• What is a nonprofit? 
• Is there a difference between the terms “nonprofit” and “not-for-profit"?
• What is a foundation? 
• What is a corporate giving program? 
• What is a community foundation? 
• What is an NGO? 
• Staff-recommended resources

The social sector is a diverse network of mission-driven organizations working at the intersection of compassion and systemic change. From community-based nonprofits addressing local needs to global foundations— this diverse landscape represents society's formal commitment to tackling our most pressing challenges. However, understanding the different types of organizations and how they interact can be difficult. This article will tell you everything you need to know about the different types of organizations that make up the social sector.

What is a nonprofit?

When most people refer to nonprofits, they’re talking about tax-exempt organizations, most often 501(c)(3) public charities. However, there are dozens of different types of nonprofits

organizations as classified by the IRS. Check out Candid’s U.S. Social Sector dashboard for a visual breakdown of nonprofits by type, geographic distribution, and more. 

The term nonprofit refers to the fact that any revenue generated is reinvested into the organization rather than being distributed to stakeholders, so no individual profits from the organization. 

Are nonprofits exempt from paying taxes? 

A nonprofit must apply to the IRS for tax exemption. Before applying, organizations must first obtain an EIN. Charitable organizations (private foundations and public charities) use Form 1023. All other nonprofits, such as chambers of commerce, credit unions, and veterans organizations use Form 1024. Some nonprofits, such as places of worship, automatically qualify for tax exempt status and are not required to formally apply. Learn more: How do I start a nonprofit organization? 

Federally tax-exempt organizations are exempt from federal and sometimes state income and sales tax. While they do not file federal income tax, most nonprofits are required to file an annual Form 990. These filings are public documents and have valuable information about an organization's finances, board members, and key employees.  Learn more: What is Form 990 or 990-PF? and Where can I find an organization's Form 990 or 990-PF?   

Also, if you’re looking to research a particular nonprofit, check out How can I look up a 501(c)(3) nonprofit? 

Contributions to charitable organizations are tax deductible for the donor. How much is deductible depends on whether the organization is a 501(c)(3) public charity or a 501(c)(3) private foundation. (See IRS Publication 526 for details.)   

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Is there a difference between the terms "nonprofit" and "not-for-profit?"

Generally, "nonprofit" and "not-for-profit" have the same meaning. However, nonprofit, legal, academic communities do make subtle distinctions between the two terms. 

Although the words can be used differently by different groups, the simplest way to distinguish between them is to think of "not-for-profit" as an activity, like reading a book. The term "nonprofit" refers to an organization that is not intended to make a profit, like an adult literacy group. 

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What is a foundation?

Broadly speaking, a foundation is a nonprofit corporation or a charitable trust that makes grants to organizations, institutions, or individuals for charitable purposes such as science, education, culture, and religion. Foundations are crucial in addressing societal issues and supporting various causes, from education and health to the arts and environmental conservation. 

There are two foundation types: private foundations and grantmaking public charities. 

Private foundations 

A private foundation’s money comes from a family, an individual, or a corporation. Private foundations must meet a "payout requirement," meaning they have to give away a certain amount of their assets every year. This information is helpful when you're looking for potential funders since private foundations remain active grantmakers. The Bill & Melinda Gates Foundation is a well-known example of a private foundation. 

Grantmaking public charities 

A grantmaking public charity (sometimes called a "public foundation") gets its money from many different sources, such as foundations, individuals, and government agencies. Most community foundations are also grantmaking public charities. 

Where public charities file a Form 990, private foundations file Form 990-PF. Learn more about the difference: What is Form 990 or 990-PF? 

In the Form 990-PF, private foundations must list all grants paid in that year. Some public foundations will list their grants voluntarily. For tips on grant research, check out “How do I find grants for my nonprofit?” 

What is the difference between a private foundation and a public charity? 

The only substantive difference between the two is the manner in which funds are acquired. A private foundation is a nonprofit charitable entity, which is generally created by a single benefactor, usually an individual or business, and the funds are typically derived from that single source. A public charity uses publicly-collected funds to directly support its initiatives. 

Every U.S. and foreign charity that qualifies under Section 501(c)(3) of the Internal Revenue Service Code as tax-exempt is considered a private foundation unless it demonstrates to the IRS that it falls into another category. Broadly speaking, organizations that are not “private foundations” are considered “public charities.” 

For more on the difference between the two, check out this resource from IRS.gov on the operational requirements for private foundations and public charities. 

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What is a corporate giving program? How is it different from a company-sponsored foundation?

Corporate funders have a unique approach to supporting nonprofits. While they share a philanthropic interest, their motivations extend beyond pure charity. These companies allocate funds to align with their business objectives, enhance visibility, and bolster their community presence, all part of their broader branding and Corporate Social Responsibility (CSR) efforts.  

It’s important to note that corporate giving programs and company-sponsored foundations differ significantly. 

Corporate giving programs are run by the company itself, often through a dedicated department such as Community Relations or CSR. Companies are not required to make this information public. Unless the company chooses to publicize it, you might have difficulty finding who and what a corporate giving program supports and how much it has given.  

Company-sponsored foundations are a separate entity from the company. They are a private foundation administered independently of the company. A U.S. company-sponsored foundation is subject to the same IRS rules as other foundations. They must give money every year and make information about their giving public.  

Learn more: Where can I find information on corporate giving? What motivates companies? 

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What is a community foundation?

A community foundation is a tax-exempt charitable organization that provides support— primarily for the needs of the geographic community or region where it is based— from funds that it maintains and administers on behalf of multiple donors.  

In addition to their own grant programs, many community foundations manage and/or administer: 

• Donor advised funds, on behalf of individual donors 

• Scholarship funds, on behalf of individual donors 

• Technical assistance/training programs for nonprofits 

Learn more: What is a community foundation? Where can I learn more about them? 

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What is an NGO?

Non-governmental organizations, or NGOs, were first called such in Article 71 in the United Nations Charter in 1945. While NGOs have no fixed or formal definition, they are generally defined as nonprofit entities independent of governmental influence (although they may receive government funding). 

The difference between nonprofit organizations (NPOs) and NGOs is slim. However, the term "NGO" is not typically applied to U.S.-based nonprofit organizations. Generally, the NGO label is given to organizations operating on an international level although some countries classify their own civil society groups as NGOs. Learn more:: What is an NGO? What role does it play in civil society? 

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Explore more with these Candid resources:

• Verify and find nonprofits
• Connect with new funders
• Showcase your nonprofit to donors

Learn more nonprofit terminology with our glossary: Where can I find a glossary of foundation, nonprofit, and fundraising terminology?