What Can You Do With a 501(c)(3)? Understanding IRS Charitable Purposes
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- เผยแพร่เมื่อ 22 พ.ค. 2024
- When you hear the term nonprofit, the first thing that typically comes to mind is a charity, or 501(c)(3) organization. That’s for good reason, since roughly 78% of all tax-exempt organizations are exempt under IRC Section 501(c)(3). The remaining 22% consists mostly of social welfare nonprofits, business leagues, and social/recreation clubs, plus about 24 less-voluminous possibilities.
But what does it mean to be a 501(c)(3) nonprofit? What sets a 501(c)(3) apart from the other categories of nonprofits out there? In a phrase: charitable purpose.
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•BLOG ARTICLE: How the IRS Defines Charitable Purpose bit.ly/3ypY4J8
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0:00 Introduction
0:40 IRS Restricts Purposes
1:16 Religious
2:50 Scientific
3:58 Testing for Public Safety
4:44 Literary
5:07 Educational
6:32 Fostering National and International Amateur Sports
7:51 Prevention of Cruelty to Animals and Children
8:26 Charitable
9:08 Conclusion
If you need help filing for IRS 501(c)(3) status, we’d love to help! You can fill out our contact form at bit.ly/3i6rFxz or give us a call at 888-361-9445.
How is the money distributed, who gets to determine what it is uses for? What if you just want to keep the money? Talk about this.
There is a rule called the "permanent dedication of assets". This rule states that all assets of a 501(c)(3), no matter how those assets were acquired, are permanently dedicated to a charitable purpose. This means that any money donated must be used in furtherance of the charitable purpose for which the IRS granted the nonprofit 501(c)(3) status. That includes expenditures related to reasonable overhead, not just direct program costs. But is also means that you can't just "keep the money". Taking money out of the nonprofit for personal use, assuming that it's not in the form of salary, is called embezzlement.
One fact for churches that should be mentioned is that they are not required to have a 501C3 filing. They are automatically exempt. The only advantage is that you are on their list for exemption and have an easier venue for defending their status.
It also makes it easier for a donor under audit. We've seen donations to churches without an IRS determination letter disallowed when a donor's charitable deduction was audited. It's a cheap shot by the IRS, and one that is defendable, assuming the donor has good representation. But that's not always the case.
@@FoundationGroup a friend of mine claimed tithes on her income tax. She didn't even go to church.
Just subscribed! This was SO helpful! Thank you for this video. We are looking at the Educational 501(c)(3) for our off-grid, sustainable farm. We will be teaching workshops and hosting experiences on living off-grid, sustainability, permaculture, natural building, and growing food & animals. We were trying to figure out where we best fit and this helped us confirm Educational! Thanks so much and we will be digging into your other videos. Cheers!
Glad you found it helpful! Definitely check out our other videos. We usually put out new ones about twice per month.
@@FoundationGroup Will do! Thank you!
Thank you!
Thank you and I will call
Very helpful I like how you explained everything cuz reading it I was Lost
Glad it helped!
🤣🤣🤣 Thank you, Greg !!!
You bet!
How about a coop for a group of homescoolers. Could it apply for a 501c 3 .
Great question
Does the 5O1C3 work in Africa?
Can a non-US citizen be an initial director for a US nonprofit in New York state and still get tax-exempt status?
Would feeding the homeless fall under the charitable category in the 501c purposes?
Generally speaking, yes.
Hello I need some help determining which one I need to apply for. So I am a fan of a nfl team and I have a fan group of that team. We do raffles that bring in a significant amount of money. I do take the money and put it towards the group. Supplies, website etc. I do want to be safe though. So which 501 c does my group fall under? Any info is appreciated thank you.
What you're describing sounds like a 501(c)(7), not a 501(c)(3). 501(c)(7) organizations are for social and/or recreational purposes, not charitable. I recommend you check out our video on "What Is a 501(c)(7)" - th-cam.com/video/eJNkZBmvzmE/w-d-xo.html .
This is exactly why 501 needs to be abolished. Your hobby group gambling on football and fantasy league meatball bs IS NOT A CHARITY or ANYTHING NON PROFIT... you're piggybacking off the NFL FFS
Who can I contact to get clarification of my 501c3 wanting an invoice of what members attended and paid for a field trip, but it wasn't organized by the 501c nor did payment go through them.
Without knowing more detail, we would suggest having the nonprofit put you in touch with whoever managed the payments, assuming the nonprofit doesn't have those details already. Someone should be able to provide that data to you.
@@FoundationGroup what I am looking for is where I can look up the 501c3 regulations covering this type transaction. I disagree with the nonprofits interpretation and want to see it for myself.
@@jenny-lynnmiller885 I don't think you're going to find explicit rules for what you're describing. So much of what governs 501c3 activity is more generalized regulations that are extrapolated to fit a particular situation. IRS Publication 557 is probably the place to start, but you may have a challenge overlaying precisely what you're looking for.
Which category would environmental stuff like planing trees and saving birds and bees fall into? Charitable?
Great question, and the answer is not as straightforward as you might think. Animal welfare is a charitable category under 501(c)(3), so things like habitat protection and such qualify. However, it's not as simple with flora. General environmental issues tend to fall under 501(c)(4), which is public benefit as opposed to charitable benefit. Rule of thumb is that if the beneficiary is mostly fauna, c3. Mostly flora or generally environmental, c4.
@@FoundationGroup ah ok, got it, thank you. this would fall under animal welfare bc the goal is to plant trees to reverse the devastation done by humans. with urban development, we have less trees which is the home and food supply for wildlife like birds, bees, bats, squirridaes 🐿️, etc.
501 needs to be destroyed