What is 501(c) status?
Section 501(c) of the US Internal Revenue Code allows for federal tax exemption of nonprofit organizations. This may include charities, foundations, churches, trade associations, fraternities, sororities, community recreational facilities, and many more.
Different sections of the 501(c) code may have different requirements and/or capabilities. See the table below for information on some common 501(c) types.
Which 501(c) is right for you?
| 501(c)(3) | 501(c)(4) | 501(c)(6) | 501(c)(7) | |
|---|---|---|---|---|
| Description | Charitable, educational, scientific & research, religious | Social Welfare “Lobbying” | Business or trade association — organized to promote the members’ common business interests | Social or recreational (e.g fraternities, sororities, country clubs, community recreational facilities, hobby clubs) |
| May accept tax-deductible charitable donations | Yes | No | No | No |
| May have members | Yes | Yes | Yes | Yes |
| Membership dues are tax-deductible | Dues may be tax-deductible as a charitable contribution to the extent the amount of dues paid exceeds the value of membership benefits received. | Dues may be tax-deductible as a business expense depending on the facts and circumstances. | Dues may be tax-deductible as a business expense depending on the facts and circumstances. | No |
| May engage in lobbying activity | Yes, but to a very limited extent | Yes | Yes | Yes |
| May engage in political campaign activity | No | Yes, using a political action committee (PAC) | Yes, using a political action committee (PAC) | Yes, using a political action committee (PAC) |
| Qualifies for state sales tax-exemption | Usually, depending on the state | Not usually | Not usually | Not usually |
| Applies to IRS with | Form 1023 | Form 1024 | Form 1024 | Form 1024 |