Smart Charity

Is My Cause Eligible? Understanding Different Types of NonProfits in the USA

So, you’ve got this burning desire to make a difference and help those in need. But before you dive into the world of charity work, there’s something you need to figure out: “Is my cause eligible for charitable status?” It’s about being part of the right group with special perks like tax-deductible donations.

Non-profits and Charities: Friends, but Not Identical Twins

Non-profits and charities might sound similar, but they’re not the same. 

Non-profit organizations do good things without making profits for themselves. Any extra money they make goes back into their mission.

Charities are a special kind of non-profit. They do good things, but their main focus is helping the public. And because they do such important work, donors can get tax breaks for supporting them. Think of charities as groups that fund medical research offer scholarships, or help people in poor countries. Types of charities include religious organizations, hospitals, schools, colleges, universities, health organizations, food banks, housing assistance organizations, and human rights organizations. On the other hand, non-charity non-profits might be more like fan clubs or groups that share a common interest, but they specifically need to focus on the public good. 

But there is one thing you must do before fundraising!

Now, let’s get into how you can fundraise like a pro. When you ask people for donations, it’s called charitable solicitation. But to do it correctly, you must go through the registration process. It’s not just a formality—it’s a law and is also beneficial in building trust with potential donors. You want them to know you’re legit and not some sketchy operation. But here’s the thing, the registration rules are different in each state, so be ready for some bureaucracy.

So before you start soliciting funds, get your institution registered, and the agents at Smart Charity are expert at writing it. Moreover, there are two types of registration: charitable state and corporate. The first is for asking for donations, and the second is for when you want to set up an office or hire staff in a state.

Types of Non-Profits Organizations - The Complete List (And they are all tax exempted organizations)

Now here you are going to read about the list of organizations that are classified as non-profit types; all of them are tax exempted, and you will also find out whether or not they can solicit funds: 

501(c)(1) is a nonprofit corporation organized under the Act of Congress. And solicitations are allowed. 

501(c)(2) is a nonprofit type created purely to hold title to the property. In other words, title-holding companies, therefore, are not operating organizations. They cannot solicit funds. 

501(c)(3), tax exempt organizations that include charitable, religious, or educational organizations can solicit funds. 

501(c)(4), also known as Community Social Welfare Organizations, are operated to promote social welfare and must not earn profit examples include volunteer fire departments. Generally, they cannot solicit funds. 

501(c)(5), organizations classified as such work to improve employees’ lives associated with land cultivation, crop, or aquatic resource. And they are not allowed to solicit funds. 

501(c)(6), these organizations are Business Leagues, Chambers of Commerce, Real Estate Boards, etc. They work to improve the business conditions of one or more lines of business. And they are not allowed to solicit funds. 

501(c)(7) includes social and recreational clubs that provide pleasure, recreation, and social activities. And they are not allowed to solicit funds. 

501(c)(8), Fraternal Beneficiary Societies and Associations, their activities include paying for life, sickness, accident, or other benefits to members with a lodge system. They can solicit funds only if the activities’ nature has been defined in 501(c)(3). 

501(c)(9), Voluntary Employees Beneficiary Associations, and the nature of activities include employee associations providing for payment of life, sickness, accident, or other benefits to members. And they are not allowed to solicit funds. 

501(c)(10), Domestic Fraternal Societies and Association, where earnings are devoted to charitable, fraternal, and other specified purposes within the domestic lodge system. And they cannot solicit funds. 

501(c)(11), Teachers’ Retirement Fund Associations are operated for payment of retirement benefits of teachers. And they cannot solicit funds. 

501(c)(12), Benevolent Life Insurance Associations, Mutual Ditch or Irrigation Companies, Mutual or Cooperative Telephone Companies, and Like Organizations. And they are not allowed to solicit funds. 

501(c)(13) Cemetery Companies operated for burials and incidental activities. And are not allowed to solicit funds. 

501(c)(14), State-Chartered Credit Unions operate to provide loans to its members. Are not allowed to solicit funds. 

501(c)(15), Mutual insurance companies or associations providing insurance to members substantially at cost. And cannot solicit funds. 

501(c)(16), Cooperative Organizations to Finance Crop Operations, to finance crop operations in conjunction with activities of marketing or purchasing. And cannot solicit funds. 

501(c)(17), Supplemental unemployment benefits trusts are operated to provide supplemental unemployment compensation benefits payments. And are not allowed to solicit funds. 

501(c)(18), Employee Funded Pension Trust (created before June 25, 1959), which is designed for payment of benefits under a pension plan funded by employees. And cannot solicit funds. 

501(c)(19), Post or organization of Past or Present Armed Forces members, their activities include providing financial assistance or supporting activities that promote the welfare of war veterans or their dependents. And generally cannot solicit funds. 

501(c)(21), also called Black Lung Benefit Trusts, are funded by coal mine operators to satisfy their liability for disability or death due to black lung diseases. They cannot solicit funds. 

501(c)(22) Withdrawal Liability Payment Fund provides funds to meet the liability of employers withdrawing from multi-employer pension funds. And they cannot solicit funds. 

501(c)(23), Veterans’ Organizations (created before 1880), operated to provide insurance and other benefits to veterans. They cannot solicit funds. 

501(c)(25), Title Holding Corporations or Trusts with Multiple Parent Corporations, nature of their operations includes holding the title and paying over income from real property to 35 or fewer parents or beneficiaries. They cannot solicit funds. 

501(c)(26), a state-sponsored organization providing Health Coverage for High-Risk Individuals, which provision health care coverage to individuals with pre-existing health issues. They cannot solicit funds. 

501(c)(27), a State-sponsored workers’ compensation reinsurance organization, was created to reimburse members for losses under workers’ compensations acts. Cannot solicit funds. 

501(c)(28), National Railroad Retirement Investment Trusts, manage and invest the assets of the Railroad Retirement Account. And they cannot solicit funds. 

501(c)(29), Co-Op health insurance issuers, a qualified health insurance issuer who has received a loan or grant under the Co-Op program. And they cannot solicit funds.

Qualifications for 501(c)(3) Status:

Now, let’s talk about the particular club of charitable organizations—the 501(c)(3) status. It’s like a golden ticket that opens doors to great things. You find philanthropic organizations, public organizations, and some private foundations in this club.

But hold on; you can only join if you meet some requirements. You need to show that you’re a real organization, committed to doing good for the public, and have a clear mission.

Being part of the 501(c)(3) club comes with benefits. Your earnings get a break from federal taxes so that more money can go to your cause. And donors who support you can claim tax deductions. It’s a win-win situation!

State Registration And Corporate Registration

The world of charity and nonprofits is already confusing for you so that you may connect with agents of Smart Charity for free initial consultation. Moving forward, state filings can also be quite a puzzle for nonprofits, often entangling them in need of clarity between charitable registrations and corporate annual reports. Both are essential state filings, demanding annual renewal yet serving distinct purposes. Charitable registrations empower nonprofits to seek contributions within a state, while corporate yearly reports and foreign qualifications grant the green light to operate within the state’s boundaries.

For nonprofits aiming to fundraise across several states, the path involves filing charitable registrations in each state they intend to solicit contributions. However, soliciting donations typically doesn’t necessitate registering to do business or filing for foreign qualifications. On the other hand, corporate registrations find their mandate in states where the nonprofit has offices or employees, conducts activities and is incorporated. Additionally, corporate registrations might come into play for nonprofits participating in state employee campaigns.

Notably, a staggering forty-one states mandate charitable registration for nonprofits soliciting within their borders. Meanwhile, all fifty states and the District of Columbia have corporate registration requirements. For many nonprofits, this means managing charitable registration and corporate annual reports across various states to carry out their noble missions. So, it’s time to navigate this complex terrain and ensure that your nonprofit stays compliant while making a positive impact.

Public Charities vs. Private Foundations:

Public charities—they’re like the social butterflies of the bunch. They do a lot of fundraising and get everyone involved in their causes. Then, we have private foundations—they’re more selective with their donors, and sometimes they have just one big supporter.

But watch out because each type has different rules to follow. Make sure you know which group you belong to.


You’re all set now! It’s time to take that leap of faith, let your cause shine, and positively impact the world. The road may have some bumps, but it’s all worth it. Let’s pave the way for a better and more compassionate future!

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