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Why Isn't Everybody a Nonprofit?!

2026-02-13 · explainer · Hank · 10:15 · watch on YouTube

Topic: Economics · mode: Explainer · tags: calendar ritual, fundraising ask, civic or action cta, self promotion

On the day the Project for Awesome begins, Hank tells John that, having taken Complexly nonprofit, he explains what a US 501(c)(3) nonprofit is (tax-free surpluses, tax-deductible donations, grants) and why most organizations are not: owners want profit and equity, most activities are not exempt purposes (as with Good Store), and the paperwork and legal infrastructure favour businesses.

What is said

The parts of the video and what is said in each (★ — how much it matters to the video).

00:00:00 — P4A begins today: thanks for 19 years, new systems, $88,000 raised, Tiltify perks, the Focus Friend bean

  • ★★★ Hank says the yearly Project for Awesome charity livestream begins today, moments or hours after he uploads, and thanks everyone for 19 years of it. — 00:00:00 · Project for Awesome
  • ★ Hank thanks viewers for their patience: P4A uses several new systems this year (2026), by choice or necessity, and the website broke a little yesterday but is now fixed. — 00:00:15 · Project for Awesome
  • ★★ Hank says the Project for Awesome has already raised $88,000. — 00:00:26 · Project for Awesome
  • ★★ Hank says the Tiltify perks include an unsigned fish print bundle: an artist was hired to make customized fish prints for all of the P4A guests, Hank included. — 00:00:29 · Project for Awesome
  • ★★ Hank lists more perks: the Nerdfighter art perk and a bundle of digital downloads, including an exclusive Hank's channel video, an audio first chapter of his book, Zombicorns in PDF and audio, and podcast exclusives. — 00:00:40 · hankschannel, Dear Hank and John, Delete This, The Anthropocene Reviewed (podcast)
  • ★★ Hank says Focus Friend users can get the Baked Beans bean, and all the money from it goes to the Project for Awesome. — 00:01:05 · Focus Friend, Project for Awesome

00:01:27 — Complexly became a nonprofit; what a 501(c)(3) is: tax-free surplus and tax-deductible donations, with a worked example

  • ★★★ Hank reminds John that Complexly, the company they founded together 15 years ago, just became a nonprofit organization, which they think was a good idea. — 00:01:27 · Complexly, John Green
  • ★★ Hank says the conversion made him think hard about what a nonprofit is, and at one point he asked himself why everybody doesn't do this. — 00:01:40 · Complexly
  • ★★★ Hank says an organization focused on doing good in the world does not have to be a nonprofit; it can be a business. — 00:01:56
  • ★★★ Hank explains that in the US, organizations meeting all requirements of Section 501(c)(3) of the Internal Revenue Code pay no federal income tax on the profit they generate. — 00:02:05 · United States
  • ★★ Hank says nonprofits can have a surplus, and most strive for one as a buffer, since sitting at zero is precarious; that surplus is not taxed. — 00:02:26
  • ★★★ Hank says the second big perk is tax-deductible donations: people or corporations giving to a 501(c)(3) can often deduct the amount from their taxable income, which gives them an incentive to give. — 00:02:55
  • ★★★ In a hypothetical, Hank shows a $250,000 earner giving Complexly $50,000 kept about $145,000 when it was a business, but about $158,000 now that donations reduce taxable income. (hypothetical) — 00:03:24 · Complexly

00:04:22 — Grants; nonprofits can make lots of money; why businesses are businesses: owners take profit and sell equity

  • ★★ Hank says nonprofits often get access to grants and public funds unavailable to for-profits, since many foundations and agencies fund only registered nonprofits; this is how the Project for Awesome works. — 00:04:22 · Project for Awesome
  • ★★★ Hank says nonprofits can make tons of money and have significant surpluses, citing hospitals, universities and the NFL, which was a nonprofit until 2015. — 00:04:36
  • ★ Hank says San Diego Comic-Con is a nonprofit, which he checked by googling. — 00:04:52

  • ★★★ Hank says the difference is not whether money is made but what happens to it: a nonprofit's surplus is untaxed only because it cannot leave the organization and go to a person, while businesses are set up for profits to go to owners. — 00:04:59

    “The difference is not that they don't make money. The difference is what happens with that money.”

  • ★★ Hank explains that owners mainly make money from profit distributions, which are taxed even if they stay in the corporation, whereas a nonprofit's money belongs to the organization and can only be spent on its mission. — 00:05:15

  • ★★ Hank says a company also has value in itself: owners can sell equity to investors to grow and give employees equity, but a nonprofit has no owners, no equity and no windfall. — 00:06:00
  • ★★★ Hank says most businesses are businesses because their founders' primary aim is the incentive to make money for themselves, though many count doing good as part of their mission. — 00:06:58

00:07:18 — Exempt purposes and the Good Store case; paperwork; a world built for businesses; conclusion

  • ★★★ Hank says most businesses could not be nonprofits even if they wanted: 501(c)(3) requires specific exempt purposes, such as charitable, educational, scientific, religious or literary ones serving the public good. — 00:07:22
  • ★★★ Hank says Good Store donates all its profit to charity but sells socks, which is not an exempt purpose, so it must be a for-profit that pays tax and then donates; they would love it to be a nonprofit. — 00:07:47 · Good Store
  • ★★ Hank says the paperwork of being a nonprofit is non-trivial, especially for a smaller organization. — 00:08:25
  • ★★ Hank says a reason he has never heard stated is that the world is built for what exists: far more lawyers work in for-profit, and America's infrastructure, tax code included, is set up for businesses. — 00:08:36 · United States
  • ★★ Hank says few lawyers had experience converting a for-profit to a nonprofit, and once they found one it was much easier. — 00:09:24 · Complexly
  • ★★★ Hank concludes that usually organizations that should be nonprofits are, and those that should not are not, which is what makes the Project for Awesome possible. — 00:09:24 · Project for Awesome

00:09:53 — P4A livestream: get the bean, donate, vote, watch

Threads in this video

Where the stories that moved here went next

Mentioned

Central: 501(c)(3) organization · Nonprofit organization

Also: Projects: Complexly · Dear Hank and John · Delete This · Good Store · hankschannel · Project for Awesome · The Anthropocene Reviewed (podcast)

Works: DadCast · Focus Friend · Zombicorns

Organizations: National Football League · Tiltify

Concepts: tax deduction

Places: United States

Events: San Diego Comic-Con

Policies: Internal Revenue Code

Also centred on Nonprofit organization: We Just Sold Our Company for $0 · Hank Green Is a Fool

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