For a mock NASAA exam, assume the administrator is testing this exact point. The exam wants the best state-securities answer, not a practical business answer. Securities issued by a religious, educational, or charitable organization that is organized as a nonprofit are:

Why B — Exempt from state registration under the USA

Under USA Section 401, securities issued by nonprofit organizations organized for religious, educational, benevolent, charitable, fraternal, or social purposes are exempt from state registration. The exemption applies provided the organization does not operate for pecuniary profit and no part of the net earnings inures to the benefit of any private shareholder. State-law analysis leads to the same conclusion despite the alternate scenario.