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Charity v. nonprofit, what is the difference?

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Charity v. nonprofit, what is the difference?

I received a charity request from the "Fraternal Order of Police" who claims to be a nonprofit organization. The form states "contributions...are not tax deductible." I thought any legitimate nonprofit charity organization was tax deductible. Please explain.

Your question illustrates the confusion between nonprofit and charity.  "Nonprofit" and "charity" are not legally syonomous, although they are terms often used interchangeably in ordinary conversation. Virtually all charities are nonprofit, but not all nonprofits are charities. Many nonprofits are civic associations, fraternal organizations, trade associations or social clubs that do not qualify as section 501(c)(3) charities. Section 501(c) of the Tax Code now has 29 separate classes of organizations that are exempt from paying federal income tax. Gifts to those organizations not classified under 501(c)(3) are generally not eligible for treatment as charitable contribution deductions. It appears as though the organization soliciting you is not a charity. That does not mean that it cannot ask for contributions, but it may required to tell you that the gift is not deductible.  (See Ready Reference Page: "What Do We Mean When We Say 'Nonprofit'?")

Originally published 4.23.07
Revised 1.8.18

Monday, April 23, 2007

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