There are four main types of Nonprofit in the United States. Each has subtly different goals and corporate structure, but all are tax-exempt!
- Public Charities/501(c)(3) Organizations
Charities, also known as 501(c)(3) organizations, usually provide low-cost or free services to the public utilizing funds received through donations. This can be via private donations or fundraising events specifically designed to secure funding from members or advocates. Examples of public charities include food banks and animal welfare organizations.
- Social Advocacy Organizations
This type of Nonprofit is member-based and aims to achieve specific goals regarding political change without achieving a profit. Social advocacy organizations, classified by the IRS as 501(c)(4), use donations and member dues to send out information that promotes a particular social agenda. The NAACP and the ACLU are social advocacy organizations you might be familiar with.
- Foundations
Like charities, foundations are also classified as 501(c)(3) organizations. They work to better the community, whether contributing financially to local, smaller charities/nonprofits or holding events that benefit communities. Foundations are funded by and contribute on behalf of an associated for-profit corporation. Foundations must donate a certain amount of income to other organizations every year. The Bill and Melinda Gates Foundation is one of the most well-known.
- Trade and Professional Organizations
These types of organizations are classified as 501(c)(6). They usually work to benefit and promote members' business interests and are funded primarily through membership dues. Common trade and professional organizations include chambers of commerce and real estate boards.