What benefit can nonprofits receive?

• A. Taxable income.
• B. Double taxation.
• C. Federal grants only.
• D. Tax-exempt status.

Answer: (D)

Nonprofits gain a tax-exempt status, which means their income related to their mission isn’t taxed by the federal government. This is the main financial advantage because it frees more resources for program work and often makes contributions more attractive, since donors can deduct their gifts on their own tax returns. This status also enhances credibility and can broaden eligibility for a variety of grants and funding sources. The other options don’t fit: being taxed on income would reduce resources; double taxation isn’t how nonprofits are generally treated; and funding isn’t limited to federal grants, as nonprofits can receive support from federal, state, private foundations, and other sources.