Many people are familiar with 501(c)(3) nonprofit organizations, but other types of nonprofit organizations are not as commonly known. The IRS has established several sections of the Internal Revenue Code under which nonprofit organizations may qualify. An organization wishing to apply for non-profit status must apply in the section appropriate to its purpose. Understanding the types of nonprofits available and the qualifications for each helps you choose the correct section to apply to. According to the IRS, there are five basic classifications of nonprofit organizations under Section 501(c)(3) of the Internal Revenue Code. The classifications include charitable, religious, educational, scientific, and literary. A nonprofit organization may fall into one or more classifications. For example, a Christian charity that provides food to homeless citizens might fall under the charitable and religious classifications. Nonprofit organizations must apply for federal tax exemption as a 501(c)(3) by completing Form 1023. 501(c)(3) nonprofit organizations may offer tax-exempt donations to individual contributors. Nonprofit organizations created to promote social and community welfare may apply for federal tax exemption under Section 501(c)(4) of the Internal Revenue Code. To qualify, organizations must provide a benefit to the general public. Organizations that cater 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) nonprofit organizations, 501(c)(4) organizations may participate in lobbying activities. Organizations whose principal business with the public reflects that of a for-profit corporation may not qualify as a 501(c)(4). Nonprofit organizations must apply for this status by filing Form 1024. Social clubs formed for exempt nonprofit purposes may apply for federal tax exemption under Section 501(c)(7) of the Internal Revenue Code. The Form 1024 is used to apply for a 501(c)(7). To qualify under this section, nonprofit organizations cannot discriminate against citizens based on race, color, or religion. However, 501(c)(7) religious organizations may limit their membership to those who belong to a particular religion. 501(c)(7) nonprofit organizations must receive support from membership dues and dues. Examples of nonprofit organizations with this status include college fraternities and sororities, country clubs, and homeowners associations that meet for the purpose of preserving recreational areas and facilities.
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