What Are the Corporate Benefits for a Nonprofit Agency?
If you are considering incorporating a nonprofit agency and becoming a public charity--501(c)(3)--there are both financial and liability benefits.
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Tax Exemption
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Tax exemption is not automatic for nonprofits. Your organization must apply to the IRS for tax exemption from federal corporate taxes. Nonprofits that have the 501(c)(3) status are exempt from these taxes and are often exempt from similar state and local taxes.
Contributions
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Changing your organizations status to a public charity may entice more contributions because it allows contributors to claim those donations when filing their own taxes. In addition, if your organization is not a public charity, you may be missing out in thousands of dollars from corporate trust funds that restrict their donations to public charities only.
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Limited Legal Liability
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A nonprofit organization is only liable for its assets. Employees and founders are not personally liable for the debts of the nonprofit.
Your Mission
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Gaining status as a public charity ensures that your mission is that of the organization's, not of those individuals representing your organization.
Public Scrutiny
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Organizations with 501(c)(3) status are public. Records are available to the public for review including tax returns and other financial records. This transparency adds to the credibility of your organization.
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