Nonprofit and Tax-exempt Organizations

The following chart outlines the different types of tax-exempt nonprofit organizations.

501(c)3 501(c)4 501(c)6
Purpose Charitable or educational Nonprofit civic leagues and organizations promoting social welfare Promotion of some common business interest
Comments Must be organized and operated exclusively for one or more of the above purposes Can serve recreational purposes as well; can serve a wider class of beneficiaries than (c)3 or (c)6 organizations Must be devoted to improvement of business conditions of one or more lines of business, rather than performance of particular services for individuals; primarily membership groups
Political activity allowed? May not direct a substantial part of its activities toward influencing legislation.  May not support a candidate for public office May be involved in lobbying but may not support a candidate for public office Unlimited lobbying efforts as long as activities are directly promoting common business interests of the organization
Exempt from federal tax? Yes Yes Yes
Charitable deductions available to donors? Yes No No
Eligible for foundation and federal grants? Yes Not usually Not usually
Property tax exemption? Usually Not usually Not usually
Business deductions available to donors? Yes: only as charitable deductions No Yes: the portion of membership dues attributable to permissible lobbying with a direct interest to the member

 

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