How to Qualify for Non Profit Status
According to the Internal Revenue Service of the United States federal government, non-profit status is a special form of tax exemption given to certain types of organizations that do not attempt to make money for shareholders or owners, but instead uses any money raised to further a charitable cause. Several different types of organizations qualify for non-profit status in the United States, including churches and private charities. The procedure for qualifying for non-profit status is handled by the section 501(c)(3) of the IRS code.
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Instructions
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Paperwork
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Fill out Form 1023--Application for Recognition of Exemption Under Section 501(c)(3)). Churches and public charities that make less than $5,000 do not need to fill out this form when applying for non-profit status.
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Fill out Form 1024, Application for Exemption Under Section 501(a).
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Pay the user fee, as established in Part XI of Form 1023.
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Include necessary documents. In addition to the forms, the application packet for non-profit status must include your employer identification number, and a full description of proposed activities and bylaws for the organization.
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Turn in the application to the address listed on Form 1024. The IRS only accepts physical requests for non-profit status; electronic versions will not be considered.
Qualifying
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Do not file as an individual. The IRS does not recognize individuals as non-profit entities.
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Incorporate. To qualify for non-profit status, the IRS requires incorporation of an organization. Incorporation protects individual members of a company from liability.
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Write a mission statement. An important aspect of qualifying for non-profit status includes a declaration of how you intend to spend the money you make. Some non-profits claim very specific goals in their mission statements, while others broaden the mission, using the money for a wide variety of causes.
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Forgo profits. To qualify as a non-profit organization, no individual within the organization can profit. You must invest any money raised above operating costs back into the organization to further your mission statement.
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