Mutual-benefit nonprofit corporation
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A mutual-benefit nonprofit corporation or membership corporation is a type of nonprofit
corporation A corporation is an organization—usually a group of people or a company—authorized by the state to act as a single entity (a legal entity recognized by private and public law "born out of statute"; a legal person in legal context) and ...
in the US, similar to other mutual benefit organizations found in some of
common law In law, common law (also known as judicial precedent, judge-made law, or case law) is the body of law created by judges and similar quasi-judicial tribunals by virtue of being stated in written opinions."The common law is not a brooding omnipres ...
nations, chartered by government with a mandate to serve the mutual benefit of its members. A mutual-benefit corporation can be non-profit or not-for-profit in the United States, but it cannot obtain
IRS The Internal Revenue Service (IRS) is the revenue service for the United States federal government, which is responsible for collecting U.S. federal taxes and administering the Internal Revenue Code, the main body of the federal statutory tax ...
501(c)(3) non-profit status as a
charitable organization A charitable organization or charity is an organization whose primary objectives are philanthropy and social well-being (e.g. educational, religious or other activities serving the public interest or common good). The legal definition of a ...
. It is distinct in U.S. law from
public-benefit nonprofit corporation A public-benefit nonprofit corporationCalifornia Code - Part 2: NONPROFIT PUBLIC BENEFIT CORPORATIONS nonprofit_corporation_chartered_by_a_state_governments_of_the_United_States,_state_gover_...
s,_and_religious_corporation.html" ;"title="110. - 6910./ref> is a type of Nonprofit organization">nonprofit corporation chartered by a state governments of the United States, state gover ...
s, and religious corporation">110. - 6910./ref> is a type of Nonprofit organization">nonprofit corporation chartered by a state governments of the United States, state gover ...
s, and religious corporations. Mutual benefit corporations must still file tax returns and pay income tax because they are not formed for a purpose that is meant to benefit the general public (unlike public-benefit nonprofit corporations) but rather to provide an association of people with a common benefit. Due to its private purpose, a mutual benefit corporation pays the same taxes as a regular for-profit corporation (C corporation tax rates). However, the IRS still allows for tax exemptions for certain types of mutual-benefit nonprofits (501(c)(6)). Mutual benefit corporations are formed for common gain purposes such as providing insurance for members (many insurance companies still have "mutual" in their names, though many have since adopted other corporate forms), establishing a community financial institution, managing common property, or promoting the social or economic welfare of member individuals or organizations (for example through trade groups, professional organizations or business districts). Some mutual water companies are organized as mutual benefit corporations; an electric membership corporation is another example. Mutual benefit corporations have their roots in the benefit societies that sprang up to offer services and solidarity to workers during the
Industrial Revolution The Industrial Revolution was the transition to new manufacturing processes in Great Britain, continental Europe, and the United States, that occurred during the period from around 1760 to about 1820–1840. This transition included going f ...
, although most today do not have any particular connection to labor movements.


References

* Corporate governance in the United States {{US-law-stub