A 501(c)(3) organization is exempt from federal income tax. It is one of 29 types of 501(c) nonprofit organizations in the US. 501(c)(3) tax-exemptions apply to entities organized and operated exclusively for religious, charitable, scientific, literary or educational purposes, to foster national amateur sports competition, or for the prevention of cruelty to children or animals.
The federal government describes types of nonprofits exempt from federal income tax in the 501(c)(3) section of the United States Internal Revenue Code. The rules in Section 501(c)(3) are regulated by the U.S. Treasury through the IRS.
Key Takeaways:
- To qualify as a 501(c)(3), an organization must exclusively serve six main purposes.
- Benefits include tax exemption, tax-deductible contributions, and grant eligibility.
What’s the difference between a nonprofit and a 501(c)(3) organization?
Only organizations meeting 501(c)(3) requirements can offer tax-deductible donations and qualify for certain grants.
How do I know if my nonprofit is a 501(c)(3)?
Check with the IRS to ensure your organization meets the requirements for this status.