Question of the Month - Advertising as a Nonprofit but not a 501(c)(3)

Question of the Month - Question of the Month 2009

Can an organization advertise itself as a nonprofit, but not be a 501(c)(3) organization?

Yes. Nonprofit is a concept of state law, which means that surplus revenue cannot be distributed to owners or other insiders. When we say “nonprofit” we usually think of federally tax-exempt organizations, but Section 501(c) of the Tax Code, which describes most, but not all, exempt organizations, now lists 28 separate types of organizations that are tax exempt.

The largest class of nonprofits by number is 501(c)(3) charities, but the IRS statute also includes (c)(1) groups like federal credit unions, (c)(4) civic associations, (c)(5) unions or agricultural associations, (c)(6) trade or business associations , (c)(7) social clubs, various fraternal organizations, veterans organizations and a lot of others. These are nonprofit organizations which corporate revenue is not taxable but only c3 and churches are not only tax exempt but tax deductible in that they can give tax deductions for contributions to the organizations.