What Is Section 170(c)(2) of the Internal Revenue Code?

Section 170(c)(2) of the Internal Revenue Code defines one category of “qualified organization” whose donors can claim a charitable contribution deduction. It covers corporations, trusts, community chests, funds, and foundations that are created in the United States, operate exclusively for religious, charitable, scientific, literary, or educational purposes, funnel no earnings to private individuals, and stay out of political campaigns. A gift to an organization that meets every element is deductible on your federal return. A gift to one that misses any element is just a gift.¹

The Four Requirements Under 170(c)(2)

The subsection lays out four conditions. All four must hold at the same time.

Domestic creation. The entity has to be created or organized in the United States, a U.S. possession, or under the law of a state or the District of Columbia. A donation sent directly to a foreign charity is not deductible under 170(c)(2), though a contribution to a U.S. organization that then directs funds abroad can be.¹
Exclusively exempt purposes. The organization must be organized and operated exclusively for religious, charitable, scientific, literary, or educational purposes. The statute also reaches groups fostering national or international amateur sports competition (provided they don’t supply athletic facilities or equipment) and those working to prevent cruelty to children or animals.¹
No private inurement. None of the organization’s net earnings can flow to any private shareholder or individual. Founders, officers, directors, and their families cannot personally profit from the organization’s revenue.
No disqualifying political activity. The organization cannot participate or intervene in any political campaign on behalf of, or in opposition to, a candidate for public office, and it cannot be disqualified under Section 501(c)(3) for attempting to influence legislation beyond permitted limits.¹

How 170(c)(2) Relates to 501(c)(3)

The two provisions look almost identical, and most organizations that qualify under one qualify under the other. They do different jobs, though. Section 501(c)(3) exempts the organization itself from paying federal income tax. Section 170(c)(2) determines whether donors get a deduction for what they give. When the IRS issues a determination letter recognizing 501(c)(3) status, it is also confirming that contributions are deductible under 170(c)(2).²

Whether the organization actually meets 170(c)(2) turns on two tests the IRS borrows from the 501(c)(3) regulations. The organizational test looks at the founding documents: the articles of incorporation must limit purposes to the exempt categories and must permanently dedicate assets to those purposes, so that on dissolution any remaining property goes to another qualified entity rather than to insiders. The operational test looks at what the organization actually does day to day. Its time and resources have to go primarily to exempt purposes, and none of its net earnings can benefit any private individual.²

Other Qualified Organizations Under 170(c)

Section 170(c)(2) is the biggest category, but not the only one. The wider section 170(c) also lets you deduct contributions to:

A state, U.S. possession, political subdivision, the United States, or the District of Columbia, when the gift is made exclusively for public purposes.³
Posts or organizations of war veterans, and their auxiliary units, organized in the United States, provided no earnings benefit private individuals.¹
Domestic fraternal societies operating under the lodge system, but only for individual donors (not corporations) and only when the gift is earmarked for charitable, religious, scientific, literary, or educational purposes.
Nonprofit cemetery companies operated exclusively for the benefit of their members and not run for profit.

These categories carry lower AGI deduction limits than 170(c)(2) public charities, which matters when you’re planning a large gift.⁴

Public Charities and Private Foundations Are Not Treated the Same

Within 170(c)(2), the IRS draws a further line between public charities and private foundations. An organization is presumed to be a private foundation unless it proves otherwise. To be treated as a public charity, it generally has to show broad public support. Under one common test, at least one-third of its total support over a five-year period must come from public contributions, government grants, or both. An alternative test looks at organizations receiving more than a third of their support from public contributions or from revenue tied to their exempt purpose, while receiving no more than a third from investment income and unrelated business income.⁵

For donors the practical effect is on the AGI cap. Cash to a public charity is deductible up to 60% of AGI. Cash to a private foundation tops out at 30%.⁴

What Costs an Organization Its Qualified Status

A clean charter isn’t enough. What the organization does can disqualify it.

Political Campaign Activity

A 170(c)(2) organization cannot participate or intervene in any political campaign for or against a candidate for public office. The prohibition is absolute; there is no de minimis threshold. A single violation is grounds for revocation of exempt status.⁶

Lobbying

Lobbying is treated more leniently. Some is allowed, but only an insubstantial part of overall activities can involve attempts to influence legislation.⁶ Because “insubstantial” is vague, eligible organizations can make an election under Section 501(h) that swaps the subjective test for dollar thresholds. An organization spending $500,000 or less on exempt purposes can devote up to 20% of that amount to lobbying, with the percentage sliding down as spending grows and a hard ceiling of $1,000,000 regardless of size.⁷ Exceeding the ceiling in one year triggers a 25% excise tax on the excess.⁸ Lobbying that normally runs above 150% of the allowable ceiling over a four-year base period costs the organization its exemption.

Private Benefit

The rule against earnings benefiting insiders is where the IRS spends much of its enforcement effort. It reaches everything from unreasonable executive salaries to below-market leases on property the organization owns. When an insider gets an unreasonable economic benefit from a transaction, the IRS can impose intermediate sanctions rather than revoke exemption outright. The recipient faces a 25% excise tax on the excess benefit, and a second-tier 200% tax kicks in on any portion left uncorrected after the allowed period.⁹

How to Confirm an Organization Qualifies

Before writing a check for a meaningful amount, check the IRS Tax Exempt Organization Search tool. It shows current recognition status, recent Form 990 filings, and whether the organization has been on the automatic revocation list.¹⁰

Two categories can be qualified without appearing there. Churches, synagogues, mosques, and their integrated auxiliaries are automatically recognized without filing Form 1023. Very small organizations, other than private foundations, with gross receipts normally at or below $5,000 per year are also not required to apply.¹¹ For any other organization, absence from the search tool is a warning sign. The burden of proving a deduction rests on you as the taxpayer.

One more failure mode worth checking for: automatic revocation. If an organization skips its required annual return for three consecutive years, its exempt status is revoked as of the due date of the third unfiled return, without warning. Contributions received after that date are not deductible until the organization is reinstated.¹²

What Your Deduction Is Actually Worth

AGI Caps

Cash gifts to 170(c)(2) public charities are deductible up to 60% of AGI. Gifts of long-term appreciated property, such as stock held more than a year, are capped at 30% of AGI when given to public charities. Cash gifts to private foundations, veterans’ organizations, fraternal societies, and cemetery companies are limited to 30% of AGI.⁴ Amounts above the applicable cap carry forward for up to five years, used oldest year first, with any unused balance lost at the end of the window.¹

Two 2026 Changes

Under the One Big Beautiful Bill Act, starting in 2026 itemizing taxpayers face a new floor. Charitable contributions are deductible only to the extent they exceed 0.5% of your contribution base (essentially AGI). If your AGI is $200,000, the first $1,000 of giving produces no deduction. The floor applies to cash and property alike and to every category of qualified organization.

Also new in 2026, taxpayers who take the standard deduction can claim an above-the-line deduction for cash gifts to qualified organizations, capped at $1,000 for single filers and $2,000 for joint filers. It doesn’t cover clothing, household goods, or other property, and it excludes gifts to donor-advised funds and private foundations. The 2026 standard deduction is $16,100 for single filers and $32,200 for joint filers, so most modest donors will use this route rather than itemizing.¹³

Substantiation

Without the right paperwork, a legitimate gift becomes a disallowed deduction.

For any single contribution of $250 or more, you need a written acknowledgment from the organization before you file the return for the year of the gift. It has to state the amount of cash (or describe any property) contributed, whether the organization gave you anything in return, and if so, a good-faith estimate of that value. A bank record or canceled check is not enough at the $250 threshold.¹

When you pay more than $75 and get something back (a dinner, tickets, merchandise), the organization must give you a written disclosure that the deductible portion is limited to your payment minus the fair market value of what you received, along with a good-faith estimate of that value. Token items of insubstantial value, purchases from a charity’s gift shop where there is no donative intent, and intangible religious benefits are exceptions.¹⁴

For donated property (other than publicly traded stock) worth more than $5,000, you generally need a qualified appraisal and must attach Form 8283 to your return. The appraisal has to be conducted by a qualified appraiser and obtained no earlier than 60 days before the donation.¹⁵ Overstated property values and missing appraisals are among the most common reasons the IRS disallows non-cash charitable deductions on audit.

1
Office of the Law Revision Counsel. 26 USC 170 – Charitable, Etc., Contributions and Gifts
2
Internal Revenue Service. Exemption Requirements – 501(c)(3) Organizations
3
Internal Revenue Service. Governmental Information Letter
4
Internal Revenue Service. Charitable Contribution Deductions
5
Internal Revenue Service. Exempt Organizations Annual Reporting Requirements – Public Charity Support Test
6
Office of the Law Revision Counsel. 26 USC 501 – Exemption From Tax on Corporations, Certain Trusts, Etc.
7
Internal Revenue Service. Measuring Lobbying Activity – Expenditure Test
8
Office of the Law Revision Counsel. 26 USC 4911 – Tax on Excess Expenditures to Influence Legislation
9
Internal Revenue Service. Intermediate Sanctions – Excise Taxes
10
Internal Revenue Service. Tax Exempt Organization Search
11
Internal Revenue Service. Organizations Not Required to File Form 1023
12
Internal Revenue Service. Annual Form 990 Filing Requirements for Tax-Exempt Organizations
13
Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026
14
Internal Revenue Service. Charitable Contributions – Quid Pro Quo Contributions
15
Internal Revenue Service. Form 8283 – Noncash Charitable Contributions