The Internal Revenue Service permits you to take deductions on your taxes for charitable contributions you make to "qualified organizations." Organizations can be qualified and approved by the IRS for such contributions as 501(c)3 entities. They face no income tax liability as long as they maintain their 501(c)3 status. They are called 501(c)3 organizations since they meet U.S. Code Section 501(c)3 definitions. The code names eight types of organizations that qualify. You're probably familiar with some of the largest of these organizations, such as the Girl Scouts and Boy Scouts. There are over 1.5 million examples of 501(c)3 organizations operating around the country.
Section 501(c)3 Definitions
This status applies to corporations, funds and associations operated exclusively for nonprofit purposes defined in the U.S. Code. Those eligible for 501(c)3 status include religious, charitable, scientific, amateur sports, public safety testing, literary, prevention of cruelty to animals or children and educational organizations. Holding corporations of tax exempt organizations are also free from taxation under Section 501(c)2.
Religious organizations and churches in the U.S., while typically tax-exempt, should still file for designation as 501(c)3 organizations, according to the IRS. This eliminates controversies that may arise as to whether a religion or church is properly organized for tax exemption.
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Public charities receive most of their revenue from the general public, local or federal government programs and private foundations. Some examples of public charities in the U.S. include the United Way, the American Red Cross, Catholic Charities USA and the American Cancer Society. National or local organizations dedicated to preventing cruelty to animals, such as the ASPCA or state SPCAs, are additional examples of IRS-approved public charities under Section 501(c)3.
Private foundations receive most of their income from investments and endowments. An example of this type of 501(c)3 organization is the Bill & Melinda Gates Foundation, the largest private foundation in America. There are many equally effective examples on a smaller scale in every state. In California, the Gordon and Betty Moore Foundation in San Francisco and the W. M. Keck Foundation in Los Angeles are two examples.
Most schools, except those for-profit corporations, fit 501(c)3 IRS criteria. While you're probably familiar with many of the colleges and universities in the U.S., the IRS also qualifies most primary and secondary schools for 501(c)3 status. Professional and trade schools, such as hairdressing and technical academies, can qualify for IRS approval. According to the IRS, online schools, museums, zoos, planetariums and symphony orchestras can also qualify under the educational category.
Scientific and Literary Organizations
Scientific organizations that conduct research "in the public interest" are qualified for treatment as 501(c)3 entities by the IRS. For example, the American Chemical Society supports scientific inquiry in all fields of chemistry and chemical engineering. Nonprofit literary organizations can also earn 501(c)3 IRS status as well. For example, the Council of Literary Magazines and Presses, with funding from the National Endowment for the Arts and the New York State Council on the Arts, is a 501(c)3 entity.
Amateur Athletic Organizations
Local, regional and national amateur sports organizations also can qualify as 501(c)3 entities. From your local Little League organization, to the Boston Amateur Baseball League, to the college governing authority called the NCAA, examples of 501(c)3 amateur sports organizations flourish around the U.S.
Testing for Public Safety
Some of these organizations overlap into the scientific or educational category. The Insurance Institute for Highway Safety, which performs tests to reduce fatalities, injuries and property damage from vehicular crashes, is a good example of this 501(c)3 overlap. This non-profit entity performs scientific studies, releasing its results to the insurance industry and individuals to educate and inform.
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