a token fee, such as $10 per year). Where there is a token fee, in general, it is used to meet legal requirements for establishing a contract between the executive and the organization.
Designation as a non-profit and an intent to make money are not related in the United States. This means nothing can be conferred by the declaration. It is unclear whether or not this holds outside of the U.S. In the United States, such inference is the purpose of the Internal Revenue Code, Section 501(c). The extent to which an NPO can generate surplus revenues may be constrained or use of surplus revenues may be restricted.
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