Other Nonprofit Organizations

Besides public charities and private foundations, there are many other types of nonprofit organizations that can achieve exemption from income tax.  These organizations generally cannot receive tax-deductible contributions, though.  Instead, dues from members are the primary revenue source.  Because these organizations are outside the restrictions of Internal Revenue Code section 501(c)(3), they can conduct some political activities, within limits.  Here are the most common categories of other nonprofit organizations.

A Business Association represents its members, either in a particular location (like the San Diego Regional Chamber of Commerce) or in a profession (American Medical Association).  (Internal Revenue Code section 501(c)(6).)

A Labor Union represents its member employees.  (Internal Revenue Code section 501(c)(5).)  Some Agricultural Associations also are classified under 501(c)(5).

A Homeowner’s Association owns common-area facilities in a development or district, and enforces rules such as the CC&Rs.  (Internal Revenue Code section 528.)

A Veterans’ Organization can receive tax-deductible contributions, if 90% of its members are U.S. veterans.  (Internal Revenue Code section 501(c)(19).)  Many public charities also provide help to veterans, thanks to tax-deductible contributions from the public.

A Social Club, such as a golf club, provides recreation for its members.  (Internal Revenue Code section 501(c)(7).)

Perhaps the broadest category is the Social Welfare Organization. (Internal Revenue Code section 501(c)(4).)  One long-established type of social welfare organization is a service club, like Rotary, Lions, or Kiwanis, which acts locally, nationally, and even internationally.  These service clubs are often affiliated with a public charity under section 501(c)(3).  Neighborhood associations can provide services and host recreational events in a community.  Other Social Welfare Organizations also pursue a secondary purpose of political activity.  Recent controversies have drawn attention to these partly-political Social Welfare Organizations.

 

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