What is a 501(c) organization? A 501(c) organization is one of 29 different kinds of nonprofit organizations exempt from taxation. Under the law, such organizations are “organized for the exclusive purpose of holding title to property, collecting income therefrom, and turning over the entire amount thereof, less expenses, to an organization which itself is exempt.”
Typically, when an organization solicits and receives monetary donations, the IRS gets a cut of the proceeds. The IRS views donations as taxable income unless those donations meet certain criteria. One criterion is that the donation was made to an eligible 501(c) charitable organization, making it tax-exempt.
Organizations that may fall under this regulation include any “community chest, fund, or foundation, organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary or educational purposes.” Other organizations that can be considered a 501(c) are those that foster national or international amateur sports and those that prevent cruelty to children or animals.
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