There are many different types of non-profit organizations.
When looking into launching a non-profit system, it'south important to know and sympathize the different types of designations. — Getty Images/Halfpoint

If you're because starting a nonprofit organisation, yous'll want to understand the dissimilar types of nonprofit designations. Each designation has their own requirements and compliances. Here are the types of nonprofit designations to help you lot decide which is right for your organisation.

What is a nonprofit?

A nonprofit is an system operating to further a social cause or support a shared mission. Nonprofits are tax-exempt by the IRS as their organizations are a benefit to the public, and they're required to keep fiscal information public to ensure donations are only for the nonprofit's further advancement.

[Read: Education, Partnerships and Community Are Essential to Nonprofit Success ]

Types of nonprofit designations

Today, at that place are over one.6 one thousand thousand nonprofit organizations in the United States that are categorized into 27 unlike types of designations. Here is a general overview of each type of nonprofit system:

  • Social Advocacy Groups: Advocate or anteroom for a certain social or political cause. Classified under 501(c)(4).
  • 501(c)(i): Organized and enacted past Congress, including federal credit unions. Contributions are allowed simply for public purposes.
  • 501(c)(2): Controlled past another tax-exempt organization where they must pass whatever acquirement to the parent organization.
  • 501(c)(3) – Charitable Organizations: Include religious, scientific, charitable or literary organizations. Typically funded through donations, membership dues and government grants.
  • Foundations: Fund other nonprofit organizations, sponsor events and raise awareness for causes. Required to donate a sure portion of income annually to maintain their status.
  • 501(c)(4) - Borough League, Social Welfare Organization or Local Employee Association: Tend to the full general welfare of members and those going through hard times. Fewer restrictions on lobbying or other political activities.
  • 501(c)(v): Within the agricultural, labor or horticultural spectrum and specialize in improving education and working weather of these sectors.
  • 501(c)(6) - Trade or Professional Association: Improves conditions for their members. Usually business leagues, chambers of commerce or real estate boards.
  • 501(c)(7) - Social or Recreational Society: Organizes activities that are recreational or social in nature such as hobby groups, country clubs or sports leagues.
  • 501(c)(viii) - Congenial Societies: Exist to provide for the payment of life, sickness, death or accident benefits to members.
  • 501(c)(ix) - Employee Beneficiary Association: Provides payment or insurance to their members upon sickness or other traumatic life events. Membership must exist within the aforementioned workplace or marriage.
  • 501(c)(ten) - Domestic Congenial Societies and Associations: Employ membership ante to back up outside causes without payment to members.
  • 501(c)(xi) - Teacher'due south Retirement Fund Associations: Set upwardly and manage teachers' retirement funds.
  • 501(c)(thirteen) - Cemetery Companies: Exist solely to assistance in the burial proceedings for members.
  • 501(c)(xiv) - State Chartered Credit Spousal relationship and Mutual Reserve Fund: Offers financial services to their members, usually at a discounted charge per unit. They receive funding through business organization activities and regime grants.
  • 501(c)(xv) - Mutual Insurance Companies of Association: Require members to pay a fee in order to provide them with insurance benefits, typically for holding damage and funerals.
  • 501(c)(16) - Cooperative Organizations to Finance Crop Operations: Commonly created past farmers to pool together resources for agricultural operations.
  • 501(c)(17) - Supplemental Unemployment Benefits Trust: Supported by the employer or employee and provides back up to those on sick leave or who are permanently unemployed.
  • 501(c)(xviii) - Employee Funded Pension Trust: Applies to employee trusts funded exclusively on fellow member contributions and payments tin simply be used to benefit members.

A nonprofit is an organization operating to further a social crusade or support a shared mission.

  • 501(c)(19) - Veterans Organizations: 75% of the members must be active or previous members of the armed forces. Provide benefits to U.S. Military machine members.
  • 501(c)(21) - Black Lung Benefits Trust: Pays claims to coal miners sick from black lung disease based on the Federal Black Lung Benefit Act of 1969.
  • 501(c)(22) - Withdrawal Liability Payment Fund: Helps employers fulfill alimony obligations and is funded by employers.
  • 501(c)(23) - Veterans Organisation: Applies to veterans organizations established before 1880.
  • 501(c)(26) - State Sponsored Organizations Providing Health Coverage for Loftier-Risk Individuals: Created at the country level for loftier-chance individuals who may not have access to proper healthcare.
  • 501(c)(27) - State Sponsored Workers' Compensation Reinsurance Organization: Provides insurance for worker's compensation programs supported by regime grants and member dues.
  • 501(d) - Religious and Apostolic Associations: Religious-based organizations that share a common treasury. They puddle members' income and pay taxes on this amount.
  • 501(eastward) - Cooperative Hospital Service Organizations: Provide cooperative services for ii or more than hospitals.

While each nonprofit designation is exempt from paying nearly federal income tax, each type has its own rules concerning eligibility, lobbying, electioneering and whether contributions or donations qualify as tax deductible. IRS Publication 557 provides detailed information about the various rules and regulations surrounding each nonprofit designation.

[Read: 7 Things to Consider When Starting a Nonprofit ]

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Published Feb 05, 2021