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Essay / Types of Nonprofit Organizations - 441
Many people are familiar with 501(c)(3) nonprofit organizations, but other types of nonprofit organizations are not as well known. The IRS has established several sections of the Internal Revenue Code that nonprofit organizations can qualify for. An organization wishing to apply for nonprofit status should apply in the section that corresponds to its purpose. Understanding the types of nonprofits available and the qualifications for each helps you choose the right section in which to apply. According to the IRS, five basic classifications of nonprofit organizations exist under Section 501(c)(3) of the Internal Revenue Code. Classifications include charitable, religious, educational, scientific, and literary. A nonprofit organization may fall under one or more classifications. For example, a Christian charity providing food to homeless citizens could fall under the charitable and religious classifications. Nonprofit organizations must apply for federal tax exemption as a 501(c)(3) by filing Form 1023. 501(c)(3) nonprofit organizations may offer tax-exempt donations. tax on individual contributors. Nonprofit organizations established to promote social and community welfare may apply for federal tax exemption under section 501(c)(4) of the Internal Revenue Code. To be eligible, organizations must offer a benefit to the general public. Organizations catering to a private group of people do not meet the eligibility requirements. An example of a 501(c)(4) is an organization that provides social resources to retirees. Charitable, educational, and recreational organizations that do not qualify for 501(c)(3) status may apply under this section. Unlike 501(c)(3) nonprofits, 501(c)(4) organizations can engage in lobbying activities. Organizations whose primary business with the public reflects that of a for-profit corporation cannot be considered 501(c)(4). Nonprofit organizations must apply for this status by filing Form 1024. Social clubs formed for nonprofit exemption purposes may apply for federal tax exemption under section 501(c)(7). ) of the Internal Revenue Code. Form 1024 is used to apply for a 501(c)(7). To be eligible for this section, nonprofit organizations cannot discriminate against citizens on the basis of race, color, or religion. However, 501(c)(7) religious organizations may limit their membership to those belonging to a particular religion. 501(c)(7) nonprofit organizations must receive support from dues and contributions. Examples of nonprofit organizations with this status include college fraternities and sororities, country clubs, and homeowners' associations that come together for the purpose of preserving its recreational areas and facilities..