501(c)3 VS 501(c)4 - What is the Difference?

501(c)3 VS 501(c)4 - What is the Difference?

Nonprofit organization

501(c) Non-Profit Orgs

There are 29 different 501(c) non-profit organizations exempt from Federal Income Tax, and sometimes state and local taxes. 501(c) non-profit organizations may receive unlimited contributions from individuals, corporations, and unions. The following outlines the difference between a 501(c)3 and a 501(c)4 organization so that you may ensure that you select the proper class for your organization's specific needs. 

501(c)3

Voluntary Solutions deals with primarily 501(c)3 pubic charities, the most common type of 501(c). (PLEASE NOTE: We are not attorneys and do not offer legal advice. You may want to contact an attorney if you have legal questions about the setup of your non-profit) 501(c)3 nonprofits include the following tax exempt activities: charitable, religious, educational, scientific, literary, public safety testing, cultivating amateur sports competition, or preventing cruelty to children or animals. 501(c)3 may not conduct political campaign activities to intervene in political elections. Public charities, (not private foundations) of this type of non-profit may utilize a limited percentage of their expenditures for lobbying.

501(c)4

A 501(c)4 charity, on the other hand, is operated to promote social welfare for the common good and general welfare of the people of the community. Examples are civic organizations or neighborhood associations, and net earnings can only be used for charitable, educational, or recreational purposes. Unlike the 501(c)3, a 501(c)4 may attempt to influence legislation through lobbying as its primary activity.  The 501(c)4 may not participate in political campaigns and elections, but may engage in some political activities as long as it is not their primary activity. The income of a 501(c)4 is tax exempt for their operations, however, funds spent on political activities may not be tax exempt. 

Note that there are many exceptions to these rules, please visit the IRS links above to read more detailed information about these two classes of 501(c) non-profit organizations. 

Use this handy chart as a guide to help you decide. 501c3 vs 501c4

When you are ready to file for incorporation and 501(c)3 charitable status: 

Subscribe

No comments (Add your own)

Add a New Comment


code
 

Comment Guidelines: No HTML is allowed. Off-topic or inappropriate comments will be edited or deleted. Thanks.

Voluntary Solutions International  |  1709 19th Street NW, Suite 33, Washington, D.C. 20009  |  844 . 739 . 5488

Copyright © 2017 voluntarysolutions. All rights reserved.