In certain instances, contributions to non-profit organizations are deductible from federal income taxes. This is the category people think of most often when they are referring to a non-profit. Day care centers, food banks, low-income housing organizations, mental health organizations, United Ways, museums, theatre groups, colleges, and environmental groups are just some examples of the many types of charities. Contributions to public charities are usually tax-deductible, a significant privilege not granted to most other types of organizations. Public charities are prohibited from engaging in any activities to support or oppose political candidates, but are permitted to influence legislation within legal limits.
Private foundations are organizations that distribute money to fulfill a public purpose.
Foundations are subject to different laws and regulations than public charities. Under most circumstances, contributions to private foundations are tax-deductible. Private foundations are prohibited from engaging in lobbying activities, but may contribute to charities that lobby as long as the funds are not earmarked for lobbying purposes. Examples can include civic groups, downtown improvement associations, and social action organizations. There are pros and cons to each structure.