Nonprofits help the public in many different ways. Some provide assistance in the form of food, shelter, emergency aid, elderly care, etc.—they’re called human service organizations. Others use peer-to-peer fundraising to provide critical health services to uninsured people, or even to put on theater productions for local communities.
Nonprofits tend to fall in the following categories:
Human Service: 35.5%
Public and Societal Benefit: 11.6%
Arts, Culture, and Humanities: 9.9%
Religion Related: 6.1%
Environment and Animals: 4.5%
International and Foreign Affairs: 2.1%
Tax-Exempt Versus NonProfit
It’s important to note that not all tax-exempt groups are non-profits, and not all nonprofits are tax exempt. That’s because individual states determine whether an organization is a nonprofit based on how it uses the money it generates through fundraising.
The IRS, on the other hand, determines whether an organization receives federal tax-exempt status. It’s possible to be labeled a nonprofit by the state and yet not receive tax-exempt status by the federal government.
The IRS also provides tax-exempt status to organizations that aren’t nonprofits. Business leagues, including chambers of commerce, and credit unions, also receive special tax breaks under IRS statute 501(c) because of the benefits they provide the community.
When donating to a nonprofit, it’s important for donors to ask whether the contribution is tax deductible or not. Most transparent organizations will specify their status on their website.
By using Process Donation’s online donor management software, tax-exempt nonprofits make it easier for people to find important information about their cause and then submit contributions. That helps them gather funds, manage collections, and stay compliant with federal tax law. Visit our site to learn more about our nonprofit fundraising software makes fundraising easy.