PMA vs Nonprofit vs Church:

How to Choose the Right Structure for Your Mission

When forming a mission-driven organization, one of the most consequential decisions is whether to operate publicly or privately.

Three structures are commonly considered are:

Private Membership Association (PMA) (often a 501(a))
Nonprofit organization (typically 501(c)(3))
Unincorporated Ministry or Church (26 U.S.C. § 508(c)(1)(A))

Each structure is lawful, well-established, and appropriate in different circumstances. This article provides a clear, factual comparison to help you determine whether your organization is best suited for private governance or public charitable operation.

This content is educational only and does not constitute legal or tax advice.

 
What Is a 501(c)(3) Nonprofit?

A 501(c)(3) is a nonprofit corporation or trust that is formally recognized by the IRS as operating for charitable, religious, educational, or similar public purposes.

Core Characteristics of a 501(c)(3)

Public-facing organization
Formed under state nonprofit law
Applies for and receives IRS recognition
Subject to ongoing regulatory oversight
Required to operate for public benefit
Eligible to receive tax-deductible donations
Nonprofits exist by public permission and operate in exchange for transparency, reporting, and accountability to the public and government agencies.

 
What Is a Private Membership Association (PMA)?

A Private Membership Association is a private contractual association between individuals who voluntarily agree to associate for a shared purpose.

Core Characteristics of a PMA

Membership-based and not open to the public
Governed by private contract
Operates through consent and agreement
Internal governance rather than public oversight
Services provided to members only
A PMA does not apply for tax-exempt status and does not exist to serve the general public. Its authority flows from contract law and freedom of association.

A Standard PMA, which is NOT faith-based may be qualified as an organization under 501(a) which are exempt from federal income tax, though they may be taxed on unrelated business income.

 
What Is an Unincorporated Ministry or Church?

Under 26 U.S.C. § 508(c)(1)(A), churches, their integrated auxiliaries, and conventions or associations of churches are automatically considered tax-exempt and are not required to apply for 501(c)(3) recognition.

Core Characteristics of an Unincorporated Church or Ministry

Ecclesiastical or religious purpose
Operates under internal doctrine and governance
Not required to file Form 1023
Still subject to general law (criminal, employment, etc.)
May be unincorporated or incorporated
Important note: There is no single legal definition of “church.” Determinations are fact-specific and based on actual religious operation.

 
Public vs Private: The Core Distinction

The deciding factor is who you serve and how openly you operate.

 
When a 501(c)(3) Is the Right Choice

A nonprofit is generally appropriate when an organization:

Serves the general public
Seeks grants or government funding
Needs widespread fundraising
Is comfortable with transparency and reporting
Operates programs for community benefit
Common 501(c)(3) Use Cases
Public charities and foundations
Community service organizations
Public schools and educational nonprofits
Large religious organizations
Disaster relief organizations
Public arts and cultural institutions
Public benefit and accountability are central to this structure.

 
When a PMA Is the Right Choice

A PMA may be appropriate when an organization:

Operates privately and consensually
Serves a defined membership
Values privacy and autonomy
Does not seek public donations
Relies on internal governance
Common PMA Use Cases
Private spiritual or wellness communities
Member-only education circles
Private retreats and mentorship programs
Alternative health or holistic practices
Family governance or economic circles
PMAs are best suited for relationship-based, non-public environments.

 
When an Unincorporated Church or Ministry Applies

A church or ministry structure may be appropriate when:

The primary purpose is religious worship or instruction
Activities are genuinely ecclesiastical
Governance is based on doctrine or faith
The organization functions as a congregation or ministry
Common Ministry Use Cases
Local churches or fellowships
House churches
Religious teaching ministries
Faith-based spiritual communities
This structure is not a workaround; it must be authentic in purpose and practice.

 
Choosing Between Private and Public Operation

Key questions to consider:

Am I serving members or the general public?
Do I need tax-deductible donations?
Am I prepared for public reporting and audits?
Is privacy or transparency more important?
Is my mission religious, charitable, or private?
Your answers determine the appropriate structure.

 
Common Misconceptions:

A PMA is not a nonprofit replacement
A church is not automatically exempt from all law
A nonprofit does not mean private governance
Labels do not override conduct
Structure should follow function, not ideology.

 
Conclusion
There is no universally “better” structure—only a structure that fits your mission.

Choose a 501(c)(3) when serving the public and seeking public trust.
Choose a PMA when operating privately by consent.
Choose a church or ministry when the mission is truly religious.
Intentional structure protects both the organization and the people it serves.