A 501c classification is an irs classification given to charities and charitable organizations and non for profit companies. A 501c is a corporation established under the laws of any state in the United States, but has been granted certain tax privileges under the irs code. To be properly set up as a 501c charitable organization, the articles of incorporation or the membership agreement must be set up in a way that designates the charitable nature of the organization. It is difficult for a new company to have 501c designation in its first year of operations. Typically, the irs requires a one year track record of donations and charitable distributions. In lieu of the year track record, the new company can affiliate itself with an already established organization and piggy back the 501c classification. The 501 c permits tax free operation on its revenues and permits donators to deduct the contribution from their own personal taxes. Indeed, because there are many laws which governs 501c, before embarking on such a project, please consult with an attorney so you form it the right way from the very beginning.