The 26 Types of Nonprofit Organizations: A Simplified Guide to Choosing Which Is Best for Your Goals
We all have a vision of how a nonprofit looks, but every charitable organization is unique. Most have plenty in common, but a wide range of organizations in the nonprofit sector serve distinct roles and communities.
Because the term nonprofit is a governmental designation, much of these differences come from the Internal Revenue Code.¹ And not every charitable organization has an official nonprofit status from the government. A nonprofit’s category depends primarily on its purpose and function.
Before you continue to grow your organization or plan to start a new one, understand the different types of nonprofits and how these distinctions impact fundraising and operations.
Nonprofit Types: What Makes Each One Different
1. What Purpose It Serves
The primary differences between the various types of nonprofits come down to what purpose they serve and how that purpose impacts those they support. A nonprofit’s mission will indicate to the government whether or not they’re eligible for tax-exempt status, which then instructs the organization on how to apply for nonprofit eligibility.
2. How It Registers With the IRS
Not all charitable organizations are nonprofits. To officially become a nonprofit organization, you must complete the appropriate paperwork with the Internal Revenue Service (IRS) or other governmental bodies for international organizations.
For example, to become a 501(c)(3), an organization must submit the following:
- IRS Form 990
- Nonprofit bylaws
- Articles of incorporation
- List of officers and trustees
- Audited financial statement
3. How It Accepts and Receives Donations
Most donations to qualifying nonprofits are tax-deductible. However, how much of the donation is tax-deductible depends on the type of nonprofit.
Identify how your nonprofit organization will collect funds, what donors receive in return (if anything), and how you’ll acknowledge these gifts with a tax-compliant donation receipt.
4. What Organizational Restrictions and Exceptions Apply to It
Each nonprofit comes with a specific set of restrictions and limitations. You need to understand what your organization can (and can’t) do to secure and maintain your nonprofit status with or without tax exemption.
For example, 501(c)(3) nonprofits can lobby the government, but no more than 10% of operating expenses can go to lobbying these political organizations. Similarly, 501(c)(3) organizations cannot donate to political campaigns, but other types of nonprofits can.
26 Types of Nonprofits Mobilizing Good
There are more than 1.6 million nonprofits in the United States, and each fits into one of 26 different categories outlined by the IRS.² Some are incredibly broad, while others are more specific.
- 501(c)(1): Organizations created by an act of Congress and are exempt from federal income tax
- 501(c)(2): Corporations that hold property for tax-exempt organizations
- 501(c)(3): Any organization, foundation, or fund operating for religious, charitable, educational, literary, or scientific purposes
- 501(c)(4): Social welfare and advocacy groups (e.g., the NAACP, Planned Parenthood, and the ACLU)
- 501(c)(5): Labor, agricultural, or horticultural organizations (e.g., farm bureaus, breeders’ associations, rodeos, and garden clubs)
- 501(c)(6): Business leagues, chambers of commerce, or real estate boards not organized for profit (e.g., the American Farm Bureau or the National Writers Union)
- 501(c)(7): Social or recreational clubs (e.g., hobby groups, country clubs, or amateur sports competition leagues)
- 501(c)(8): Domestic fraternal societies (e.g., Shriners International or college fraternities and sororities)
- 501(c)(9): Voluntary employee beneficiary associations
- 501(c)(10): Domestic fraternal associations that don’t provide benefits to members but instead exist to support outside causes (e.g., local chapters of the Freemasons)
- 501(c)(11): Teachers’ retirement fund associations
- 501(c)(13): Cemetery companies created to provide burial services to members
- 501(c)(14): State-chartered credit unions and mutual reserve funds
- 501(c)(15): Mutual insurance companies
- 501(c)(16): Cooperative groups created to finance crop operations
- 501(c)(17): Supplemental unemployment benefit trusts
- 501(c)(18): Employee-funded pension trusts created before 1959
- 501(c)(19): Veterans organizations with at least 75% of membership consisting of past or present members of the United States Armed Forces (e.g., Veterans of Foreign Wars and Marines’ Memorial Association & Foundation)
- 501(c)(20): Qualified legal service plans (FYI: This designation no longer exists as of 1992)
- 501(c)(21): Black lung benefit trusts created to pay benefits claims as part of the Black Lung Benefits Act of 1969
- 501(c)(22): Funds created to meet liabilities of employers withdrawing from multiemployer pension funds
- 501(c)(23): Veterans organizations founded prior to 1880 (e.g., the Navy Mutual Aid Association and American Legion)
- 501(c)(26): Health coverage organizations for high-risk individuals unable to get coverage through other medical companies
- 501(c)(27): State-sponsored workers’ compensation reinsurance organizations
- 501(d): Religious or apostolic groups that share a common treasury
- 501(e): Cooperative hospitals
5 Types of 501(c)(3) Nonprofits
Over 1 million nonprofits in the United States fall into the broad 501(c)(3) category. For this reason, there are a few subcategories to further distinguish these nonprofits. These generally have the same legal restrictions but vary in purpose and means of collecting donations.
- 509(a)(1): These are nonprofits that exist for the public benefit and rely on support from the public (e.g., churches, schools, and hospitals)
- 509(a)(2): These nonprofits earn income primarily from performing a tax-exempt purpose (e.g., museums or zoos that sell admission tickets)
- 509(a)(3): These nonprofits are support organizations controlled by and exclusively benefitting another nonprofit (e.g., a university foundation solely fundraising for that university)
- 509(a)(4): These nonprofits are public charities that test for public safety
- Private foundations: These foundations receive support from a small group of people or a business and are subject to more restrictions than public charities
Choosing the Right Category for Your Nonprofit
Since most nonprofits in the United States are 501(c)(3)s, that’s likely where your gut will tell you to begin your research on how to start a nonprofit. However, that might not necessarily be the correct option for you. Consider these steps to start down the right path.
- Compare your mission and purpose to the list of nonprofit categories. This helps you consider which one might apply to your group. You’ll also want to consult with a tax, business, or law expert to get their input on where you should apply. Additionally, look at nonprofits similar to yours and find out which category applies to them.
- Take your time before starting the requisite paperwork. This gets you on the right path and helps you avoid starting over, as the application process can be lengthy. Which category you choose will also impact how to shape your nonprofit’s bylaws.
- Consider a fiscal sponsor while conducting this process. This allows you to begin collecting donations early by partnering with an existing nonprofit charity. It might also provide some insights into what type of nonprofit is best for you.
Leveraging Your Nonprofit’s Category
A nonprofit’s status and type impact how it can function and grow. While most nonprofits are 501(c)(3)s, it’s still vital for nonprofit leaders to understand what that means and how it’s different from the many other types of charities.
Gaining a stronger grasp on the ecosystem of the nonprofit sector can also help you to become a better nonprofit leader and have a more holistic appreciation for different organizations and how these work together.
Learn how Classy proudly supports nonprofits worldwide on their path to lasting social change.
1. “Charities and Nonprofits,” File, IRS, last modified December 21, 2022, https://www.irs.gov/charities-and-nonprofits.
2. “Types of Nonprofits: Everything You Need to Know,” Upcounsel, last modified December 21, 2022, https://www.upcounsel.com/types-of-nonprofits
The State of Modern Philanthropy 2022
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