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What is 501(C)3 Non Profit Status?

What is 501(C)3 Non Profit Status? thumbnail
Filing for 501(c)3 status requires specific paperwork.

A 501(c)3 organization is a charitable organization that has filed official paperwork with the Internal Revenue Service (IRS) to become tax exempt.

  1. Features

    • A 501(c)3 organization is organized for an IRS-defined tax exempt purpose such as educational, charitable, religious, scientific, literary, public safety, amateur sports competitions and prevention of cruelty to animals.

    Types

    • 501(c)3 organizations can be categorized as one of five different types: private foundations, publicly-supported charities, exempt purpose activity-supported charities, supporting organizations for 509(a)1 or 509(a)2 charities, or public safety charities.

    Requirements

    • To obtain 501(c)3 status, an organization must exist for an approved exempt purpose and none of its proceeds may benefit any private shareholder or individual.

    Benefits

    • 501(c)3 organizations do not have to pay tax on earnings, meaning more of their proceeds can benefit the group's particular cause.

    Considerations

    • Organizations with 501(c)3 status are not permitted to campaign for or against political candidates and are restricted in terms of legislative and other political activism.

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  • Photo Credit Image by Fotolia.com, courtesy of Tom Oliveira

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