According to Investopedia, an organization can benefit from the non-profit tax status if it satisfies several conditions:

  • have a purpose within a designated list
  • an annual exemption form must be filed yearly (with some exceptions)
  • files various other forms

However, I do not see some clear or strict rules related to the organizational "overhead". For example, Cancer Fund of America (now dissolved) submitted some financial data that indicate a high overhead / low efficiency in spending the donations:

  • only 13% of total expenses were spent on its programs
  • the cost to raise 100$ was 80$
  • the President/CEO had a compensation of $248,000

I wonder why non-profit status is allowed for some entities that spend most of the money outside of the programs themselves.

  • 4
    I don't know how strict the rules are but it's likely there are more than just those given by instestopedia. I wondered by your example was dissolved so I searched for "cancer fund of america" and "scandal" and found a few articles indicating the person behind it was charged with fraud. Here's one example nytimes.com/2015/05/20/business/…
    – Eric Nolan
    Dec 2, 2023 at 22:33
  • 1
    "Why are there not rules for X?" has the generic answer: "No-one can agree what rules for X should be made"
    – Caleth
    Dec 5, 2023 at 14:58


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