Understanding the Difference Between a 501(c)(3) and a 501(c)(6)
A 501(c)(3) is a nonprofit organization recognized by the IRS as tax-exempt for charitable, educational, religious, scientific, or literary purposes. These organizations serve the public good, and donations are typically tax-deductible for the donor. They are limited in how much lobbying or political activity they can engage in.
A 501(c)(6) is a tax-exempt nonprofit business league, chamber of commerce, or trade association. These organizations are designed to promote the common business interests of their members. Unlike 501(c)(3)s, contributions to a 501(c)(6) are not tax-deductible as charitable donations, and they are allowed to engage in advocacy and lobbying on behalf of their members.
- 501(c)(3): Focused on benefiting the public through charitable and educational initiatives.
- 501(c)(6): Focused on advancing the shared business or professional interests of its members.
Yes. Many associations form a separate 501(c)(3) foundation (like the PSEMA Foundation) to manage charitable programs and grant funding, while their 501(c)(6) counterpart (like the Private Sector Emergency Management Association) focuses on member engagement, networking, and advocacy.
- Donations to a 501(c)(3) may qualify as charitable tax deductions.
- Contributions to a 501(c)(6) generally do not qualify for charitable tax deductions, but they support business-focused efforts and advocacy.
- Understanding the difference ensures transparency in how your support is used and what tax implications apply.
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