In addition, some other charities include the word foundation in their names even though they are not considered foundations according to legal definitions. Social welfare organizations . These nonprofits are often called social welfare or advocacy organizations. Professional and trade associations . Although contributions to these organizations are not tax-deductible, membership dues may be deductible as business expenses.
Many people believe that nonprofits receive most of their funds from private contributions.
Many organizations also receive funding from government, either in the form of outright subsidies or for providing services on a contract basis. The idea of the nonprofit sector may be abstract and poorly understood, but the sector's role in our society is tangible and easily recognized. Freed from the profit motive that dominates business and from the constraints of government, the nonprofit sector serves as a forum for the creation and dissemination of new ideas, an efficient vehicle for delivering social services, and a guardian of our environment, values, and heritage. All nonprofits are exempt from federal corporate income taxes. Nonprofits are, of course, not exempt from withholding payroll taxes for employees, and they also are required to pay taxes on income from activities that are unrelated to their mission.