Can I open a nonprofit but not be tax exempt?

Yes. But why would you want to do so?

Thursday, March 6, 2008 - 12:00

Comments

Because state law requires an entity wishing to engage in certain activities to be a nonprofit, but federal tax exempt status is not available for the activity. Think needle exchanges, or cannabis dispensaries.

Add new comment

January Webinar

Bylaws: The "Constitution" of Nonprofits - The Art and Science of Making Them Work
Wednesday, January 14, 2026
1:30-3:00 PM ET

Can Donald Trump serve a third term as President? A lot of commentators say the answer is clearly “No.” Steve Bannon says they have “a plan.”

If the bylaws of a nonprofit function as the “Constitution” of the corporation, and the Constitution of the United States functions as the bylaws of the nation, learn why the term limit provision of the Constitution is not so clear and how it would undoubtedly lead to litigation if Trump seeks to serve a third term.

If you want bylaws that don’t lead to litigation, join us for tips on how to write them so that they say what you mean and mean what you say.

Do you have nonprofit bylaws that work?
Not bylaws that are open to several interpretations.
Not bylaws that describe the way things used to be done.
Not bylaws that fail to cover key power issues.

But bylaws that set out clear roles and responsibilities so that people can understand how to proceed, without litigation.

Learn more and register

Nonprofit bylaw review

Don Kramer will review and comment on your own current or proposed bylaws

Do your Bylaws reflect the way you actually operate? Do they protect the interests of those who should be protected? Do they spell out clearly how to deal with governance issues? Or do they create uncertainty for those who have to implement them?

Most nonprofits don't spend a lot of time looking at their Bylaws until there is a question or a dispute. That's when you need bylaws that are clear and unambiguous, so your questions on how to proceed are already answered. That's when bad bylaws can lead to unnecessary controversies or even costly litigation. Nonprofit Issues editor Don Kramer will review your current or proposed Bylaws to see if they work for you.

Learn more

New Subscribers can have full access to the entire website and all editions for 3 months for only $17.95.

Subscribe Today

Here's what our readers say about Nonprofit Issues:
Thanks again for your excellent and helpful website - it's a wonderful resource for the non-profit community! --Stephanie H.

Thank you for your informative and keen advice on nonprofit matters. I believe it's a unique and concise place to get answers to this often wispy area called nonprofit. --Richard T.

SAY THAT AGAIN?

May 30, 2025

The loan agreement says: “All contractual rates of interest chargeable on the outstanding Term Loans shall continue to accrue and be paid even after default, maturity, acceleration, judgment, bankruptcy, insolvency proceedings of any kind or the happening of any event or occurrence similar or dissimilar.”

A former banker friend says that “any event or occurrence similar or dissimilar” is some lawyer “fancy talk” for “the kitchen sink!”

See our "Say That Again" collection

Special Report Available

Increasing Gender Diversity on the Boards of Nonprofit Eds and Meds: Why and How to Do It

This report provides a rare inside view on barriers women face to selection and success that are particular to nonprofit organizations and makes specific recommendations on how to improve the gender ratio.
Download the full report free

YOUR ONE-STOP PLACE FOR NONPROFIT LAW YOU NEED TO KNOW

Sign up to receive our free weekly Nonprofit Law Q&A

Can I open a nonprofit but not be tax exempt?

Comments

Add new comment

Plain text