> They can operate like any other non-profit and be subject to that set of rules, or they can be a regular corporation and be subject to a different set of rules.
Its pretty clear that OP just wants them to register as 501c3's or similar not force them to pay taxes in general
> Non-profit is an misleadingly named corporate structure that really means non-stock.
No, its not. Most states allow non-profit corporations, some allow non-profit non-corporations (associations, trusts, etc.) Some kinds of non-profits may have members in much the same way that an LLC does, however, a non-profit is not structured to return profits to those members (or anyone else, hence the name.)
There are a wide variety of rules for federal and state tax exemption and other treatment for various forms of non-profits, of which the the 501(c)(3) charity provisions making the entities own revenues tax exempt and contributions tax deductible to the contributor are the best known, but hardly the only significant ones.
> I'm also tempted to say a business whose number one goal isn't making money for its owner and employees should probably be registered as a non-profit or a charity or something else, and not a corporation, but I guess there's no reason they couldn't be a corporation.
Um, what does "corporation" mean to you? Can you identify anything that you would call a "non-profit" that is not also a corporation?
The IRS is the agency that would enforce this by striping the organization of its 501(c)(3) tax exempt status. The organization would then be subject to various taxes.
> Normal private institutions in America have none of those.
This is not true. Any non-profit classified corporation would be tax-exempt. This is not particularly difficult to set up. All you need to do is file with the IRS and not have shareholders.
> it wouldn't make any sense for a for-profit to own a non-profit due to the no private inurement requirement)?
The most obvious example is the corporate foundation, but if we believe the first result from a search you're right in they are controlled but not owned by the for-profit:
> A for-profit cannot own a nonprofit because a nonprofit has no owners. However, a for-profit can set up a structure in which it effectively has control over the nonprofit, subject to applicable laws, including those regarding private inurement, private benefit, and corporate self-dealing
Non-profits can make surplus revenues over costs and retain them; they can't return profits to shareholders or other particular beneficiaries.
Certain classes of nonprofits are restricted from certain business activities, or limited to certain activities. E.g., charities (501c3 nonprofits) must be organized and operated exclusively for purposes on an list of charitable purposes.
> and these "charities" can pay out to their owners from tax-exempt gains on the back-end.
I pretty certain that legally these charities can only give to causes that furthers their exempt purpose. [1]
E.g. a charity claiming to be devoted to saving children's lives in Africa can only spend money on exactly that, governance costs and fundraising.
The charity may be paying the owners as employees, and/or the owners may twist the spending to pretend it is in line with the purpose, but I don't think they can literally give the owners the tax-exempt gains.
>Some non-profits exist mainly to enrich their officers
This could very well be, but it goes against what first comes to the mind of most people when talking about a non-profit: the name itself implies that those companies are "not for profit" after all.
EDIT: I also think that the reason why most countries have a special tax law regarding non-profit organization, is to help people that want to do "the right thing" even if it is not profitable, not to provide their officers with an easier way to enrich themselves. So if a non-profit is being used by their officers to enrich themselves, I think it is correct to see them as people that are cheating the system. If they are doing it in a way that is technically legal, I would say they are probably exploiting some loophole.
> This strikes at an issue we haven't really addressed enough in non-profits: how much community benefit do they need to offer?
A non-profit simply means that there are no investors who can profit from the business.
Non-profit and tax exempt aren’t the same thing. A non-profit must apply for tax exempt status and the IRS will look at things like public benefit vs private benefit, diversity of control etc…
A vanity that is controlled by 1 person who tends to put his his name on everything, and that benefits the person running it more than the public is going to lose their tax exempt status.
Also diversity of control and diversity if support will determine whether an origination is a private foundation vs a public charity.
In the case of the hospital controlled by 1 person (even if does keep its tax-exempt status because it can’t be shown to be providing that person too much benefit), it would probably be a private foundation, which means there are rules on how much money it has to give away each year vs how much it can reinvest in itself.
> They are registered as a 501(c)(3) which is what people commonly call a public charity.
TIL "public charity" is specific legal term that only some 501(c)(3) qualify as. To do so there are additional restrictions, including around governance and a requirement that a significant amount of funding come from small donors other charities or the government. In exchange a public charity has higher tax deductible giving limits for donors.
A, that's true then. A non-profit is all about being registered as one (incorporating etc) and not about intentions (or for that matter, not being into it for profit).
>and in most cases they very explicitly legally are businesses.
By that definition every nearly single non-governmental organization is explicitly legally a business, so stating that an organization is a "business" is meaningless.
A church, a soup kitchen, and fraternal lodge are also explicitly legally businesses as well, but it's not useful to classify them alongside for profit businesses.
Many very well off schools don't even charge students who make below a certain income, and the vast majority of their operating expenses come from donations--saying they charge money in exchange for a service isn't a very useful description of what they do.
Its pretty clear that OP just wants them to register as 501c3's or similar not force them to pay taxes in general
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