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501c3 Tax Exemption

What Is A 501c3?

When you’ve begun the process of starting a nonprofit, one of the first questions you encounter is: what is a 501c3, and how can it help my organization? 

The recognition of your organization as a 501c3 tax-exempt entity by the Internal Revenue Service (IRS) offers many advantages in helping your organization receive donations. Primarily, having an active 501c3 status allows donors to receive a tax deduction, provides grant funding eligibility for the nonprofit, lowers postage rates, and increases credibility within the community. 

Here at CharityNet USA, we can help you gain active exempt status with the IRS, guaranteed. We are one of the nation’s top 501c3 service providers, helping thousands of nonprofits move forward successfully. Get the help you need with your IRS 501c3 application preparation from our dedicated nonprofit team.

We Help You Obtain 501c3 Status With The IRS

At CharityNet USA, we help you understand what a 501c3 is, and offer dependable 501c3 document preparation for nonprofit organizations at a fair price. If you need help with understanding the requirements to start a nonprofit, our professional team of consultants can prepare all of the necessary documentation to secure your organization’s tax-exempt status from the IRS. 

Our services include Form 1023, Form 1023-EZ, Financials, Articles of Incorporation, EIN or Tax ID#, Bylaws, State Tax Exemption, Charity Registration, Corporate Book & Seal, Conflict of Interest Policy, Foreign Registration, Group Exemption, Fictitious Names (DBA) and State Annual Reports. We also can review your organizing documents, assist with follow up with the IRS in response to official correspondence, and even assist with other 501c designations.

CharityNet USA is your reliable partner when you want to know what steps are needed to make your organization a 501c3 tax-exempt entity. Our passion is to help your nonprofit succeed.

Your mission is to help others. Our mission is to help you.

The 501c3 tax exemption process can be extremely complex and difficult to follow. You do not want your organization to be at risk due to inexperienced volunteers or companies processing your IRS Form 1023 & IRS 1023 EZ. If done improperly, the processing of your 501c3 status and 501c3 application can be delayed for months. Here at CharityNet USA, we work with clients nationwide, having filing expertise in all 50 states and U.S. territories. 

Moreover, we guarantee approval of the 501c3 status, and work fast to get quick approval for your nonprofit organization. In some cases, we have assisted nonprofits in receiving their status in less than 30 days. Allow our skilled consultants to complete the necessary documents for your nonprofit. Count on our nonprofit solutions for all your needs. From helping you understand what a 501c3 is to incorporation and digital marketing, we know how to fast-track your growth.

We understand that this process can be difficult, and you may need assistance starting a nonprofit, especially with limited funding. Accordingly, we offer affordable solutions to help you get started and move forward. Please note that our document preparation fees do not include state or federal government filing fees.

At CharityNet USA, our qualified consultants have extensive experience in document preparation for nonprofit organizations. We can complete both state and federal documents for your organization, and guarantee their approval. It is our mission to help you help others in whichever manner we professionally can, including understanding what a 501c3 is, 501c3 status, and 501c3 application, CharityNet USA is your one-stop resource center for nonprofit growth and business development.

Call for a Free Consultation with a Nonprofit Consultant

Ready To Start A 501c3 Nonprofit?

If you have any questions about starting a nonprofit, including state incorporation documents, federal requirements, and annual compliance, please feel free to review our helpful 501c3 Tax Exempt Status video You can also contact us at any time, and one of our representatives at CharityNet USA will be happy to assist.

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Frequently Asked Questions

A. Form 1023 is used to apply for exemption under IRS 501(c)(3). There are two types 1023 and 1023 EZ.

A. Religious, charitable, scientific, testing for public safety, literary, educational, fostering amateur sports, or prevention of cruelty to children or animals.

A. On average the IRS takes 6-9 months from the time they receive the application package, however there are exceptions. Animal organizations tend to receive determinations quite quickly, and foreign or housing organizations may take an extended period of time. Doing it right the first time is critical, and that is where CharityNet’s experience helps. Also, if you are in a hurry our staff can assist with tips to help expedite the process.

A. Reg. l. 501(c)(3)-1(d)(2) provide that the term “charitable” is used in IRS 5Ol(c)(3) in its generally-accepted legal sense and includes relief of the poor and distressed or of the underprivileged; advancement of religion; advancement of education or science; erection or maintenance of public buildings, monuments, or works; lessening of the burdens of government; and/or promotion of social welfare.

A. For the IRS to approve an organization as a church, they must demonstrate that they have a set of distinct religious beliefs, a place of worship, regularly-scheduled services, and an established congregation. Lately the IRS has been requesting photographs of the church facility, the signage outside that invites the public to attend services, and the congregation at worship. In addition they have requested a list of members of the congregation, including names, addresses, and phone numbers.

A. Fostering Amateur Sports- Sports activity is not in and of itself an exempt activity under IRS 5Ol(c)(3). To qualify:

  1. An organization may be educational within the meaning of IRS 501(c)(3) if it teaches sports to youth or by being affiliated with an exempt educational organization. Such educational organizations may also provide facilities and equipment.
  2. An organization that develops, promotes, and regulates a sport for youths may be charitable within the meaning of IRS 5Ol(c)(3) as combating juvenile delinquency or lessening the burdens of government.
  3. The organization is organized and operated to foster national or international amateur sports competition and no part of its activities involve the provision of athletic facilities or equipment. (Think Olympic training).

A. The organizing document for the company; it states the organization’s specific purposes, incorporators, etc. The outline will vary from state to state.

A. Similar to Articles of Incorporation, but used for LLCs.

A. Internal operating rules for an organization; they state who should do what, how they should do it, when they should do it, etc. This basic nonprofit template discusses board duties and elections, memberships, meetings, etc.

A. If your organization has been operational for 5 years or more, then actual financial information for the last 5 years is required. If the organization has been in operation 1-4 years, we must have actual financial information for the periods of operation, and projected financials to include a total of 4 years of information. If the organization is a start-up, a 3-year projection is required.

A. Yes. However, the fees should be for provision of services which help to achieve the exempt purpose. These fees should be reduced in comparison with a commercial entity that may offer the same service. If fees are charged for any goods or services that do not directly involve the exempt services, the revenue may be subject to unrelated business income taxes.

A. Reg. 1.501(c)(3)-1(b)(l)(i) provide that an organization is organized exclusively for one or more exempt purposes only if its Articles of Organization:  Limit the purposes of such organization to one or more exempt purposes; and do not expressly empower the organization to engage, other than as an insubstantial part of its activities, in activities which in themselves are not in furtherance of one or more exempt purposes. In addition, the organization’s assets must be dedicated to an exempt purpose, either by an express provision in its governing instrument or by operation of law. Reg. lRS 501(c)(3)-1(b)(4).

IRS 508(e) imposes additional requirements for governing instruments of private foundations. These are discussed in the Private Foundations Manual.

The term “articles” includes “the trust instrument, the corporate charter, the articles of association, or any other written instrument by which an organization is created.” Reg. 1.501(c)(3)-1(b)(2). The organizational test cannot be met by any document that is not the creating document.

A corporation’s bylaws cannot remedy a defect in its corporate charter. A charter can be amended only in accordance with the State’s nonprofit corporation law. States generally require that any amendments be filed with and approved by the chartering authority. In the case of a trust, operating rules cannot substitute for the trust indenture. For an unincorporated association, the test must be met by the basic creating document, whatever it is called, and any amendments. Subsidiary documents that are not amendments to the creating document may not be relied on.

A. The board is the governing body of the organization. In most nonprofits, the board does not participate in the daily operations of the organization. They must approve major organizational decisions, such as budget, salaries, amending articles or bylaws, etc. These individuals are there to ensure that the organization has the public’s interest at heart, and that all operations are done appropriately. Board functions must be offered on a volunteer basis. Board members may be recompensed for any out-of-pocket expenses. Sometimes, members of the board may also hold a day-to-day position in the organization. This is a separate position from that which they hold on the board. An individual who happens to be on the board may receive compensation for their daily role in the organization.

A. 501 Board Requirements: You must have at least 3 individuals – President, Secretary, Treasurer.

A. Yes, however there must always be a majority of “uninterested” individuals on the board. This means unrelated by blood, marriage, adoption, or business, and not receiving compensation for any reason.

A. Members of the board, award committee, or their family members should not be eligible to receive funding.

A. To remain in compliance, the organization must submit a Form 990 each year. This form (which comes in a variety of formats depending on the organization’s specific financial situation) must be submitted following the end of the fiscal year. Each year, the organization must file annual reports with their state to ensure that the corporation remains in good standing.

A. Most states require nonprofit organizations to register with the Attorney General or Department of Consumer Services before soliciting donations from the public. This ensures that all organizations requesting donations are in fact legitimate.

A. Not necessarily, but it is a good idea. This will prevent your organization from paying state level corporate and franchise taxes, freeing up more funds to put toward programs. In addition, sales tax exemption may be available to save you money on purchases made for the organization. The good news is the process is a lot simpler than federal tax exemption, however the state’s department of revenue may require you to first submit a copy of your IRS determination letter.

A. This varies by state. Some states will automatically exempt organizations that have been deemed exempt at the federal level. Other states require organizations to apply separately for state level exemptions.