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Common Incentives for Creating Non-Profit Corporations

Although there are many good reasons for forming non-profit corporations, most groups wanting to offer special community services or artistic programs choose them because they offer special tax benefits and funding opportunities. Yet as useful as they are, it’s important to ask an experienced Peachtree City business attorney to help you create one so that it will be in full compliance with all state and federal laws.                                                                                                  

The following information takes a general look at the specific types of groups or legal entities willing to pay the added fees it can cost to create a non-profit corporation. It also notes the special financial advantages they frequently offer.

Types of Groups that Most Often Form Non-Profits            

 In general, non-profits are often formed by groups planning to offer community services, educational opportunities, health services, and artistic programs. In order to qualify for free funding from the vast array of government grant programs and private foundations, a group or legal entity must prove its tax exempt status, based upon the provisions of Internal Revenue Code Section 501(c) (3).                                                                                                                          

A non-profit group might sponsor a local ballet troupe or even a ship that sails the seas in order to clean up waste or study marine biology. Museums, homeless shelters, church groups, hospitals and childcare centers also often seek out non-profit status.

Specific Tax Benefits Often Available to Non-Profit Corporations (NPCs)

  • NPCs gain exemption from all state and federal taxes they might otherwise owe (for all activities directly tied to their stated non-profit purpose);

  • The NPC’s members, directors, and officers obtain limited liability status. This means that if someone sues the non-profit, these individuals will not have to pay any damages out of their own personal funds. Only the non-profit corporation’s assets would normally be used for that purpose. Although non-profits are probably not sued as often as other corporations, it does still happen -- especially when someone creates a non-profit for fraudulent purposes that aren’t discovered until much later;

  • Individuals and organizations that donate to non-profits can obtain tax deductions for their donations. (The next time you watch a PBS program, you can look for a list of these groups or individuals -- it’s normally run right before or after the show is presented).

Although there are other good reasons for creating a non-profit, those named above are the most common ones. A great many people often benefit from this type of business structure that’s usually designed to help others -- much like “B” or “benefit” corporations that can often obtain the same tax benefits as non-profits.

To obtain help with handling all of your Georgia business planning needs, please contact the Law Offices of Shane Smith today.  You can schedule your free initial consultation with a knowledgeable Peachtree City estate planning attorney by calling: (770) 487-8999.


Shane Smith
Advocate for the Seriously Injured in Georgia