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The Internal Revenue Service (IRS) considers some groups, such as clubs, political groups and charitable organizations, as 'not-for-profit' (or 'nonprofit') organizations because their main objective is something other than financial profit. [1]

Nonprofit organizations include charities, professional associations, labor unions, religious organizations, arts, community, research, and campaigning bodies. These organizations are not situated in either the public or private sectors, but in what has been called the third sector.[2]

They are often called 501(c) organizations after the section of the tax code that lists eligible groups of non-profit entities.[3]

Each eligible group in section 501(c) has its own code number depending on its purpose. The most common and sought-after is 501(c)(3), or 'charitable', and includes both public charities and private foundations.[4] The 501(c)(3) groups are exempt from federal income tax and donations to them are tax-deductible so long as they fall into one of the sub-categories of 501(c)(3) that are based on a group's aims. The IRS recently announced that 501(c)(3) non-profit organizations must now place their business-income tax returns (Form 990-T) on public display.[5]

Bill Gates, the former full-time executive of Microsoft and present co-chairman of the Bill and Melinda Gates Foundation is one of an estimated 1.1 million baby boomers who have traded jobs in the corporate world for work at nonprofit organizations, according to some estimates.[6]

The National Council of Nonprofit Organizations and the National Human Service Assembly reviewed the work of five organizations that rate charities in 2005.[7]



  1. Nonprofit corporation. NOLO.
  2. Nonprofit Organization. BNET.
  3. 501. Exemption from tax on corporations, certain trusts, etc.. Cornell University Law School.
  4. How the IRS Classifies Nonprofit Organizations.
  5. Public Inspection and Disclosure of Form 990-T. Internal Revenue Service.
  6. Baby Boomers Find Meaning In 'Encore Careers' At Nonprofit Groups. Dallas Morning News.
  7. Study. NCNA.
Last modified on 26 February 2014, at 10:46