When you hear of the designation – “nonprofit” – you are generally thinking about only one of the many different types. There are also entities called “non governmental organizations” (NGOs). What are the different types of nonprofit organizations?
The Basic Nonprofit is 501(c) Tax-Exempt
When you hear a nonprofit is 501(c) tax-exempt, the number and letter refer to the specific authoritative line of the United States Internal Revenue Code Section [26 USC Sections 501 (c) 1 – 29.] The government allows organizations involved in advancing the public good through charity, religion, education, science or literary purposes to be tax-exempt. The government does not need to create another expensive government program, the non-profit can serve this function more efficiently. The following are 501(c) nonprofits:
(2) title holding corporations
(3) religious or educational
(4) social welfare
(6) chambers of commerce
(9) voluntary employee benefits
(10) domestic fraternal societies
(11) teacher’s retirement funds
(12) mutual life insurance
(14) mutual reserve funds
(15) mutual insurance companies
(17) supplemental unemployment benefit trusts
(18) employee funded pension trust
(20) group legal services
(21) black lung benefits
(22) withdrawal liability payment fund
(24) section 4049 ERISA trusts
(25) multiple parent title holding
(26) high-risk health coverage
(27) state-sponsored worker’s compensation reinsurance
(28) national railroad retirement investment
(29) health insurance issuers
Each of these designations is also part of a category, like health insurance nonprofits. Thus as legislation is passed for a category, it affects each of the non-profit sectors.
So do NGOs Qualify as Nonprofits?
Many profitable corporations will also have an educational non-profit subsidiary for tax purposes. Section 511 of the IRS tax code states that a 501(c) organization may be subject to tax on “unrelated business income.” There are limits on how much money can be made by auctioning off donated goods. Tax deductions can be claimed for those who make donations to one of these tax-exempt organizations.
While the 501(c) is governed under American law, the non-governmental organization (NGO) is an attempt to create an international group of non-profits. The NGO is both non-governmental and non-profit. It can receive funding from individuals, corporations or governments.