501c

501(c) refers to a set of provisions in the United States Internal Revenue Code that grant federal income tax exemption to certain nonprofit organizations. The most familiar is 501(c)(3), which covers charitable, religious, educational, scientific, literary, and similar organizations. The code also lists many other categories, such as 501(c)(4) social welfare organizations, 501(c)(6) business leagues, 501(c)(7) social and recreational clubs, and 501(c)(19) veterans organizations, each with its own rules about activities and fundraising.

To qualify, an organization must be organized and operated for exempt purposes, with governing documents and a recognized exemption purpose. It must not distribute profits to private individuals, and net earnings generally must benefit the public or a broad class. At the federal level, 501(c) status also comes with limits on political campaign activity and, for 501(c)(3)s, on lobbying.

Tax implications: Exempt from federal income tax under 501(a). Donors to 501(c)(3) organizations can typically deduct contributions on their federal tax returns. Some other 501(c) groups do not offer the same deductibility. Organizations may face unrelated business income tax (UBIT) if they earn income unrelated to their exempt purpose. Public charities and private foundations have different rules and reporting requirements.

Application and compliance: Organizations apply for recognition with the IRS using Form 1023 or 1023-EZ, supplying details on structure, activities, finances, and governance. After approval, they must file annual returns (Form 990 series) and maintain records to sustain their exemption. State and local requirements for charitable solicitation, incorporation, and taxes may also apply.