The 5 Main Types of Nonprofits (Plus Important FAQs)

Get the details about 19 types of nonprofits in the U.S. and some real-world examples of each one. This will help guide you if you’re forming a nonprofit yourself.

Get the details about 19 types of nonprofits in the U.S. and some real-world examples of each one. This will help guide you if you’re forming a nonprofit yourself.

What Are the Different Kinds of Non Profit Organizations?

What types of nonprofits are there?

The IRS lists a wide range of qualifying tax-exempt organizations, but many nonprofits often fit into several primary categories under Section 503(c) of the federal tax code. Some of these common types of nonprofits fall under the following subsections:

Section 501(c)(3)

Nonprofits under Section 503(c)(3) are organizations that classify as corporations, foundations or funds that operate in a religious, charitable, educational, scientific or literary capacity. These types of NPOs are able to claim donations as tax-deductible and typically fall under three distinct categories: charities, private foundations and religious organizations and churches.

Section 501(c)(4)

Under Section 501(c)(4) the IRS grants tax-exempt status to NPOs that operate in support of social and community welfare. Local business and employee associations with designated membership status is one such NPO that would qualify under Section 501(c)(4). Other types of 501(c)(4) eligible NPOs include organizations like homeowners associations, volunteer fire associations and community associations. In some cases, the IRS also recognizes lobbying organizations that operate in support of a social or municipal cause or service. Development associations may also qualify for 501(c)(4) tax-exempt status so long as they operate in support of social welfare.

Section 501(c)(5)

NPOs under Section 501(c)(5) include agricultural, horticultural and labor organizations. The IRS grants this tax-exempt status to NPOs that meet several key criteria. For instance, the NPOs net earnings cant go toward the benefit of any sole member and proceeds to the organization must be for the support of improvements to labor conditions, product quality and occupational efficiency. Several types of NPOs that operate under Section 501(c)(5) include associations like labor unions and farmers associations.

Section 501(c)(6)

The IRS also grants tax-exempt status to nonprofits that dont use any of their net earnings to benefit individuals or private shareholders. NPOs such as chambers of commerce, trade boards, real estate associations, business leagues and professional sports teams are several types of nonprofit organizations that qualify for tax-exempt status under the IRS Section 501(c)(6). Additionally, some lobbying organizations may also qualify under Section 501(c)(6) but may need to provide documentation of dues to participating members. These nonprofits may also be subject to a proxy tax on a percentage of expenditures related to operational activities.

Section 501(c)(7)

Under Section 501(c)(7), organizations that provide social or recreational support to a group may be eligible for tax-exempt status. So long as a nonprofits operations go toward the improvements and ongoing support of pleasure and recreation. Several common types of organizations that fall under this tax category can include associations like social clubs, alumni associations, country clubs and sports clubs. Its also important to note that many businesses can convert to this type of nonprofit, as long as activities meet the standards that the IRS establishes for 501(c)(7) eligibility.

Other types of nonprofits

In addition to these common types of NPOs and NFPOs, other nonprofit classifications exist under Section 501(c). The subsections of this federal tax designation go up to Section 501(c)(29), with each prior subsection outlining specific criteria that organizations must meet to be eligible for tax exemption. For instance, fraternal organizations, veterans associations, state-sponsored health organizations and continuing education trusts are several types of organizations that may qualify for tax-exempt status under the additional categories of Section 501(c).

What is a nonprofit?

A nonprofit is a type of organization or foundation that dedicates its activities to advancing or advocating for a particular cause or social perspective. A nonprofit organization is a non-business entity that doesnt generate profits for its services and holds tax-exempt status with the Internal Revenue Service (IRS). If your organization is seeking tax-exempt status, this requires filing under the 501(c) code with the IRS.

The IRS recognizes two types of nonprofits: nonprofit organizations (NPOs) and not-for-profit organizations (NFPOs), where NPOs serve the public and NFPOs serve a specific group, cause or charity. Nonprofits can fall under several categories of NPO depending on the nature of the organization and activities.

How to apply for tax-exempt status under Section 501(c)

The following steps can provide additional insight into filing for tax-exempt status under Section 501(c):

1. Determine the type of organization

Before filing for Section 501(c) status, its important to identify the type of organization under the nonprofit designation. In general, nonprofits can identify as associations, corporations or trusts. Corporations follow state laws when filing for tax exemption and submit articles of incorporation to signify this status. Associations are groups that form in support of a specific mission, cause or purpose.

Sometimes, associations can also qualify under another area, Section 501(a), of the federal tax code. In a trust NPO, the organization or individual holds the title to a property, such as an office building or event venue, but is responsible for using the property solely to benefit the public, a cause, group or other association.

2. Meet your states requirements for registration

The requirements and documentation states require when filing can vary, though all registering nonprofits submit IRS Form 1023-EZ. Therefore, its important to research and understand your states laws regarding tax exemption eligibility for your type of organization. Even with the differences in filing requirements, the IRS usually requires corporations, associations and trusts to include the following organizing documents when registering as a 501(c):

In addition, if your organizations had a recent name change and this amendment is present in the organizing documents, your state may require your organization to submit copies of the record. This means your state laws can ultimately determine whether your organization meets the appropriate documentation requirements for registration under Section 501(c).

3. Get an employer identification number

Once your NPO or NFPO legally forms and meets all state requirements, its eligible for tax-exempt status under the appropriate Section 501(c) designation. At the approval stage, the organization can apply for an employer identification number (EIN) through the IRS. A third party can also receive an EIN on the nonprofits behalf by signing off on the Third-Party Designee section of Form SS-4.

So long as your organization is a legally formed nonprofit, it can apply for the EIN. The IRS also requires all nonprofits to file a return or required notice within three years of receiving an EIN, otherwise, the IRS can revoke tax-exempt status.

This article is for information purposes only and is not intended to constitute legal or financial advice; you should consult with an attorney or tax professional for any legal or financial issues you may be experiencing.

FAQ

What are the 3 types of non profits?

There Are Three Main Types of Charitable Organizations

Most organizations are eligible to become one of the three main categories, including public charities, private foundations and private operating foundations.

What are the 4 types of non-profit organizations?

IRS 557 provides details on the different categories of nonprofit organizations. Public charities, foundations, social advocacy groups, and trade organizations are common types of nonprofit organization.

What are types of non profits?

501(c)(3) charities are the most popular type of nonprofit. There are more than 1.5 million registered charitable organizations in the United States. 501(c)(3) organizations are funded primarily through charitable donations and government grants.

What is the most common type of non-profit?

501(c)(3) charities are the most popular type of nonprofit. There are more than 1.5 million registered charitable organizations in the United States. 501(c)(3) organizations are funded primarily through charitable donations and government grants.

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