More often than not, a nonprofit corporation begins as a nonprofit association – a loosely organized organization ran by mostly volunteers. In a nonprofit association, the members can be held liable for the debts and liabilities of the organization.
If a nonprofit association stays afloat long enough, they often seek to gain tax-exempt status and attract donors by becoming a nonprofit organization. Once incorporated, not only can the organization gain tax-exempt status from the IRS, but the individual members will no longer be subject to the debts and liabilities of the organization.
Becoming a nonprofit corporation is no more difficult than a registering as a limited liability company – you draft articles of organization and file them with the Secretary of State. You must then submit your incorporation papers to the IRS to gain tax-exempt status, under IRS Section 501(c)(3). To gain tax exempt status, you must obtain and fill out (likely with the assistance of a lawyer/accountant) IRS Package 1023.
The caveat to being a nonprofit corporation is that the assets of your organization must be dedicated to charitable, educational, religious, or similar purposes; moreover, nonprofit corporations cannot campaign or lobby for or against political candidates. Finally, taxes must be paid on any profits the nonprofit organization makes.