Types of Charitable Organizations

• Charities help the well-being of others, mostly through donations and fundraising. Shana Novak/Photodisc/Getty Images

  In the United States, charitable organizations need to meet certain requirements to qualify for non-profit status. While some charities are for-profit organizations, the majority are considered 501(c)(3), tax-exempt organizations. This status helps charities retain revenue, for they do not have to pay income tax on their earnings, thus having more money to help their chosen cause. There are five basic types of charitable organizations.

The Private Independent Organization

• The private independent organization is a trust formed with the understanding that funding will come from one source. This group will not make a public outcry for funding, and use the organization to assist other charities. This type of charitable organization has the most tax restrictions.

The Public-supported Charity

• A public-supported charity is the largest, most common type of charity. Churches and community organizations often fall into this category. There are some rules and restrictions on this type of organization as well, including that it consist of a board of directors who make decisions regarding the charity together. Also, one-third of the funding for this type of charity must come from the public, either through donations or membership dues.

The Charity with Support from Donations and Dues, Fees or Payment for Services

• This type of charitable organization is similar to the public-supported charity in that it must receive one-third of its funds from donations, dues or gifts, and that its income does not exceed one-third of support generated. Because of the similarities, it is important to read tax laws to decipher differences.

The Supporting Charitable Organization

• The supporting charitable organization is usually associated with another larger, parent organization. Funds taken in by this organization are in most cases directly handled by the larger organization. An example of this would be a group of volunteers who raise money for an animal shelter, as they would gather funds and hand them off to the larger group.

The Private Operating Foundation

• It is not always obvious when a charity is a private operating foundation. As the name implies, it is private, and the organization will fund and support its programs alone. Art centers are popular examples of private operating foundations, where groups of patrons support the activities of the centers.