What is a 501(c)3 organization?

If you are involved with a Tennessee religious, charitable, educational or scientific organization, your organization could benefit greatly from obtaining 501(c)3 status. As the Foundation Group explains, a 501(c)3 organization is one that receives favorable treatment from the Internal Revenue Service and the state taxing authority.

While nonprofit corporations make up the majority of 501(c)3 organizations, other eligible entities include the following:

  • Unincorporated associations
  • Trusts
  • Foundations

Public charities are defined as those that receive a majority of their donation revenue from a wide range of supporters, such as individuals, businesses and other charities. Churches, educational groups, animal welfare groups and benevolence groups all fit within this category.

Achieving 501(c)3 status

In order to become a 501(c)3 organization, your group must apply to the IRS by means of either Form 1023 or 1023-EZ. These forms require you to provide extensive information as to your group's structure, programs and method of governance.

Compliance and restricted activities

As a 501(c)3 organization, your group will be regulated by the IRS and will need to remain in compliance with all such regulations. For instance, your group cannot endorse a candidate for political office.

In addition, your group must be very careful regarding how much lobbying or activism it does on behalf of or against upcoming legislation at the local, state and federal levels. Anything more than "insubstantial" involvement could jeopardize your 501(c)3 status. This information is provided for educational purposes and should not be interpreted as legal advice.

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