People tend to think of different types of charities and private foundations when they think of nonprofits. While it’s true that all charities, in general, are nonprofit organizations, the reverse isn’t always true.
Understanding different types of nonprofits is crucial to ace governmental reporting and motivate communities, whether using admission-based nonprofit software or starting your first nonprofit.
A nonprofit organization (NPO) is a non-business entity that advocates for a shared goal or social cause and has federal income tax-exempt status from the Internal Revenue Service (IRS). Nonprofits don’t issue stocks or distribute profits among shareholders or owners. Examples include trade organizations, public charities, social advocacy groups, and foundations.
Let’s go over some examples and then types so that you understand how to grow a nonprofit organization or set rules for lobbying and tax-deductible contributions.
Common nonprofit organization examples include public schools, public clinics, labor unions, volunteer service organizations, research institutes, museums, and legal aid societies, to name a few. Check out these nonprofits you may have come across in real life.
Now, let's go over the types and some nonprofit examples.
What types of nonprofits are there? How are they different? And which ones allow you to count charitable contributions? We've got you covered if these are the questions you’re facing. The IRS publication 557 outlines more than 30 types of nonprofits, from private foundations to public charities to trade associations.
501(c) (1) organizations are tax-exempt status per public law.
501(c) (2) organizations hold property titles for nonprofit corporations that are tax-exempt under IRC 501(a). All of the income earned from the property is given back to the latter nonprofit. Property-owning tax-exempt organizations use 501(c) (2) to reduce land and building liability and risk factors.
When people think of nonprofits, they usually think of 501 (c) (3)s. Commonly known as “true nonprofits” by those who work in the industry, 501(c)(3) organizations are charities that receive IRS's exempt tax status. 501(c) (3) nonprofits are the most common.
501(c) (3) organizations can be of three types.
Public charities receive a large portion of their revenue from the government or the public.
Private or non-operating foundations may not have active programs but support public charities with grants. A private charitable foundation is a privately owned nonprofit that addresses global concerns such as education, medical research, or environmental issues.
A single wealthy benefactor or business normally establishes private charitable foundations. These foundations grant money to smaller, more niche nonprofits. Private charitable foundations get their money from their founders, who manage the investments.
Think of private charitable foundations as angel investors crowdfunding the nonprofit world. One day, they might invest money in cancer research, and then two days later, they might pour money into an initiative to promote an experimental theatre company. The only stipulation is that the initiatives these private charitable foundations donate to must be other 501(c) (3) charities.
Private operating foundations have programs similar to public charity but with governance like a foundation.
501(c) (3) and 501(c) (4) organizations operate in almost the same way to promote philanthropy and positive change through their work and mission. However, 501(c) (4), or social welfare organizations, freely lobby to help pass or repeal legislation. They can also publicly endorse and promote legislation to gain support.
While 501(c) (3)s are technically permitted to participate in lobbying, the rules are much stricter. They’re only allowed to allocate about 10% of their total operating budget to lobbying, and violating those rules could result in losing nonprofit status.
Social advocacy groups are a type of 501(c) (4) with a primary focus on lobbying and promoting social or political change. Like the other nonprofits, they promote a certain cause through education and fundraising.
Social advocacy groups and social welfare organizations overlap greatly, and although they’re both considered 501(c) (4) organizations, they do have some key differences.
Social welfare organizations promote social change through auctions and public awareness. Examples of social welfare organizations include groups like volunteer fire departments.
Social advocacy groups also affect change through fundraising and public awareness, but their primary means of doing this is through lobbying and political change. They make no apologies for being proactively involved in legislation, as it is their chosen method to advance progress. Social advocacy groups rely heavily on membership dues to supplement the money they receive from public donations.
Planned Parenthood and the American Civil Liberties Union (ACLU) are social advocacy groups.
501(c) (5) organizations aim to improve product grades and occupational efficiency of those involved in labor, horticulture, or agriculture industries. These nonprofits raise funds with donations, union dues, and political lobbying.
501(c) (6) organizations improve working conditions for member businesses using instructional services and programs. These entities participate in political activities and function with funds raised via member dues.
501(c) (7) organizations are social or recreational clubs, including country clubs, sports leagues, interest clubs, cultural clubs, fraternities, and sororities. These organizations collect non-tax-deductible member fees to support their operations.
501(c) (8) organizations provide life, sickness, and other benefits to their fraternity members and dependents. They operate under a lodge system or parent organization with multiple subordinate chapters.
501(c) (9) organizations financially support members and their dependents in case of accidents, sickness, and other similar live events. Volunteers form these organizations to give benefits to their co-workers.
501(c) (10) organizations are similar to 501(c) (8)s, but they don’t offer financial assistance or benefits to members. All earnings go toward fraternal and charitable causes that the society has chosen.
501(c )(11) organizations are locally organized associations that manage teachers’ retirement funds and benefits. These associations are typically funded through tax proceeds, membership contributions, and investment revenue.
501(c) (12) organizations are local mutual or cooperative telephone companies, mutual ditch or irrigation companies, or electric companies that offer certain services to members at the lowest possible cost. These organizations must receive at least 85% of their income from members to be eligible for exempt tax status.
501(c) (13) organizations are cemetery companies that offer burial or cremation services to various fraternities and groups. Anyone who buys a plot becomes a member of the organization. These nonprofit cemeteries use the revenue to operate and maintain cemetery grounds.
501(c) (14) IRS tax exemption status applies to state-chartered financial entities like cooperative banks and loan associations that serve their members and communities. A common bond, such as employment, unites the members of these nonprofit credit unions.
A 501(c) (15) mutual insurance company offers insurance coverage at cost. These local-level nonprofits generally restrict participation to individuals residing in a particular county. Any profit goes toward reducing policy costs. Most 501(c) (15) companies offer property damage coverage and funeral benefits, among others.
Farmers’ cooperatives registered under IRC section 521 create 501(c) (16) organizations to support agricultural or crop operations. These nonprofits work with the founding cooperative to fund warehousing, shipping, livestock, farm equipment, and marketing.
Supplementary unemployment benefits trusts that financially support individuals laid off temporarily or permanently are known as 501(c) (17) organizations. The employer or employees form and support these organizations to offer unemployment, injury, and sickness benefits.
The 501(c) (18) tax status applies to a special class of employee pension trusts created before June 25, 1959. Funded by member contributions, these trusts offer pension and retirement benefits to employees.
501(c) (19) organizations are trusts or foundations, with at least 75% of members being active or former employees of the United States Armed Forces (USAF). 97.5% of the members must be cadets, members’ spouses, close relatives, or armed forces. These organizations aim to fulfill a particular goal, such as providing community service, recreational activities, educational programming, or access to insurance. Veterans organizations rely on tax-deductible individual contributions.
501(c) (21) organizations offer insurance premiums and death or disability compensation to coal mine workers diagnosed with black lung disease as a result of their employment. Spouses and dependents of coal miners are eligible for these benefits as well. These trusts came into existence after the Federal Black Lung Benefits Act of 1969 made coal mine operators pay claims.
These are the most common types of nonprofits, but some more exempt organizations are mentioned below.
| Type | Description | Nature of activities |
| 501(c) (22) | Withdrawal liability payment fund | To provide funds to meet the liability of employers’ withdrawing from a multi-employer pension fund |
| 501(c) (23) | Veterans' organization (created before 1880) |
To provide insurance and other benefits to veterans |
| 501(c) (25) | Title-holding corporations or trusts with multiple parent corporations | Holds title and pays out income from real property to 35 or fewer parents or beneficiaries |
| 501(c) (26) | State-sponsored organization providing health coverage for high-risk individuals | Covers healthcare for high-risk individuals |
| 501(c) (27) | State-sponsored workers’ compensation reinsurance organization | Reimburses members for losses under workers' compensation acts |
| 501(c) (28) | National Railroad Retirement Investment Trust | Manages the assets of the Railroad Retirement Account |
| 501(c) (29) | CO-OP health insurance issuers | CO-OP health insurance issuers receive loans or grants from the Centers for Medicare and Medicaid Services (CMS) CO-OP program to offer health insurance to consumers. |
| 501(d) | Religious and apostolic associations | Partakes in business and religious activities |
| 501(e) | Cooperative hospital service organizations |
Services hospitals |
| 501(f) | Cooperative service organizations of operating educational organizations | Performs collective investment services for educational organizations |
| 501(k) | Child care organizations | Tends to children when guardians are unavailable |
| 501(n) | Charitable risk pools | Combines certain insurance risks of Sec. 501(c) (3) organizations |
| 501(q) | Credit counseling organizations | Services for improving credit |
| 521(a) | Farmers' cooperative associations | Cooperative marketing and purchasing for agricultural procedures |
| 527 | Political organizations | A party, committee, fund, association, etc. that directly or indirectly accepts contributions or makes expenditures for political campaigns. |
Now that you know more about different types of nonprofits, let's explore how to start a nonprofit organization.
Starting a nonprofit is no easy feat. If you want to have a positive impact by serving the public, try to understand what it takes to run a nonprofit before investing time, money, and other resources. Walk through these steps to get started.
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Ticketing, donations, fundraising, and membership management are the only tasks that admission-based nonprofit software solutions can assist you with. Integrating these tools with other back-office programs and nonprofit systems is also easy.
To be included in this category, a software product must:
*Below are the top 5 leading admission-based nonprofit software solutions from G2’s Summer 2024 Grid® Report. Some reviews may be edited for clarity.
AudienceView Professional is an all-in-one event ticketing platform that features marketing, fundraising, and customer engagement solutions for nonprofits.
“This web-based program is helpful for processing orders off-site. Detailed reports give the information we want and need. The ability to integrate a credit card reader is a plus.”
– AudienceView Professional Review, Ryan R.
“There can be a learning curve to get to know the system. However, the help and tutorials available make learning easy. I would like to see the addition to the package's feature that allows patrons to choose from series events and pay according to the selected events' individual ticket prices.”
– AudienceView Professional Review, Jess R.
Neon CRM is a connected fundraising platform for managing memberships, raising funds, automating email campaigns, and processing payments.
“Neon CRM has been a useful, intuitive tool for our medium-sized nonprofit organization. We can import all of our volunteers, donors, and event attendees in one place so that we can access a central supporters database. Tracking donations and pulling reports is a breeze, and it's easy to pull data to support our fundraising initiatives quickly.”
– Neon CRM Review, Hayley W.
“I wish we had the ability to turn company accounts into individual accounts and vice versa. This would help with combining duplicate accounts. I also noticed that ‘soft credits’ and ‘donations’ showed on one tab instead of separate tabs.”
– Neon CRM Review, Kristina R.
Blackbaud Altru is a comprehensive fundraising and donor management software for nonprofits. It helps NGOs by streamlining donor data management, tracking donations, and automating fundraising processes.
"Altru is best at collecting data from multiple different areas of an organization to understand users cross-departmentally. This approach allows an organization better to track users' interactions across multiple contact points. For us, this means being able to gain a better understanding of potential growth areas and equip ourselves with the tools for targeted marketing campaigns."
- BlackBaud Altru Review, George B.
"It has some glitches, and the support team isn't always the quickest at responding to or fixing things, but they will eventually get it done. At our organization, we've also noticed a lot of connectivity issues with Altru specifically. It's definitely sensitive when it comes to browsers and internet connection."
- Blackbaud Altru Review, Evy E.
ACTIVEWorks for Parks & Recreation is a nonprofit facility, registration, and membership management software that lets you do more with less.
“Tons of tutorials, so you can always look up how to do something if you don't know.”
– ACTIVEWorks for Parks & Recreation Review, Naomi N.
“I don't like how an automatic receipt is sent to the user's email that makes them log in to view it. I also wish Active had an easier way to set up schedules on leagues. The fee for the surcharge is not cheap, and when we refund someone if a class was canceled, we have to pay them the surcharge back out of our pocket, and Active still keeps the profit of us using the software.”
– ACTIVEWorks for Parks & Recreation Review, Verified User in Recreational Facilities and Services
ThunderTix is an online ticketing platform designed to manage events. Beyond ticketing, you can sell merchandise and concessions, accept donations, track customer data, offer discounts, and sell using integrated hardware solutions.
"We run a community-based nonprofit literacy organization in Northeast Florida. We have a handful of events yearly, from a fundraising gala with 400 guests to a luncheon for 100 people. We have been using ThunderTix for almost 4 years to replace Eventbrite. The solution is very flexible and versatile. It was implemented quickly, and we use it frequently (over 8 months of our fiscal year).
ThunderTix has easily handled all of our reservation and ticketing needs and is adaptable to the needs of a larger/more complex organization. It has been timely, helpful, and accurate when we have needed assistance. The pricing fits our budget well, and the solution provides great value. We have integrated ThunderTix with Braintree using the built-in support and Google Tag Manager. This is an excellent solution that continues to evolve, meet our needs, and help us grow our business."
- ThunderTix Review, Bob F.
"The only downside I can think of is that I wish the areas in the program where you can type in your email receipts, reminders, or letters were a little easier to use. I often have to use HTML for bold, italic, or links."
- ThunderTix Review, Luana W.
Starting a nonprofit comes with more challenges than you might think. Focus on capacity-building projects like recruiting volunteers, implementing communications strategies, and delivering missions effectively. These are the first steps toward making an impact on lives and communities.
Want to manage better relationships among donors, volunteers, and members? Try nonprofit CRM software to strengthen your nonprofit's marketing muscle.
This article was originally published in 2022. It has been updated with new information.