Understand the world of nonprofits, and where foundations and other forms of giving fit in. A nonprofit is an organization that exists to benefit the public and isn't in the business of making money. Any profits it earns aren't distributed to shareholders, like a for-profit business does; rather, any profits are used to further the organization's mission or charitable purpose. Nonprofits come in all shapes and sizes. Some are small, community-based organizations run by volunteers, and others are large, complex, professionally run businesses. Internationally, nonprofits are often referred to as NGOs (nongovernmental organizations). To become a nonprofit, an organization must apply to the Internal Revenue Service (IRS) of the U.S. federal government, which is the agency to which everyone pays taxes. Once the organization receives nonprofit status from the IRS (a letter that confirms the government agrees it is a nonprofit), it is exempt from paying income taxes (meaning, it doesn't have to do it). The IRS calls these types of organizations 501(c)(3)s -- signifying their special "tax exempt" status.