What Is the Difference Between a 501c and a 501c3?

Written by True Tamplin, BSc, CEPF® | Reviewed by Editorial Team

Updated on December 20, 2022

Difference Between 501c and 501c3

A 501(c) organization and a 501(c)3 organization are similar in designation, however they differ slightly in their tax benefits.

Both types of organization are exempt from federal income tax, however a 501(c)3 may allow its donors to write off donations whereas a 501(c) does not.

Subsection 501(c) of the Internal Revenue Code is the "List of exempt organizations."

Subsection (3) of subsection 501(c) outlines the specific organizations which are tax exempt under subsection 501(c)(3) and will receive that subsection's specific tax treatment (including tax write offs for donors).

Here is a screenshot from the Internal Revenue Code section 501(c)(3) in context:

 

[caption id=”attachment_43475” align=”alignnone” width=”2430”]Screenshot of 501(c)(3) of Internal Revenue Code Screenshot of 501(c)(3) of Internal Revenue Code[/caption]<h2>Difference Between a 501c and a 501c3 FAQs</h2>

What is a 501(c)(3) organization?

A 501(c)(3) organization is a non-profit organization with tax exempt status that is dedicated to the general well-being of society.

What Is the Difference Between a 501c and a 501c3?

a 501(c)(3) is just a subsection of section 501(c) of the Internal Revenue Code. It describes tax exemption for certain nonprofits, but section 501(c) also includes other, broader categories.

Is a 501(c)(3) organization tax exempt?

A 501(c)(3) organization is tax exempt so long as it remains true to its stated mission and remains compliant with the IRS.

What does 501(c)(3) mean?

501(c)(3) is the internal revenue code (IRC) section for organizations with tax exempt status. 501(c)(3) falls under internal revenue code 501(c).

What are the organizations that fall under 501(c)(3) status?

The Internal Revenue Code states the following entities qualify for 501(c)(3) status: "(3) Corporations, and any community chest, fund, or foundation, organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary, or educational purposes, or to foster national or international amateur sports competition (but only if no part of its activities involve the provision of athletic facilities or equipment), or for the prevention of cruelty to children or animals, no part of the net earnings of which inures to the benefit of any private shareholder or individual, no substantial part of the activities of which is carrying on propaganda, or otherwise attempting, to influence legislation (except as otherwise provided in subsection (h)), and which does not participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office."

About the Author

True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website, view his author profile on Amazon, or check out his speaker profile on the CFA Institute website.

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