Better Books and Learning begins as a part-time effort by a few dedicated individuals to hold book groups for disadvantaged youth. The volunteers pay all of the expenses out of their own pockets, and the group never turns a profit. Then a board member of a local junior college asks the group to administer and run book groups as part of the college curriculum -- for a fee. Since the group will now show a profit from its educational activities, it decides to incorporate as a nonprofit and seek tax-exempt status with the IRS.

For Shore United wants to sponsor monthly cleanup drives to pick up and haul away trash left along the local bay shore. They've enlisted a sufficient number of enthusiastic volunteers, but they need funds to rent a truck, buy gas, and pay for volunteers' meals. They know that many people in the community would chip in to help fund their effort if their group was a recognized public charity eligible to receive tax-deductible contributions. Incorporating the group as a nonprofit corporation and applying for tax-exempt status can help them raise these much-needed funds.

Engineers for the Environment is a nonprofit consulting firm that helps developers prepare environmental impact reports for nonprofit housing developments. To avoid legal liability if unforeseen federal and state guidelines cause costly delays, the firm decides to incorporate their organization as a nonprofit.

Citizens for a Smoke-Free America informs the public about the health hazards of secondary smoke from cigarettes. The group decides to campaign for local legislation banning cigarette advertising on billboards in the community. It expects an unfriendly response from cigarette advertisers in the form of expensive and time-consuming lawsuits against the organization, and its directors and officers. The group decides to incorporate before beginning the campaign, to allow the corporation to pay the officers' and directors' legal expenses, and to insulate the directors and officers from personal liability.