by Brett Shapiro, co-owner of GovDocFiling
When you think of non-profit organizations, you’ll likely think of charities. You may think of organizations like YMCA, Feeding America, and Salvation Army. Perhaps, even the Bill and Melinda Gates Foundation.
However, “non-profit” is not necessarily another term for charities. Even though all charities are non-profit organizations, all non-profits are not charities.
There are many different types of non-profit organizations. The common factor, though, is that all non-profits work towards some social cause. That’s why the IRS has exempted them from paying any taxes.
Do you wish to start your own non-profit? If so, knowing about different types of non-profit organizations can help you select the right organizational structure for your non-profit.
Read on to learn more about different types of non-profit organizations.
10 Types of Non-Profit Organizations You Need to Know
Starting your own non-profit organization can be an impactful and fulfilling way to pursue a social cause and serve the community.
There are nearly 27 different types of non-profit organizations, according to the IRS. We’ll discuss 10 of the most common ones.
1. Charitable Organizations.
Charities are perhaps the most popular type of non-profit organization. They come under Section 501(c)(3) of the IRS.
Organizations that fall under this section are funded mainly through government grants and charitable donations.
The most popular charitable organizations are the ones that deal with providing education, relieving hunger, and animal welfare.
Some examples of charitable organizations include Habitat for Humanity, Feeding America, and National Geographic Society.
To start your own charitable organization, you must first check if your charity qualifies under Section 501(c)(3). You must also incorporate your charity and apply to the IRS for an exempt status.
Now, incorporating a business requires some legal know-how. That’s why it’s best to engage the services of an organization like Incfile that can help you start your non-profit. Here is GovDocFilling’s Incfile review to help you assess if it is the right move for you.
2. Social Welfare Organizations, Civic Leagues, and Employee Associations.
Social welfare organizations, civic leagues, and local employee associations are some types of non-profit organizations that come under Section 501(c)(4). These organizations usually promote social or political initiatives.
These organizations aim to look after the general welfare of their members or those who have fallen on hard times.
A few popular organizations under Section 501(c)(4) are AARP, ACLU, and NAACP.
3. Social Advocacy Groups.
Social Advocacy Groups also come under Section 501(c)(4). These organizations mainly focus on lobbying and promoting political or social change.
Social advocacy groups organize many fundraising events to raise money for the causes they support. They may also use these funds to lobby political organizations or educate the public about these causes.
Examples of social advocacy groups include National Organization for Women, Greenpeace, and Planned Parenthood.
4. Labor, Agricultural, and Horticultural Organizations.
Section 501(c)(5) of the IRS includes labor, agricultural, and horticultural organizations. These non-profits work to improve working conditions in the labor, agriculture, and horticulture industries. They also educate the people employed in these industries.
Funds are raised through donations and union dues. However, they may also engage in political lobbying.
Some examples include Sunset Empire Orchid Society, United Steelworkers, and National Education Association.
5. Business Leagues, Real Estate Boards, and Chambers of Commerce.
Such non-profit organizations fall under Section 501(c)(6) of the IRS. Their goal is to advance the business interests of their members.
They may also offer instruction services and programs for the benefit of their members. Additionally, they work to improve the overall working conditions in the industry.
A few examples of such non-profit organizations are American Bar Association, National Hockey League, and National Writers Union.
6. Social and Recreational Clubs.
Did you know social and recreational clubs are also non-profit organizations? You can file for them under Section 501(c)(7). The purpose of these organizations is to organize social and recreational activities for the enjoyment of their members.
These organizations include cultural clubs, hobby clubs, sports leagues, country clubs, and more. For funds, they rely on membership dues or fees.
Delta Sigma Theta, Inc. and Boca West Country Club are popular examples of such non-profit organizations.
However, to start your own, you must first ensure that you meet the necessary requirements of Section 501(c)(7).
There’s more. You will also need to draft your Articles of Incorporation and apply for tax-exempt status.
7. Fraternal Beneficiary Societies and Associations.
Fraternal Societies fall under Section 501(c)(8) of the IRS. These non-profit organizations provide benefits and payments for life, accidents, sickness, and other scenarios for its members and their dependents.
To qualify under 501(c)(8), these organizations must have parent and subordinate organizations.
Foresters Friendly Society, Shriners, and the Knights of Columbus are popular fraternal societies in the US.
For setting up your own 501(c)(8) organization, you must file Form 1024 with the IRS for tax-exempt status. But before you do so, you should also apply for an Employer Identification Number.
8. Voluntary Employees Beneficiary Associations.
These non-profit organizations come under Section 501(c)(9). All members of such organizations either have a common employer or membership in the same union.
The goal of these types of non-profit organizations is to support and provide payment to members and their dependents in unfortunate events, such as accidents or sickness.
Walmart Stores Inc. Associates’ Health & Welfare Trust and Wells Fargo & Company Employee Benefit Trust are examples of employee beneficiary organizations.
9. Mutual Insurance Companies or Associations.
Mutual insurance companies, under Section 501(c)(15), are generally owned by policyholders. The goal of these non-profit organizations is to provide insurance at cost to their members.
Any profit earned by the company is used to reduce policy costs or given directly to its members. It helps to optimize employee spending with maximum employee benefits.
South Florida Dentists Insurance Trust and Big Sky Farm Mutual Insurance Company are a couple of examples of such non-profits.
10. Supplemental Unemployment Benefit Trusts.
These types of non-profit organizations support and provide payments to individuals who have lost their jobs. Supplemental Unemployment Benefit Trusts come under Section 501(c)(17).
These trusts can either be formed by the employer or the employees. The funds they raise cannot be used for anything other than paying unemployment benefits.
Electrical Industry Supplemental Unemployment Benefits Fund and Builders and Contractors Supplemental Unemployment Benefits Trust are two examples of such trusts.
If you want to start your own non-profit, you’ve got to know its various types before taking the plunge. You can apply for your tax-exempt status only after choosing it.
From charitable organizations to supplemental unemployment benefit trusts, there are numerous organizations you can form. So make sure you define your goals first and then see which one of the non-profit organizations suits your needs the best.
Brett Shapiro is a co-owner of GovDocFiling. He had an entrepreneurial spirit since he was young. He started GovDocFiling, a simple resource center that takes care of the mundane, yet critical, formation documentation for any new business entity.