New nonprofit organizations must be incorporated as a nonprofit corporation community chest or foundation[i] within its particular state. For the legally established NPO, a number of protections are in place.
Financial autonomy is one benefit granted a nonprofit business. The NPO is a legal entity with all associated rights, and as such has its own finances. The founder and board members of an organization and the NPO itself have separate bank accounts, making any potential lawsuit one that will effect solely the NPO.
There are a number of banks that cater specifically to the unique needs of nonprofit organizations. Finding a financial institution that is experienced in dealing with NPOs can be a considerable benefit to the organization, as they will not only give comparatively better interest rates and help with financial reporting, but they will be able to advise on financial matters, as well.
Another benefit to incorporating an NPO is the fact that a nonprofit is able to continue operations even after the founder leaves the board or even the company itself. A potential NPO founder may work at the company for whatever length of time he or she deems fit. After stepping down from the board of directors, the founder is no longer accountable to or for the organization. This not only affords a certain amount of freedom to the founder, but it allows the nonprofit to carry on, thriving long after its creator is gone.
[i] "The IRS states that you must be a corporation, community chest, fund, or foundation to receive tax-exempt status." Online. http://www.managementhelp.org/strt_org/strt_np/strt_np.htm
