When people think of a nonprofit, they typically think of a 501(c)(3) charitable organization. For many people, those two terms are synonymous. However, there are more than two dozen types of nonprofits. Since most people do not enjoy carefully reading the tax code, it may be helpful to provide a quick description of the types of nonprofits you will be most likely to encounter.
501(c)(3): Public Charities and Private Foundations
Organized and operated for limited purposes in certain areas: religious, charitable, scientific, public safety, literary, educational, fostering national or international sports competition, prevention of cruelty to animals.
Examples: churches, schools, spay and neuter programs, charitable organizations, private foundations.
501(c)(4): Civic Leagues and Social Welfare Organizations
Should further the common good and general welfare of the people of the community.
Examples: civic associations, volunteer fire companies, certain local government employee retirement benefit programs, certain homeowners’ associations, organizations encouraging businesses to move to an area by making loans, groups preserving community traditions.
501(c)(5): Labor, Agricultural, and Horticultural Organizations
An association of workers who have combined to protect and promote their interests through collective bargaining for better working conditions.
Example: labor unions
Organization working to improve the conditions of workers, efficiency of production, or the products themselves in the agricultural and horticultural sector.
Examples: exhibiting livestock, maintaining specific breed of farm animal, promoting agricultural activities among rural residents.
501(c)(6): Business Leagues
Group promoting a common business interest, primarily supported by membership dues and fees from activities related to an exempt purpose. Unlike most other nonprofits, can advocate for enactment of laws in the interest of its members.
Examples: chambers of commerce, real estate boards, professional football leagues, bar associations.
501(c)(7): Social and Recreational Clubs
Organized for pleasure and recreation of members bound together by common purpose, with special requirements prohibiting most instances of discrimination.
Examples: garden clubs, university fraternities and sororities in the Greek chapter system, amateur sports clubs, country clubs.
501(c)(8) & 501(c)(10): Fraternal Beneficiary Societies & Domestic Fraternal Societies
Fraternal organization operating under the lodge system. (8) organizations provide for insurance and other benefits for their members and dependents, whereas (10) organizations give their earnings to religious, charitable, scientific, literary, educational, and fraternal purposes.
Examples: Elks, Moose, Eagles, Masons.
501(c)(13): Cemetery Companies
Solely for the disposal of human bodily remains through cremation or burial. May not operate a mortuary, but may sell headstones, flowers, etc. for self-support under certain circumstances.
Examples: cemeteries, perpetual care organizations.
501(c)(19): Veterans’ Organizations
Post or group of past or present service members of the U.S. Armed Forces. Activities must meet certain requirements for promoting social welfare, perpetuating the memory of deceased veterans, assisting disabled veterans, conducting educational and charitable programs, etc.
Examples: Veterans of Foreign Wars (VFW), American Legion, their auxiliary units and foundations.
For more information:
IRS Publication 557 has a great deal more information on these types of organizations and many others, if you want to learn more about the requirements of each sub-section, donation deductions, and other issues.
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Please note: This blog is intended as general educational information only, and should not be considered legal advice or a substitute for consulting a lawyer.