Because notforprofit corporations cannot distribute earnings

Because not-for-profit corporations cannot distribute earnings to individual owners in the form of dividends, not-for-profit corporations do not have any capital similar to equity.

Solution

Not-for-profit organizations mostly operate on charity and not for revenue. The government provide tax free arrange on the charity paid by individual that is induvial get relive on the tax payment for the charity payment amount.

Since, Not-for-profit organizations does not operate for profit and cannot issue common stock as profit companies, not-for-profit corporations do not have any capital similar to equity.

Statement is true.