December 18, 2018

What is a 501c3 Nonprofit Organization?

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Anyone who’s planning to make a charitable contribution has probably asked these questions: What is a 501c3 nonprofit organization? What is the distinct provision that’s unique to charities that fall under this classification? What are the different types of 501c3 nonprofits?

To give you a clearer picture of what a 501c3 nonprofit is all about, Veteran Car Donations has summed up everything you need to know about it.

IRS: Section 501c3

Organizations that are identified as non-business or not-for-profit entities are exempt from federal income tax based on the United States Internal Revenue Code’s Section 501c3 of Title 26. Typically, these organizations are classified as private operating foundations, private foundations or public charities. Furthermore, the U.S. Department of Treasury through the Internal Revenue Service regulates and administers it.

Entities that want to be IRS-certified 501c3 organizations include corporations, community chests, trusts, and other unincorporated associations. However, most of those that are determined by the IRS as such are nonprofit corporations.

What Sets 501c3 Nonprofits Apart

Although there are various provisions that are unique to 501c3 entities, what sets them apart from other tax-exempt organizations is the fact that all donations made to them are tax-deductible. Aside from this, 501c3 organizations are exempt from property taxes as well as sales tax on their purchases. What’s more, qualified nonprofits are entitled to special nonprofit, bulk rate postage discounts from the Post Office.

Different Types of 501c3 Nonprofit Organizations

As mentioned earlier, these 501c3 nonprofits are classified into any of the three basic categories, namely:

• Public charities

A 501c3 nonprofit under this category is determined by the IRS as “not a private foundation.” Much of its revenue is received from the government or the general public. In fact, it relies on an extremely broad base of support from individuals, companies, and other public nonprofits to come up with at least 1/3 of its donated revenue. Otherwise, it won’t be able to maintain its classification as a public charity.

Examples of public charities include benevolence organizations, churches, animal welfare agencies, and educational organizations. If a person donates to a certified 501c3 public charity, their charitable contribution can be tax-deductible up to 50% of their income. Corporate limits are normally 10%.

Other distinct characteristics of a public charity include a governing body that’s made up of unrelated individuals and the maintenance of active programs.

• Private foundations

These organizations are commonly labeled as non-operating foundations due to the fact that they don’t maintain active programs. Their revenue is earned from a single donor or a small number of them. Some public charities receive support from private foundations through grants.

If a person makes a donation to a private organization, they are entitled to have their taxable income deducted up to 30%. Compared to that of a public charity, the governance of private foundations is closely held. An example of a private foundation is a family foundation.

• Private operating foundations

Among the three types of 501c3 nonprofits, this is the least common. Organizations under this category are often considered as “hybrids” because they also have active programs that are very much like those that are maintained by public charities. Moreover, since close governance is one of their distinct attributes, this makes them similar to private foundations as well.

Most of what a private operating foundation earns is required to be used for the conduct of their programs. Moreover, the deductibility of all donations they receive is the same as that of a public charity.

Donate a Vehicle to an IRS-Registered 501c3 Nonprofit Today!

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If you’ve already decided to donate a vehicle that you’ve been itching to get rid of but still haven’t picked a charity to donate it to, we encourage you to hand it over to us at Veteran Car Donations. Our former military servicemen and women who are going through the toughest times badly need your support. With your donation, they will get mortgage-free and specially adapted homes, free physical and mental health care services, educational scholarships, career development, employment opportunities, financial assistance, and many other benefits.

Since your vehicle donation will be used by our IRS-certified 501(c)3 nonprofit organization partners, your charitable contribution will entitle you to receive a 100% tax-deductible sales receipt after your vehicle is sold at auction. This means you can get the highest possible tax deduction that can significantly lower your tax bill when you file your itemized federal income tax return for the upcoming tax-filing season.

If you’re interested to turn around the lives of our struggling veterans, fill out our online donation form or call us at 877-594-5822 today. We accept vehicle donations wherever you are in the United States since we have car donation programs in all 50 states.

For more information on our car donation program, check out our FAQs page. For inquiries, you can call our toll-free 24/7 hotline 877-594-5822 or send us a message online.

Help Uplift the Lives of Our Vets

Your donation will definitely help improve the quality of lives of our impoverished veterans. After all, don’t you think it’s about time we give back to our nation’s heroes?  Call us at 877-594-5822 and kick-start your car donation process

Last Updated: May 12th, 2023