Types of Nonprofit Designations
Nonprofits fall under 27 different types of designations.
- Social Advocacy Groups: Advocate or lobby for a certain social or political cause. Classified under 501(c)(4)
- 501(c)(1): Organized and enacted by Congress, including federal credit unions. Contributions are allowed only for public purposes.
- 501(c)(2): Controlled by another tax-exempt organization where they must pass any revenue 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 certain portion of income annually to maintain their status.
- 501(c)(4) - Civic League, Social Welfare Organization or Local Employee Association: Tend to the general welfare of members and those going through hard times. Fewer restrictions on lobbying or other political activities.
- 501(c)(5): Within the agricultural, labor or horticultural spectrum and specialize in improving education and working conditions 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 Club: Organizes activities that are recreational or social in nature such as hobby groups, country clubs or sports leagues.
- 501(c)(8) - Fraternal Societies: Exist to provide for the payment of life, sickness, death or accident benefits to members.
- 501(c)(9) - Employee Beneficiary Association: Provides payment or insurance to their members upon sickness or other traumatic life events. Membership must be within the same workplace or union.
- 501(c)(10) - Domestic Fraternal Societies and Associations: Use membership dues to support outside causes without payment to members.
- 501(c)(11) - Teacher’s Retirement Fund Associations: Set up and manage teachers’ retirement funds.
- 501(c)(13) - Cemetery Companies: Exist solely to assist in the burial proceedings for members.
- 501(c)(14) - State Chartered Credit Union and Mutual Reserve Fund: Offers financial services to their members, usually at a discounted rate. They receive funding through business activities and government grants.
- 501(c)(15) - Mutual Insurance Companies of Association: Require members to pay a fee in order to provide them with insurance benefits, typically for property damage and funerals.
- 501(c)(16) - Cooperative Organizations to Finance Crop Operations: Usually created by farmers to pool together resources for agricultural operations.
- 501(c)(17) - Supplemental Unemployment Benefits Trust: Supported by the employer or employee and provides support to those on sick leave or who are permanently unemployed.
- 501(c)(18) - Employee Funded Pension Trust: Applies to employee trusts funded exclusively on member contributions and payments can only be used to benefit members.
- 501(c)(19) - Veterans Organizations: 75% of the members must be active or previous members of the armed forces. Provide benefits to U.S. Armed Forces 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 pension obligations and is funded by employers.
- 501(c)(23) - Veterans Organization: Applies to veterans organizations established before 1880.
- 501(c)(26) - State Sponsored Organizations Providing Health Coverage for High-Risk Individuals: Created at the state level for high-risk 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 government grants and member dues.
- 501(d) - Religious and Apostolic Associations: Religious-based organizations that share a common treasury. They pool members’ income and pay taxes on this amount.
- 501(e) - Cooperative Hospital Service Organizations: Provide cooperative services for two or more hospitals.
"While each nonprofit designation is exempt from paying most 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."