Q: I am involved with a 501(c)6 organization. There is a question whether this organization is eligible for grants that are made available only to “nonprofits and public agencies.” Do you have any insights to share?
A: There are 27 different types of 501(c) organizations – all of which are “nonprofit” corporations. The most common of these are 501(c)3 – the designation of public charities and private foundations – and 501(c)4 – social welfare organizations, which are allowed to lobby. But, most of us are familiar with 501(c)6 organizations. These are business associations like Chambers of Commerce or trade associations that are formed to serve the interests and needs of their members. The National Football League is a 501(c)6!
Such organizations can accept grants. However, while they are “nonprofit,” they are not considered charitable organizations. Therefore, donations made to 501(c)6’s are not tax deductible. This raises the issue of whether a funder would want to make a grant to your organization, knowing there would be no deduction. For some funders that may not be an issue. Even in this case, though, the bylaws of the funder may prohibit it from making a grant to a 501(c)6 organization.
The only way to determine whether your organization is eligible to apply for a particular grant is to call the funder and ask. That’s just good business, anyway, since it’s always beneficial to build a relationship with potentials funders. It may be that while the funder had no intention of making a grant to a 501(c)6 organization – and it knows it will not benefit tax-wise from doing so – it will find itself sufficiently impressed with your vision that it might decide to fund you regardless.