Nonprofit organizations are meant to forward various beliefs, ideas, and initiatives, which are based on a group of individuals or individuals. These organizations are the contrast to the business entities or business, that transfers a certain percentage of its profits to its shareholders or private ownership.
Differences between Nonprofit Types
The IRS tax code Section 501 (c) summaries the necessities for non- profits, regulates how they interact with the Internal Revenue Service (IRS). The below list of subsection assists a non –profit type.
Subsection 501(c)(1) controls and rules the behavior of the entities that is set up by the Acts of Congress, hence we no need to consider more about that aspect.
Section 501 (c) (2) arranges to hold corporations for the exempt organizations.
Section 501 (c) (3) aids as a reference for charitable organizations that includes educational, religious and medical organizations. Most of the non-profits come under this category.
Section 501 (c) (4) is meant for the organizations to benefit the social welfare.
Section 501 (c) (5) is for the organizations for horticultural or agricultural activities.
Section 501 (c) (6) arranges the regulations for the business leagues, which takes forward the industry’s interest. It will give resources for the firms within the industry or influence consumer behavior.
It is important to choose the type of non-profit, this does not assist as a requirement for tax-exempt status but also it can define the organization’s factor.
In order to qualify for a tax-exempt status, those charitable organizations must require mentioning it is a private foundation or public charity. The major difference between these two types of organization is based on the source of funds. The private foundation receives most of its funds from a single entity like a corporation or a donor. Public charities are hospitals, churches or other qualified medical research centers.
These organizations work towards to raise the funds regularly or get the income from other activities in search of their exempt activities. A church gets the income from the contributions of its members. A hospital gets the compensation for giving assistance to the sick and needy. Still, all the revenues are re-injected for the purpose of the organization.
Charitable organizations will not control the legislation or politics in a biased way. They can spread the awareness of political causes or issues, but they cannot read about the non-partisan political action before conducting the campaign. 501 (c) (3) charities may lobby in Congress but with little margin in their revenues.
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