I received a charity request from the "Fraternal Order of Police" who claims to be a nonprofit organization. The form states "contributions...are not tax deductible." I thought any legitimate nonprofit charity organization was tax deductible. Please explain.
Your question illustrates the confusion between nonprofit and charity. Virtually all charities are nonprofit, but not all nonprofits are charities. Many nonprofits are civic associations or fraternal organizations that do not qualify as section 501(c)(3) charities. Section 501 of the Tax Code now has 29 classes of organizations exempt from paying federal income tax. Gifts to those organizations not qualified under 501(c)(3) are generally not eligible for treatment as charitable contribution deductions. It appears as though the organization soliciting you is not a charity. That does not mean that it cannot ask for contributions, but it is required to tell you that the gift is not deductible. (See Ready Reference Page: "What Do We Mean When We Say 'Nonprofit'?")
Originally published 4.23.07