Understanding the Different 501(c) Categories
Section 501(c) of the Internal Revenue Code lists more than two dozen kinds of tax-exempt organizations. Most organizations fit one of these:
- 501(c)(3) — Charitable, religious, educational, scientific, and literary organizations, plus some others. Donations are generally deductible. Split into public charities and private foundations. Applies with Form 1023 or 1023-EZ.
- 501(c)(4) — Social welfare organizations and some employee associations. Can lobby freely for their purpose. Files Form 8976 notice; Form 1024-A is optional.
- 501(c)(5) — Labor, agricultural, and horticultural organizations, such as unions and farm bureaus. Form 1024.
- 501(c)(6) — Business leagues, chambers of commerce, trade associations, and professional societies. Form 1024.
- 501(c)(7) — Social and recreational clubs funded mainly by member dues, like country clubs and hobby clubs. Form 1024.
- 501(c)(8) — Fraternal beneficiary societies that operate under a lodge system and provide benefits such as insurance to members. Form 1024.
- 501(c)(19) — Veterans' organizations, posts, and auxiliaries. Form 1024.
Public charity or private foundation?
Every 501(c)(3) is presumed to be a private foundation unless it shows it qualifies as a public charity — usually by receiving broad public support, or by being a church, school, hospital, or supporting organization. Private foundations face stricter rules, including excise taxes on investment income, minimum annual payouts, and limits on dealings with insiders.
Picking the right category
Your category depends on your purpose and who benefits — not on what you'd prefer for tax reasons. If your organization serves members rather than the public, it probably isn't a 501(c)(3).
Related service: 501(c) Application Services →