They're two different things at two different levels of government. "Nonprofit" is a state-level corporate status — you get it by filing articles of incorporation with your state (usually the Secretary of State). It means your organization isn't owned by shareholders and doesn't distribute profits to individuals. "501(c)(3)" is a federal tax-exemption category from the IRS for charitable, educational, religious, and similar organizations. Being a 501(c)(3) exempts you from federal income tax and — uniquely among most exempt types — makes donations to you tax-deductible for donors.
The normal sequence is: incorporate as a nonprofit at the state level first, then apply to the IRS for 501(c)(3) recognition (Form 1023, or the streamlined 1023-EZ if you qualify). So nearly every 501(c)(3) is a nonprofit, but not every nonprofit is a 501(c)(3) — you have to apply and be approved.
There are also other 501(c) categories: 501(c)(4) social welfare/advocacy groups and 501(c)(6) business leagues and chambers, among others. These are tax-exempt too, but contributions to them generally are not deductible as charitable gifts. That charitable deductibility is the big practical distinction of (c)(3) status.
This is general information, not legal or tax advice — confirm your specific path with a CPA or nonprofit attorney before filing.
What to do next
- Incorporate at the state level (file articles of incorporation, adopt bylaws, appoint a board — many states require a minimum number of directors, often three) before applying to the IRS.
- Get an EIN from the IRS, then apply for 501(c)(3) status using Form 1023 or 1023-EZ (check the 1023-EZ eligibility worksheet first).
- After approval, file the right annual return every year — the 990-N e-Postcard is generally for orgs with gross receipts normally ≤ $50,000; missing a required return for 3 consecutive years triggers automatic revocation of exemption.
- Confirm your filing strategy and any state charitable-registration requirements with a CPA or nonprofit attorney.
A quick note
This is general information for nonprofits, not legal, tax, or accounting advice. Rules and figures change and vary by state — verify with a qualified professional before you act.
Sources & tools
Free, primary sources
- IRS — Exemption Requirements (501(c)(3) Organizations) — Official IRS overview of what qualifies an organization for 501(c)(3) status and the tax-deductibility of donations.
- IRS — Annual Filing & Forms (990 series, including 990-N) — IRS guidance on required annual returns, the 990-N e-Postcard, and automatic revocation after three consecutive years of non-filing.
- IRS — Who Must File Form 990-N (e-Postcard) — Confirms the gross-receipts-normally-$50,000-or-less eligibility threshold for filing the 990-N e-Postcard.
- National Council of Nonprofits — How to Start a Nonprofit — Plain-language explanation of incorporating at the state level versus obtaining federal tax-exempt status, with step-by-step guidance.
Last verified 2026-06-17. Rules and figures change — verify at the source before you act.
Good Circles funds nonprofits — passively and automatically
This Answers library is free because Good Circles is built to fund nonprofits, not charge them. Supporters pick your cause once, then a share of their everyday local spending funds you automatically — about 10% of each merchant's net profit, conservatively ~$72 per active supporter per year (an estimate), recurring and free for your nonprofit.
See how it works for nonprofits →