A nonprofit business is a business whose owners do not receive distributions of profits—and any money remaining after payment of the business’s expenses must be retained and used for its own expenses and for charitable purposes. Nonprofit businesses are often charitable foundations and exempt from federal income tax under Internal Revenue Code section 501(c)(3). A tax-exempt 501(c)(3) is a charitable organization that is formed for religious, charitable, educational, literary, artistic, or scientific purposes, or for preventing cruelty to animals and children, fostering amateur sports competition (locally and internationally), or testing for public safety. These charitable organizations are distinct from not-for-profit social or recreational clubs that may be exempt from federal income taxation if they meet the requirements of Internal Revenue Code section 501(c)(7).

In New Hampshire (NH), a nonprofit business is typically structured as a non-profit corporation, which is governed by the New Hampshire Revised Statutes Annotated (RSA) Chapter 292. These entities are designed to operate without the primary goal of making profits for their owners. Instead, any surplus revenues are reinvested into the organization to further its mission, which must be for religious, charitable, educational, scientific, or similar purposes as outlined in Section 501(c)(3) of the Internal Revenue Code. To be recognized as a 501(c)(3) tax-exempt organization, a New Hampshire nonprofit must apply to the Internal Revenue Service (IRS) and meet the federal requirements, including the prohibition on political campaigning and substantial limitations on lobbying activities. Additionally, NH nonprofits must comply with state-level regulations, such as annual reporting to the NH Attorney General's Charitable Trusts Unit. This is distinct from social or recreational clubs, which may qualify for tax-exempt status under Section 501(c)(7) of the Internal Revenue Code if they are organized for pleasure, recreation, and other similar purposes and meet specific IRS criteria.