Nonprofit Health Inc.

cartoon Nonprofit health corporations are unique. While they are created to meet the health needs of a particular community, they are also organized to fulfill broad public purposes. Thus, nonprofits and their boards have obligations to the public and must be responsive and accountable to the people they serve. To reward nonprofit corporations for their public commitment, society provides special treatment and recognition to them, such as government subsidies or the ability to accept tax-deductible donations. In order to understand the special obligations of nonprofit corporations, especially as they go through the conversion process, it is helpful to discuss the distinctions between nonprofit and for-profit corporations, the special obligations of nonprofit board members to the community, and the legal doctrines involved in preserving the public's assets.

The important distinctions between nonprofit and for-profit health corporations illustrate the special obligations nonprofits owe to their communities. These distinctions fall into the five following categories: mission and purpose, ownership, use of assets, dissolution and tax status.

Click the chart below to learn more about each characteristic.

Characteristic	Nonprofits	For-Profits
Mission and Purpose	Organized for charitable, benevolent, educational, or social welfare purposes Serve the broader public Charity Care Community Benefits	Primary obligation is profit-making for shareholders
Ownership	Effectively, the public is the only “shareholder”	Private Individuals Stockholders Private Investors Policyholders/Members (Mutual)
Use of Assets	Assets generated must remain in nonprofit sector and further nonprofit purposes No person can benefit personally from assets Executive Compensation Surplus	Assets and profit generated can be distributed to private individuals and used to increase value of stock and other investments
Dissolution	Assets must be used to further nonprofit purposes	No similar obligation; assets can be distributed to private individuals
Tax Status	Full or partial tax-exemption Blue Cross: special tax designation	No tax-exemption

Nonprofit Health Inc.

Mission and Purpose

Ownership

Use of Assets

Dissolution

Tax Status