501(c)(3)

The name comes from Section 501(c)(3) of the Internal Revenue Code. Qualifying organizations pay no federal income tax on money raised for their exempt purpose, and individual donors can usually deduct their gifts.

501(c)(3)s split into two broad types: public charities (funded by many donors and the public) and private foundations (typically funded by a single source such as a family or company). Both file a Form 990 each year.

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• What is a 501(c)(3)?

Related terms

• Form 990 — Form 990 is the annual information return that most U.S. tax-exempt organizations file with the IRS, disclosing their finances, governance and programs.
• Public charity — A public charity is a 501(c)(3) that receives support from a broad base of donors and the public — the most common type of charitable organization.
• Private foundation — A private foundation is a 501(c)(3) typically funded by a single source — a family, individual or corporation — that often makes grants rather than running its own programs.
• Tax-deductibility — A donation is tax-deductible when the IRS lets the donor subtract it from taxable income — generally true for gifts to 501(c)(3) public charities.