1 How does a Not for Profit Organization differ from a Charitable Organization?
We would be considered a Not for Profit organization, but not classified as a tax exempt one by the IRS. The IRS classifies us as a 501 C-7 organization. This can be confusing. The IRS classifies an organization such as ours as a Section 501 C-7 social organization, which is for clubs founded for social purposes, as ours is. These clubs pays no taxes on normal income, which is derived from member dues and contributions and the like. The difference between the 501 C-3 you hear about, and us, is that our purposes are social, and the 501 C-3 is formed primarily for charitable and/or educational purposes. A 501 C-3 organization can give receipts for tax-deductible donations, and we can’t. If we were planning to engage in 501C-3 purposes, which we’re not, it should be in our incorporation document from the outset. Then, we’d need to do a complicated filing with the IRS to become one.