501c(3) Info

  • Tax-exempt status: 501(c)(3) organizations are exempt from federal income tax on their income, including donations, bequests, and other forms of revenue generated in pursuit of their exempt purposes. This tax exemption applies to most types of income, though some specific activities, such as unrelated business income, may still be subject to taxation.
  • Charitable contributions: Contributions made to 501(c)(3) organizations by individuals and corporations are generally tax-deductible. This tax deduction encourages people to support these organizations financially, promoting philanthropy and charitable giving.
  • Public charities and private foundations: 501(c)(3) organizations can be categorized as public charities or private foundations. Public charities are organizations that receive a significant portion of their support from the general public, government, or grants, and they are subject to less strict regulations compared to private foundations.
  • Private benefit and lobbying restrictions: To maintain their tax-exempt status, 501(c)(3) organizations must operate exclusively for charitable, educational, religious, scientific, or other exempt purposes. They cannot operate for the benefit of private individuals or engage in substantial lobbying activities.
  • Forming a 501(c)(3) organization: To become a 501(c)(3) organization, you need to form a nonprofit corporation in your state and then apply for tax-exempt status with the IRS. The application process involves submitting Form 1023 or Form 1023-EZ, along with supporting documents and a filing fee. The IRS will review the application and determine if the organization meets the requirements for tax-exempt status.
  • Reporting requirements: Once granted tax-exempt status, 501(c)(3) organizations have ongoing reporting obligations to the IRS, which include filing an annual information return (Form 990, Form 990-EZ, or Form 990-N, depending on the organization’s size and activities). This form provides financial and operational information to ensure continued compliance with tax-exempt regulations.
  • State regulations: In addition to federal regulations, 501(c)(3) organizations must comply with state laws governing nonprofits in the states where they operate.