Legal Question in Business Law in California

It is perfectly legal to establish a non-profit educational institution. There are specific provisions in the Internal Revenue Code covering them. The procedure is rather complicated and way beyond the scope of a free bulletin board question. Also, you should be aware that although you can be paid by the organization, if your pay is too much of the institution's budget, or is to high compared with other institutions serving the same number of students, the IRS may withdraw the non-profit status and charge you taxes and penalties on all the revenue of the organization. So if you are thinking you can set up a non-profit as a way of making money for yourself, then that would be very illegal.