The exempt purposes set forth in section 501(c)(3) are charitable, religious, educational, scientific, literary, testing for public safety, fostering national or international amateur sports competition, and preventing cruelty to children or animals. The term charitable is used in its generally accepted legal sense and includes relief of the poor, the distressed, or the underprivileged; advancement of religion; advancement of education or science; erecting or maintaining public buildings, monuments, or works; lessening the burdens of government; lessening neighborhood tensions; eliminating prejudice and discrimination; defending human and civil rights secured by law; and combating community deterioration and juvenile delinquency.
Interactive Training
Learn more about the benefits, limitations and expectations of tax-exempt organizations by attending 10 courses at the online Small to Mid-Size Tax Exempt Organization Workshop.
IRS Exempt Organizations offers specialized education programs to help exempt organizations understand their tax responsibilities.
A sensible starting point for finding nonprofit business ideas is the list of charitable purposes required by the IRS for tax-exempt status. Your nonprofit business may receive tax-exempt status if it's organized for any of the following purposes: charitable purposes; prevention of cruelty to children or animals; literary, scientific or educational purposes; public safety testing; and amateur sports competition. Within those arenas are countless ideas for a nonprofit business. You might choose to start a nonprofit publishing business for new authors, for example, or a Saturday youth academy to spark interest in science and math. Your nonprofit business could raise funds to sponsor amateur sports teams that can't afford to travel to competitions; a nonprofit thrift store could support local no-kill animal shelters.
Personal Interests
Often, the best idea for a nonprofit business is a cause that interests you. A business that renovates homes for the newly disabled, for example, might be a constructive use of your construction or carpentry skills. Or, you can combine your interests in youth and your community with a graffiti-removal business that mentors youth while providing them with a way to make a difference in their neighborhoods. Your fundraising knowledge can help you operate a fundraising business that sponsors special events such as charity auctions or walkathons. A retired teacher can open a no-cost or low-cost teacher supply store in her school district and stock the shelves with donated items.
Community Needs
Viable nonprofit business ideas can come from need that's specific to your community. Address high unemployment rates with a business that helps people develop job-searching skills, for example. Narrow your focus even more and start a nonprofit business that works with people reentering the community from prison. Start a youth center in your rural community to provide recreation and intervention. Your nonprofit business can focus on high levels of obesity with nutrition and fitness programs tailored for churches or community centers. If specialized transportation is lacking in your community, apply for federal grants and open a transportation business for seniors and the disabled.
Existing Programs
National nonprofit initiatives may operate like nonprofit business franchises. These programs provide the entire package — name, marketing, materials and technical assistance — for you to get started. Contact YouthBuild USA and join the social entrepreneurs who launch new YouthBuild programs across the country. YouthBuild focuses on youth development and community development through building houses and providing education and mentoring to young people. The national HandsOn Network can help you implement a HandsOn Action Center in your city and start matching volunteers with organizations that need help.
Types of Non Profits
A nonprofit is a type of business structure where the profits of the business are not distributed among the owners and shareholders. In fact, not-for-profit businesses are not allowed to create stocks, though they can invest in other stocks as a source of income. Often these organizations are created for charitable purposes.
The IRS classifies several different kinds of nonprofit business structures, some of which may be tax-exempt, depending on the nature and purpose of the organization. Each is listed as a subcategory under Section 501(c) of the Internal Revenue Code, and each has its own requirements and regulations, limitations, and tax implications, as well as the ability to apply for tax exemption. Here are some major types of nonprofits:
501(c)(3) - Charitable Organizations. The most common nonprofit is a charity, and refers to an organization that operates to fulfill any of the following purposes: religion, education, science, literature, public safety testing, amateur sports, and the prevention of cruelty to children or animals. Common types of charitable organizations—which the IRS uses in its generally accepted legal sense—include food banks, museums, theatre groups, colleges, low-income housing organizations, and day care centers. Both public and private charities are usually prohibited from or limited in engaging in lobbying activities. As charities, 501(c)(3) organizations can apply for tax-exemption for all income related to the business or mission. You can find a complete list of all 28 types of 501(c) corporations through the IRS.
501(c)(4) - Civic League, Social Welfare Organization, or Local Employee Association. These types of nonprofits are created to promote community and individual welfare. Lobbying activities are not limited by law, and regulations regarding partisan political activities Labor and Agricultural Organization. This is created for educational or instructive purposes, designed to improved conditions and efficiency of work. Types include labor, agricultural, or horticultural organizations.
501(c)(6) - Trade or Professional Association. These are created to improve business conditions. Types of these nonprofits include Chambers of commerce, retail merchants associations and real estate boards. They are typically not subject to legal limitations on lobbying and political activity.
501(c)(7) - Social or Recreational Club. Types of these nonprofits include hobby clubs, country clubs, and other groups created for recreational purposes.
501(c)(8)- Fraternal Societies. These types of organizations must operate under the “lodge” system, and provide substantial programs and activities for members, whose membership is based on common ties or pursuit of a common goal, and who receive benefits.
501(c)(9) - Employee Beneficiary Association. This kind of association provides for the payment of life, sickness, accident, or other benefits to its employee members.
501(c)(14) - State Chartered Credit Union and Mutual Reserve Fund. These nonprofits offer their members high-quality financial services and enable them pool and organize their own financial resources.
501(c)(19) - Veterans Organizations. This type of nonprofit is comprised primarily of past or present members of the United states Armed Forces, and organized to provide benefits for these and other USAF members.
Interactive Training
Learn more about the benefits, limitations and expectations of tax-exempt organizations by attending 10 courses at the online Small to Mid-Size Tax Exempt Organization Workshop.
IRS Exempt Organizations offers specialized education programs to help exempt organizations understand their tax responsibilities.
- Webinars - Review archived EO tax law programs from your computer
- Virtual workshops - Small and Medium-Sized Exempt Organizations - online programs on exempt organizations tax issues
- Nationwide Tax Forums - the latest word from IRS leadership and other experts in the exempt organizations tax law field.
A sensible starting point for finding nonprofit business ideas is the list of charitable purposes required by the IRS for tax-exempt status. Your nonprofit business may receive tax-exempt status if it's organized for any of the following purposes: charitable purposes; prevention of cruelty to children or animals; literary, scientific or educational purposes; public safety testing; and amateur sports competition. Within those arenas are countless ideas for a nonprofit business. You might choose to start a nonprofit publishing business for new authors, for example, or a Saturday youth academy to spark interest in science and math. Your nonprofit business could raise funds to sponsor amateur sports teams that can't afford to travel to competitions; a nonprofit thrift store could support local no-kill animal shelters.
Personal Interests
Often, the best idea for a nonprofit business is a cause that interests you. A business that renovates homes for the newly disabled, for example, might be a constructive use of your construction or carpentry skills. Or, you can combine your interests in youth and your community with a graffiti-removal business that mentors youth while providing them with a way to make a difference in their neighborhoods. Your fundraising knowledge can help you operate a fundraising business that sponsors special events such as charity auctions or walkathons. A retired teacher can open a no-cost or low-cost teacher supply store in her school district and stock the shelves with donated items.
Community Needs
Viable nonprofit business ideas can come from need that's specific to your community. Address high unemployment rates with a business that helps people develop job-searching skills, for example. Narrow your focus even more and start a nonprofit business that works with people reentering the community from prison. Start a youth center in your rural community to provide recreation and intervention. Your nonprofit business can focus on high levels of obesity with nutrition and fitness programs tailored for churches or community centers. If specialized transportation is lacking in your community, apply for federal grants and open a transportation business for seniors and the disabled.
Existing Programs
National nonprofit initiatives may operate like nonprofit business franchises. These programs provide the entire package — name, marketing, materials and technical assistance — for you to get started. Contact YouthBuild USA and join the social entrepreneurs who launch new YouthBuild programs across the country. YouthBuild focuses on youth development and community development through building houses and providing education and mentoring to young people. The national HandsOn Network can help you implement a HandsOn Action Center in your city and start matching volunteers with organizations that need help.
Types of Non Profits
A nonprofit is a type of business structure where the profits of the business are not distributed among the owners and shareholders. In fact, not-for-profit businesses are not allowed to create stocks, though they can invest in other stocks as a source of income. Often these organizations are created for charitable purposes.
The IRS classifies several different kinds of nonprofit business structures, some of which may be tax-exempt, depending on the nature and purpose of the organization. Each is listed as a subcategory under Section 501(c) of the Internal Revenue Code, and each has its own requirements and regulations, limitations, and tax implications, as well as the ability to apply for tax exemption. Here are some major types of nonprofits:
501(c)(3) - Charitable Organizations. The most common nonprofit is a charity, and refers to an organization that operates to fulfill any of the following purposes: religion, education, science, literature, public safety testing, amateur sports, and the prevention of cruelty to children or animals. Common types of charitable organizations—which the IRS uses in its generally accepted legal sense—include food banks, museums, theatre groups, colleges, low-income housing organizations, and day care centers. Both public and private charities are usually prohibited from or limited in engaging in lobbying activities. As charities, 501(c)(3) organizations can apply for tax-exemption for all income related to the business or mission. You can find a complete list of all 28 types of 501(c) corporations through the IRS.
501(c)(4) - Civic League, Social Welfare Organization, or Local Employee Association. These types of nonprofits are created to promote community and individual welfare. Lobbying activities are not limited by law, and regulations regarding partisan political activities Labor and Agricultural Organization. This is created for educational or instructive purposes, designed to improved conditions and efficiency of work. Types include labor, agricultural, or horticultural organizations.
501(c)(6) - Trade or Professional Association. These are created to improve business conditions. Types of these nonprofits include Chambers of commerce, retail merchants associations and real estate boards. They are typically not subject to legal limitations on lobbying and political activity.
501(c)(7) - Social or Recreational Club. Types of these nonprofits include hobby clubs, country clubs, and other groups created for recreational purposes.
501(c)(8)- Fraternal Societies. These types of organizations must operate under the “lodge” system, and provide substantial programs and activities for members, whose membership is based on common ties or pursuit of a common goal, and who receive benefits.
501(c)(9) - Employee Beneficiary Association. This kind of association provides for the payment of life, sickness, accident, or other benefits to its employee members.
501(c)(14) - State Chartered Credit Union and Mutual Reserve Fund. These nonprofits offer their members high-quality financial services and enable them pool and organize their own financial resources.
501(c)(19) - Veterans Organizations. This type of nonprofit is comprised primarily of past or present members of the United states Armed Forces, and organized to provide benefits for these and other USAF members.
Last edited: