Comparison of 501(c)(3), 501(c)(4) and 501(c)(6) Organizations
Treatment
Charities
501(c)(3)Advocacy
501(c)(4)Trade & Prof.
501(c)(6)What is the primary purpose of the organization? Charitable, educational and/or scientific Advocacy To promote a line of trade or business Is the organization exempt from federal taxes? Yes Yes Yes Is the organization exempt from state and local taxes? Yes, usually, however some states are tightening requirements No, not usually No, not usually Are donations tax-deductible as charitable contributions? Yes No No Are dues or member fees tax-deductible? Yes, to extent fees exceed benefits received No Yes, if qualify as ordinary and necessary business expense May the organization engage in lobbying? Yes, but only an insubstantial portion activities may be lobbying Yes Yes, but beginning in 1993 lobbying expenditures are no longer deductible May the organization engage in political election campaign activity? No Yes, but taxed on expenditures Yes, but taxed on expenditures Is the organization required to file an annual information return (IRS Form 990)? Yes, if gross receipts exceed $25K Yes, if gross receipts exceed $25K Yes, if gross receipts exceed $25K Is the organization subject to UBIT? Yes Yes Yes Will the organization qualify for nonprofit postal permit? Yes No, unless also qualify as an "educational" organization within the meaning of 501(c)(3) No, unless also qualify as an "educational" organization within the meaning of 501(c)(3) Is the organization required to have an independent board of directors? Yes Yes Yes Are volunteers of the organization subject to legal liability? Yes, but trend is to exempt volunteers of charities Yes Yes May the organization have certain employee benefit plans: 401(k)? Yes Yes Yes 403(b)? Yes No No