501(c)(3) vs. 501(c)(4): What's the Difference?

What is a 501(c)(3)?

501(c)(3) organizations are private foundations or public charities that are created and operate exclusively for at least one of the following purposes:

• Charitable
• Religious
• Educational
• Scientific
• Literary
• Testing for public safety
• Fostering national or international amateur sports competition
• Preventing cruelty to children or animals

Many churches, food banks, schools, animal shelters, and traditional charities are considered 501(c)(3) organizations.

501(c)(3) pros

• Tax-exempt
• Can receive tax-deductible contributions (other than testing for public safety organizations)
• May be eligible for grants and government funding

501(c)(3) cons

• Limited lobbying
• Prohibited from political campaigning

What is a 501(c)(4)?

501(c)(4) organizations can be one of the following:

• Civic leagues or nonprofit organizations with the primary function of promoting social welfare
• Certain local associations of employees

To qualify as a social welfare organization, an organization’s main purpose must be promoting the common good and general welfare of the community as a whole, such as through fostering civil and social improvements.

For example, advocacy groups such as the American Association of Retired Persons (AARP), the Sierra Club, the National Rifle Association Institute for Legislative Action, and the Planned Parenthood Action Fund are 501(c)(4) organizations. 

Civic associations such as a group that puts on a yearly festival celebrating local customs; a community association that publishes a free local newspaper; and volunteer fire companies can also be considered 501(c)(4) organizations as they operate primarily to serve their communities.

501(c)(4) pros

• Tax-exempt
• Can engage in unlimited lobbying
• Can participate in political campaigns, as long as it's not the organization's primary activity

501(c)(4) cons

• Donations not tax-deductible

When to choose 501(c)(3) vs. 501(c)(4)

Unsure of which classification to choose for your organization? Here’s a quick guide for when to choose a 501(c)(3) vs. a 501(c)(4).

You may want a 501(c)(3) if:

• Your mission is purely charitable or educational.
• You rely on donations and grants.
• You want to offer tax deductions to donors.

You may want 501(c)(4) if:

• Advocacy or lobbying is central to your mission.
• You want freedom to participate in political discourse.
• You’re less concerned about donor tax deductions.

Can you have both?

Some organizations can maintain a dual structure, using a 501(c)(3) for charitable work and receiving donations and a 501(c)(4) for lobbying and political engagement. 

If you decide to create both a 501(c)(3) and a 501(c)(4), it’s important to maintain a distinction between the two and understand and comply with tax law requirements.

For example, the Sierra Club Foundation (SCF) is a 501(c)(3) organization that can receive tax-deductible donations. It cannot provide products, services, or memberships in exchange for donations. 

The Sierra Club is a 501(c)(4) social welfare organization and the primary recipient of the SCF’s charitable grants. Donations to the Sierra Club are not tax-deductible, but the Sierra Club is able to lobby for environmental laws. Funds from the SCF must be monitored to ensure they are not used for unpermitted non-charitable purposes. 

How to apply for each 501(c) status

Most nonprofit organizations must apply for recognition of exemption from the IRS to receive federal income tax exemption. 

Before applying for 501(3)(c) or 501(c)(4) tax-exempt nonprofit organization status, you’ll need to form a legal entity under your state's laws. Your formation document must identify that the entity is a nonprofit.

The next step is applying for 501(c)(3) or 501(c)(4) status with the IRS.

To apply for the correct 501(c) status, you’ll need to consider factors such as your primary mission, whether you want donations to be tax deductible, and whether you intend to lobby or participate in political campaigns.

Here’s the step-by-step process to apply for 501(c)(3) or 501(c)(4) tax-exempt status.

501(c)(3) status application process

• Check if you need recognition of exemption. The following organizations are not required to file Form 1023 or Form 1023-EZ: churches, synagogues, temples, mosques, integrated auxiliaries (related to religious organizations), conventions, or associations of churches, and organizations other than private foundations with annual gross receipts that are normally $5,000 or less. However, these organizations may choose to file for recognition of exemption in order to receive a determination letter. 
• Ensure you meet the IRS requirements. To qualify as a 501(c)(3), an organization must be organized as a corporation, a limited liability company (LLC), an unincorporated association, or a trust. Its organizing document must define its purposes and dedicate its assets to exempt purposes. The organization must operate to fulfill its exempt purpose(s), refrain from prohibited activities, and limit its legislative activities. 
• Determine which application to use. You can use either Form 1023 or Form 1023-EZ to apply for 501(c)(3) status. Organizations that meet the IRS criteria can submit Form 1023-EZ, a streamlined version of Form 1023. Fill out the Form 1023-EZ Eligibility Worksheet to determine whether you can use Form 1023-EZ. If you are not eligible for Form 1023-EZ, you can complete Form 1023. 
• Submit the correct form and pay the user fee online. You can complete and submit Form 1023 or Form 1023-EZ and pay the associated user fee via Pay.gov. The user fee for Form 1023-EZ is $275; for all other applications for recognition of exemption under Section 501 of the IRC the user fee is $600. See the IRS Schedule of User Fees for a full list of user fees. 

501(c)(4) status application process

• Collect necessary information. You will need the following information to notify the IRS that you intend to operate as a 501(c)(4): email address, business name, address, employer identification number (EIN), date organized, state and country organized, filing year and month, and a statement of purpose of the organization. 
• Notify the IRS. New 501(c)(4) organizations are typically required to submit Form 8976, Notice of Intent to Operate Under Section 501(c)(4) to the IRS within 60 days of formation. Don’t skip this step! If you are required to submit Form 8976 and miss the deadline, the IRS can impose a penalty of $20 per day the notification is overdue, up to $5,000. You can submit the form by creating an account through the IRS Online Registration System for Professional Employer Organizations and 501(c)(4) Certification, completing Form 8976 online, and paying the required $50 fee. 
• Ensure you meet the IRS requirements. The IRS requires organizations applying for 501(c)(4) status to submit evidence that they are organized and plan to operate as a nonprofit and that their primary function is to promote social welfare. 
• Submit Form 1024-A and pay the user fee. You can submit Form 1024-A and the required $600 user fee online via Pay.gov.

You can work with a business law attorney licensed in your state or use a reputable online legal services provider to establish your nonprofit and apply for tax exemption. Talk to a tax professional if you have questions about nonprofit taxation or eligibility for tax donations.

FAQs 

How long does IRS approval take for 501(c)(3) or 501(c)(4)?

Most application determinations for Form 1023-EZ applications submitted before Feb. 1, 2025, are issued within 22 days. Form 1023-EZ applications submitted after Feb. 1, 2025, have not been assigned as of April 2, 2025.

The processing time for most Form 1023 applications submitted before June 17, 2024, is 191 days. Form 1023 applications submitted after June 17, 2024, have not been assigned as of April 2, 2025. 

Most determinations for Form 1024-A applications submitted before July 7, 2024, are issued within 229 days. Form 1024-A applications submitted after July 7, 2024, have not been assigned as of April 2, 2025. 

In some situations, you may be able to request your application for tax-exempt status be expedited. Check the IRS page Applying for exemption: expediting application processing for more information.

Whichever form you submit, you will likely receive a determination letter once the application has been processed. 

Can a 501(c)(3) engage in political lobbying?

501(c)(3) organizations cannot legally support or oppose political candidates. An organization cannot qualify for 501(c)(3) status if a substantial part of its activities involve lobbying activities to help pass legislation, oppose proposed laws, or repeal existing laws. 

In contrast, 501(c)(4) companies can endorse or campaign against candidates and can lobby lawmakers, as long as the causes the organization is lobbying for coincide with the nonprofit's social welfare purposes. Organizations that choose to engage in political lobbying may need to provide disclosures to members showing how much of their dues were used for such activities.

Can I convert a 501(c)(3) to a 501(c)(4)?

You cannot directly convert a 501(c)(3) to a 501(c)(4). 

For instance, if an organization has lost its 501(c)(3) status due to excessive lobbying or political campaign intervention, it doesn’t automatically convert to a 501(c)(4) organization.

However, you can dissolve the 501(c)(3) and set up a new 501(c)(4). Another option is to go with a dual structure approach, operating a 501(c)(3) for charitable purposes and utilizing a 501(c)(4) to engage in lobbying and political campaign activities. 

It’s a good idea to consult with an attorney or online legal service before switching from a 501(c)(3) to a 501(c)(4) to ensure that the appropriate processes are followed. 

Can a 501(c)(4) accept donations?

Yes, a 501(c)(4) can accept donations, but they are not typically tax-deductible for the donor. 

When you make a charitable contribution to a qualified 501(c)(3) organization, you can generally take an income tax deduction. In contrast, you cannot deduct contributions made to a 501(c)(4) nonprofit organization, with certain limited exceptions.