ORGANIZATIONS | Allowable Purposes and Prohibited Activities of Nonprofit Corporations

Allowable purposes

Texas law allows nonprofits to have the following purposes:

  1. serving charitable, benevolent, religious, eleemosynary, patriotic, civic, missionary, educational, scientific, social, fraternal, athletic, aesthetic, agricultural, and horticultural purposes;
  2. operating or managing a professional, commercial, or trade association or labor union;
  3. providing animal husbandry; or
  4. operating on a nonprofit cooperative basis for the benefit of its members.

Prohibited activities

A nonprofit corporation may not be organized or registered in Texas to:

  1. engage in or operate as a group hospital service, rural credit union, agricultural and livestock pool, mutual loan corporation, cooperative association under Chapter 251, cooperative credit association, farmers' cooperative society, Co-operative Marketing Act corporation, rural electric cooperative corporation, telephone cooperative corporation, or fraternal organization operating under the lodge system and incorporated under Subchapter C, Chapter 23;
  2. engage in water supply or sewer service except as an entity incorporated under Chapter 67, Water Code; or
  3. engage in a business or activity that may not be engaged in by a nonprofit corporation without first obtaining a license under the laws of this state and a license to engage in that business or activity cannot lawfully be granted to the corporation.