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Does your organization qualify as a 501c3 charity?

What is a 501c3 nonprofit?

Is a 501c3 organization different than a charity?  When people think of non-profits, they typically think of “charitable” organizations.  For example, the Red Cross and Salvation Army are in this category.   These organizations are governed under Internal Revenue code 501c3, which are more commonly referred to as publicly supported charities.  One feature of 501c3 organizations is the tax deductible  nature of donations that the organization receives.  Charitable organizations, as defined by Internal Revenue Code, court opinions and I.R.S. rulings are organized for one (or more) of these specific purposes:  The relief of poverty, advancement of religion, literary or support for the arts, promotion of health, scientific research, educational organizations (schools, universities, libraries, museums and organizations who instruct the public), and organizations designed to reduce suffering and prevent cruelty to children and animals.

Other “501c” designations.

There are other categories of non-profit (and generally tax exempt) organizations that fall outside of the 501c3, publicly supported charity classification.   Examples of these organizations include social welfare and civic organizations, athletic clubs or leagues, social and fraternal clubs, business organizations, chambers of commerce, and agricultural co-ops, just to name a few.  The important distinction is that donations to organizations outside of the 501c3 designation are not eligible for tax deductible status.  Of course, there are exceptions to these rules.

Form 1023 or 1024?

That depends on the designation your organization is seeking.  Organizations applying for 501c3 status file form 1023.  Generally, all others file form 1024. Tax exempt organizations, including 501c3 nonprofits, are subject to a complicated and sometimes unclear set of rules.  Consult with our experts to determine what type of organization you are starting before applying for tax exempt or public charity status and receiving donations.  If you need help, sign-up for a one on one consultation.  Non Profit Advisor Group offers live webinars monthly.  Sign-up for the next webinar to learn the steps to obtain 501c3 status.

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