501(c) refers to a section of the U.S. Internal Revenue Code that grants tax-exempt status to certain types of nonprofit organizations. The term “501(c)” is commonly used to describe a variety of nonprofit organizations that qualify for federal tax exemption under this section. Each subsection of 501(c) applies to a different type of organization, with specific purposes and requirements.

Key Types of 501(c) Organizations:

1. 501(c)(3) – Charitable Organizations:
   • The most well-known type of 501(c) organization.
   • Includes organizations that are religious, charitable, educational, scientific, literary, or dedicated to preventing cruelty to children or animals.
   • Donations to 501(c)(3) organizations are tax-deductible for the donor.
   • These organizations are prohibited from engaging in political campaign activities or substantial lobbying efforts.
2. 501(c)(4) – Social Welfare Organizations:
   • Includes organizations focused on promoting social welfare, civic betterment, or advocacy.
   • Donations are not tax-deductible for the donor.
   • These organizations can engage in lobbying and political activities, provided that these activities further their social welfare purpose.
3. 501(c)(6) – Business Leagues:
   • Includes business leagues, chambers of commerce, real estate boards, and other organizations that promote the interests of an industry, profession, or trade.
   • Donations are not tax-deductible for the donor.
   • These organizations can engage in lobbying and political activities related to their industry or trade.
4. 501(c)(7) – Social and Recreational Clubs:
   • Includes organizations such as country clubs, hobby clubs, and other groups organized for pleasure, recreation, or other non-profit purposes.
   • These organizations are generally supported by membership fees and dues.
   • Donations are not tax-deductible for the donor, and these clubs must primarily benefit their members.
5. 501(c)(8) – Fraternal Beneficiary Societies:
   • Includes organizations that provide for the payment of life, sickness, accident, or other benefits to their members.
   • Often associated with fraternities or sororities.
   • Donations are not tax-deductible for the donor unless used for a charitable purpose.

General Requirements for 501(c) Organizations:

• Exempt Purpose: To qualify for 501(c) status, an organization must be organized and operated exclusively for exempt purposes as defined under the specific subsection (e.g., charitable, educational, social welfare).
• No Private Benefit: The organization’s earnings must not benefit any private shareholder or individual. The organization must operate for the public good.
• Restrictions on Political Activity: Depending on the type of 501(c) organization, there may be restrictions on political campaign activities and lobbying. For example, 501(c)(3) organizations cannot participate in political campaigns and can only engage in limited lobbying.
• Filing Requirements: 501(c) organizations must file certain forms with the IRS, such as Form 990, to maintain their tax-exempt status. Failure to comply with these requirements can result in the loss of tax-exempt status.

Benefits of 501(c) Status:

• Tax Exemption: 501(c) organizations are exempt from federal income tax on income related to their exempt purposes.
• Donor Deductibility: For 501(c)(3) organizations, donations made by individuals or corporations may be tax-deductible for the donor.
• Credibility: Achieving 501(c) status can enhance an organization’s credibility, making it easier to attract donations, grants, and volunteers.

Application Process:

To obtain 501(c) status, an organization must apply to the IRS by filing Form 1023 (for 501(c)(3) organizations) or Form 1024 (for other types of 501(c) organizations), along with supporting documentation that outlines its mission, activities, finances, and governance.

In summary, 501(c) is a section of the U.S. Internal Revenue Code that provides tax-exempt status to various types of nonprofit organizations. The specific type of 501(c) organization determines its eligibility for tax exemption, the activities it can engage in, and the tax treatment of donations made to it.