What is the Definition of a 501(c)(3) Organization?

Animal rescue organizations can qualify for tax-exempt status.

Organizations must meet certain requirements to file for tax-exempt status under section 501(c)(3) of the U.S. Tax Code. In general, non-profit organizations can qualify for this designation, thus avoiding most federal taxes.

Mission

The Internal Revenue Service lists eight missions that qualify for tax-exempt status: charitable, religious, educational, scientific, literary, amateur sports, public safety and preventing cruelty to children and animals. The IRS uses the current legal definition of "charitable" when reviewing an organization's mission.

Lobbying

Tax-exempt organizations may engage in limited lobbying efforts. They may not encourage people to contact legislators or otherwise support or oppose a particular bill or policy. They may, however, hold educational sessions, distribute educational materials and spend a limited amount of money on lobbying activities.

Campaigns

A 501(c)(3) organization may not promote a specific candidate for public office nor engage in any other electioneering activity.

Governance

In 2007, the IRS revised its good governance regulations, noting that well run organizations tend to follow tax laws better than poorly run ones. Tax-exempt organizations must file Form 990 to show they follow governance regulations.

Donations

In addition to the income tax exemption, organizations formed under 501(c)(3) may accept tax deductible donations from individuals and grants from foundations.

References

• Internal Revenue Service: Exempt Purposes - Internal Revenue Code Section 501(c)(3)
• Internal Revenue Service: Exemption Requirements - Section 501(c)(3) Organizations
• Internal Revenue Service: Governance of Charitable Organizations and Related Topics
• Internal Revenue Service: Lobbying

Resources

• Nolo's Plain-English Law Dictionary: 501(c)(3)