In the United States, nonprofit organizations (NPOs) are organizations that qualify for tax-exempt status under the U.S. Internal Revenue Code. About half are public charities, to which donors can deduct contributions from their taxes. Private foundations also are charitable organizations, but they are not public charities. They exist primarily to fund charities or individuals. Other types of tax exempt organizations include social welfare, labor or agricultural organizations, business leagues, and fraternal beneficiary societies. Nonprofit organizations are not prohibited from earning a profit or paying salaries and wages, but they must devote any surplus to the organization.

Nonprofit organizations also are known as not-for-profit organizations, or as the "independent sector," as opposed to business or government. Nonprofits constitute about 10 percent of U.S. employees. These organizations play a unique role in society, falling between the concepts of public and private entities. Public agencies provide goods and...