There are many different types of nonprofit organizations, each with its own unique purpose and function in the community. You’ve probably heard of 501(c)3 nonprofits, but you may be surprised at how many other categories are defined by the IRS. In this article, we will explore the 14 most common types of nonprofit organizations and how they serve their communities.
501(c)1: Corporations Organized Under Act of Congress
A 501(c)1 organization is a nonprofit corporation that has been created by an act of Congress. These organizations are typically government agencies or instrumentalities; such as the Federal Reserve System, the United States Postal Service, and state and local government agencies.
These nonprofit organizations are exempt from paying federal income tax on any surplus revenue they generate.
501(c)2: Title-holding Corporations
Title-holding corporations are nonprofit organizations that hold title to property, usually for the benefit of a religious organization or cemetery. These types of nonprofits are typically created by state legislatures and are exempt from federal income tax.
This type of nonprofit helps the community by holding and managing property for religious or other nonprofit organizations. This can free up resources for these organizations so they can better serve their missions.
501(c)3: Charitable Organizations
Charitable organizations are nonprofit organizations that are organized for religious, charitable, scientific, literary, art, or educational purposes, making them an essential part of the nonprofit landscape. If you are wondering how to start a 501(c)(3) nonprofit organization, understanding the guidelines and requirements for obtaining a 501(c)(3) designation from the IRS is crucial. After receiving a 501(c)3 designation from the IRS, they are exempt from federal income tax and can receive tax-deductible contributions from donors. This is the most well-known and common category of nonprofit organizations.
These nonprofits help the community by providing goods or services that would not otherwise be available. The exact benefits vary widely depending on the organization, as each may provide specific services for those in need: tutoring young children, helping the environment, supporting disadvantaged groups, assisting the disabled or providing art in community places.
501(c)4: Civic Leagues, Social Welfare Organizations, And Employee Associations
Civic leagues, social welfare organizations, and employee associations are nonprofit organizations that are organized for the promotion of social welfare or the common good. They are exempt from federal income tax and can receive tax-deductible contributions from donors.
These types of nonprofits help the community by advocating for laws or policies that will improve the quality of life for all citizens. They may also provide social services or other assistance to those in need.
501(c)5: Labor, Agricultural & Horticultural Organizations
Labor, agricultural, and horticultural organizations are nonprofit organizations that are organized for the betterment of the community. They are exempt from federal income tax and can receive tax-deductible contributions from donors.
These types of nonprofits help the community by providing food or services that would not otherwise be available. They may also advocate for laws or policies that will improve the quality of agricultural practices and horticultural applications to benefit the community.
501(c)6: Business Leagues, Chambers Of Commerce & Real Estate Boards
Business leagues, Chambers of Commerce, and real estate boards are nonprofit organizations that are organized for the promotion of business or trade. They are exempt from federal income tax and can receive tax-deductible contributions from donors.
These types of nonprofits help the community by advocating for laws or policies that will improve the business climate. They also provide resources and networking opportunities for businesses.
501(c)8: Fraternal Beneficiary Societies & Associations
Fraternal beneficiary societies and associations are nonprofit organizations that are organized for the mutual aid or benefit of society. They are exempt from federal income tax and can receive tax-deductible contributions from donors.
These types of nonprofits are fraternal in structure, with members who share a “common calling” to help in benevolent and civic ways. They often provide services such as aiding children who need funds for operations. They may also advocate for laws or policies that will improve the quality of life for others. For example, Rotary Clubs of America provided smallpox vaccines worldwide to help eradicate the disease.
501(c)11: Teachers’ Retirement Fund Associations
Teachers’ retirement fund associations are nonprofit organizations that are organized for the purpose of providing retirement benefits to their members. They are exempt from federal income tax and can receive tax-deductible contributions from donors.
These types of nonprofits help the community by providing services for teachers that would not otherwise be available. They may also advocate for laws or policies that will improve the quality of life of their members.
501(c)14: State-Chartered Credit Unions & Mutual Reserve Funds
State-chartered credit unions are nonprofit organizations that are organized for the purpose of promoting thrift among their members and providing credit at reasonable rates. They are exempt from federal income tax and can receive tax-deductible contributions from donors.
Mutual reserve funds are nonprofit organizations that are organized to provide insurance and annuities. They are exempt from federal income tax and can receive tax-deductible contributions from donors.
These types of nonprofits help the community by providing services that offer low-cost options for consumer savings and credit. They may also advocate for laws or policies that will improve the quality of life of their members.
501(c)15: Mutual Insurance Companies & Associations
Mutual insurance companies or associations are nonprofit organizations that are organized for the purpose of underwriting insurance risks. They are exempt from federal income tax and can receive tax-deductible contributions from donors.
These types of nonprofits help the community by providing services that would not otherwise be available. They may also advocate for laws or policies that will improve the quality of life of their members.
501(c)(19): Veterans Organizations
Veterans organizations are nonprofit organizations that are organized for the purpose of providing assistance to veterans and their families. They are exempt from federal income tax and can receive tax-deductible contributions from donors.
These types of nonprofits help the community by providing goods or services that may not otherwise be available. They may also advocate for laws or policies that will improve the quality of life for veterans and their families.
501(c)(22) – Withdrawal Liability Payment Fund
The Withdrawal Liability Payment Fund is a nonprofit organization that is organized for the purpose of providing benefits to employees who have been laid off from their jobs. They are exempt from federal income tax and can receive tax-deductible contributions from donors.
These types of nonprofits help the community by providing services that would not otherwise be available. They may also advocate for laws or policies that will improve the quality of life for those who have been laid off from their jobs.
501(c)(26) – State-Sponsored Organizations Providing Health Coverage for High-Risk Individuals
State-sponsored organizations that provide health coverage for high-risk individuals are nonprofit organizations that are organized for the purpose of providing health insurance to those who are at risk of not being able to obtain it. They are exempt from federal income tax and can receive tax-deductible contributions from donors.
These types of nonprofits help the community by providing services that may not otherwise be available. They may also advocate for laws or policies that will improve the quality of life for those who live at or below the poverty level.
501(c)(27) – State-Sponsored Workers’ Compensation Reinsurance Organization
State-sponsored workers’ compensation reinsurance organizations are nonprofit organizations that are organized for the purpose of providing insurance to those who are injured on the job. They are exempt from federal income tax and can receive tax-deductible contributions from donors.
These types of nonprofits help the community by providing services that would not otherwise be available. They may also advocate for laws or policies that will improve the quality of life for those who have been injured on the job.
Conclusion
As you can see, there are numerous types of nonprofits that entrepreneurs can start. Each type of nonprofit has its own unique purpose and goals, but all of them help to improve the quality of life of their members and the communities they serve. If you’re thinking of starting a nonprofit, research the different types to see which one best suits your goals and passion. With hard work and dedication, you can make a difference in the world by starting a nonprofit organization.