A 501(c) organization is a type of nonprofit organization in the United States. The name refers to the section of the Internal Revenue Code that defines these organizations and sets out their tax-exempt status. There are several different types of 501(c) organizations, including 501(c)(3) (charitable organizations), 501(c)(4) (social welfare organizations), and 501(c)(6) (business leagues). Each type has specific requirements and restrictions.
Different Types of 501(c) Organizations
There are several different types of 501(c) organizations, including:
- 501(c)(3) organizations: These are charitable organizations, such as religious organizations, educational institutions, and scientific research organizations. They are eligible for tax-exempt status and donations to them are tax-deductible for the donor.
- 501(c)(4) organizations: These are social welfare organizations, such as civic leagues and organizations that promote social welfare. They are also tax-exempt, but donations to them are not tax-deductible.
- 501(c)(5) organizations: These are labor, agricultural, and horticultural organizations.
- 501(c)(6) organizations: These are business leagues, chambers of commerce, real estate boards, and professional football leagues. They are also tax-exempt, but donations to them are not tax-deductible.
- 501(c)(7) organizations: These are social and recreational clubs
- 501(c)(8) organizations: These are fraternal beneficiary societies, order or associations
- 501(c)(9) organizations: These are voluntary employees’ beneficiary associations
- 501(c)(10) organizations: These are domestic fraternal societies and associations
- 501(c)(11) organizations: These are teacher retirement fund association
- 501(c)(12) organizations: These are benevolent life insurance associations, mutual ditch or irrigation companies, mutual or cooperative telephone companies
- 501(c)(13) organizations: These are cemetery companies
- 501(c)(14) organizations: These are state-chartered credit unions
- 501(c)(15) organizations: Mutual insurance companies or associations
- 501(c)(16) organizations: Cooperative organizations to finance crop operations
- 501(c)(17) organizations: Supplemental unemployment benefit trusts
- 501(c)(18) organizations: Employee funded pension trusts
- 501(c)(19) organizations: Post or organization of past or present members of the Armed Forces
- 501(c)(20) organizations: Group legal service organizations
- 501(c)(21) organizations: Black lung benefit trusts
- 501(c)(22) organizations: Withdrawal liability payment fund
- 501(c)(23) organizations: Veterans organizations
- 501(c)(25) organizations: Title holding corporations or trusts
- 501(c)(26) organizations: State-sponsored organization providing health coverage for high-risk individuals
- 501(c)(27) organizations: State-sponsored workers’ compensation reinsurance organizations
- 501(c)(28) organizations: Prepaid legal services plans
- 501(c)(29) organizations: Qualified nonprofit health insurance issuers
This list is not exhaustive, and there may be other types of organizations that qualify as 501(c) organizations.
Donations made to 501(c) organizations that are tax-deductible for the donor
501(c) organizations, by virtue of their tax-exempt status, are able to offer a tax benefit to donors as well. Charitable and educational nonprofits, specifically those falling under section 501(c)(3), are typically eligible to provide this advantage, which allows a portion of donations to be deducted from a taxpayer’s adjusted gross income (AGI). When itemizing deductions on their tax return, an individual can deduct contributions to most charitable organizations up to 50% (60% for cash contributions) of their AGI, computed without regard to net operating loss carrybacks. In case of other organizations, the limit is 30% of AGI. It’s good to check the status of the organization in IRS’s exempt organization database before making any donations.
501(c) Organization FAQs
What does 501(c) Organization mean?
A 501(c) organization refers to a type of nonprofit entity in the United States that is recognized by the Internal Revenue Service (IRS) and is exempt from paying federal income taxes. These organizations are established to provide a public benefit and can be classified into different categories, such as charities, government entities, advocacy groups, educational and artistic groups, and religious entities.
Difference Between a 501(c) and a 501(c)(3)?
The difference between a 501(c) and a 501(c)(3) is that while both are tax-exempt nonprofits, a 501(c)(3) organization is further classified as a charitable organization, church/religious entity, or private foundation, and donors can claim tax deductions for contributions made to them.
Types of Nonprofits?
The IRS recognizes several types of nonprofit organizations that can qualify for 501(c) status, including but not limited to charitable organizations, churches and religious organizations, social advocacy groups, trade organizations and many more.
