Not my industry, but I will take a stab. Anyone who knows better should correct me. When you form a corporation or business, you have the option of being a for profit or non profit business, and there are different state laws that apply to each entity status and its formation.
Non-profit and not for profit entities then tend to obtain tax exempt status from the IRS (and state taxing authority), and if they meet certain qualifications, then donations given to them can be tax deductible too. In some cases they can obtain IRS permission to raise finances by issuing tax exempt bonds. The issue for tax exemption/deduction/bond eligibility is whether they meet a set of fairly stringent provisions in the Internal Revenue Code and regulations (there are state level requirements as well, but they are generally less restrictive and more reporting oriented). The IRS, for the privilege of being tax exempt, tends to mandate that the business raise and spend a certain percentage of their money certain delineated ways, compensate their employees certain ways, provide extensive accounting information to the federal government, be run by directors with stringent fiduciary duties and obligations, and thus sometimes forces an extreme level of inflexibility, to ensure that the "charity" is keeping everything on the up and up. Sometimes if the business could be a profitable for profit one and if it doesn't depend on donations to maintain its business, it would make more sense, and provide a lot more flexibility and manageability, not to mention generating a cashflow which could be used for non-charitable purposes, if it operated as a for profit (i.e. regular) business. With respect to any donations and money raised while a tax exempt business, you would generally have to disgorge and donate all that money to another similar charity that was tax exempt -- you can't keep it if you cease to be a "charity". You basically would need to start over with a new parent company with a new name but the same personnel.
Hope that helps.
