Not-for-profit corporation

A Not-for-profit corporation is a corporation created by statute, government or judicial authority that does not issue stock. It is created with a specific purpose, educational, charitable or related to other enumerated purposes, it may be a foundation, a charity or other type of non-profit organization. Such a corporation is subject to the general laws of corporations as adapted. In some cases it may also be a public corporation. In many countries these entities are subject to exemption from various tax laws, in certain circumstances. Regarding the more general group of organizatons created for non-remunintary purposes see: Non-profit organization. Regarding US tax law applying to these organizations see: intermediate sanctions, unrelated business activities.

Examples of not-for-profit organizations that have been formed in the past include the Electricity Supply Commission of South Africa (Eskom) and the New Zealand Electricity Department (NZED). Both of these organizations were set up to develop the electricity generation and electric power transmission needs of the respective countries by statute (The Electricity Act in each country).

One of the problems experienced by such corporations is their inability to fund growth from profits in the way that conventional businesses can. In the case of Eskom, the dilemma was solved by establishing a capital development fund, contributions to which were deemed to be costs and the investment of the fund was restricted to the loan stock (bonds) of Eskom. In New Zealand, the pricing of electricity was regulated to allow for the collection of a capital contribution. Ultimately the respective governments amended the legislation to bring the organisations into the normal commercial fold.

This article is a stub. You can help Wikipedia by fixing it.