They are exempt from federal income tax and are eligible to receive tax-deductible contributions. Some examples of 501c3 organizations are churches, schools, and organizations like the American Red Cross. In contrast, 501c6 organizations are business leagues, chambers of commerce, and trade associations.

Tax treatment of donations: 501 (c) (6) organizations Contributions to section 501 (c) (6) organizations are not deductible as charitable contributions on the donor's federal income tax return. They may be deductible as trade or business expenses if ordi­nary and necessary in the conduct of the taxpayer's business.

Section 501 (c) (6) of the Internal Revenue Code provides for the exemption of the following types of organizations: Business leagues Chambers of commerce Real estate boards Boards of trade Professional football leagues Return to Life Cycle of a Business League (Trade Association)

Both 501 (c) (3) and 501 (c) (6) organizations are tax-exempt from federal income taxes on the income raised or earned related to their exempt purposes. Generally, a startup nonprofit (other than a church) must apply for exemption under 501 (c) (3) by filing Form 1023 or Form 1023-EZ with the IRS.

Whether your nonprofit is organized as a 501 (c) (3) or a 501 (c) (6), there are benefits. Both statuses are exempt from filing federal taxes. Each of these types of organizations must first file for tax-exempt status with the IRS. As a 501 (c) (3), your organization can either file Form 1023 or Form 1023EZ.