August 27, 2010, Newsletter Issue #191: Nonprofit Organizations

Tip of the Week

Nonprofit organizations or a Not For Profit Organization includes charitable organizations, churches and religious organizations, political organizations, and private foundations. Nonprofit organizations that qualify as an IRS 501(c)(3) organizations are both tax exempt and can accept donations that are tax deductible, and include organizations established for purposes:

"charitable, religious, educational, scientific, literary, testing for public safety, fostering national or international amateur sports competition, and the prevention of cruelty to children or animals. The term charitable is used in its generally accepted legal sense and includes relief of the poor, the distressed, or the underprivileged; advancement of religion; advancement of education or science; erection or maintenance of public buildings, monuments, or works; lessening the burdens of government; lessening of neighborhood tensions; elimination of prejudice and discrimination; defense of human and civil rights secured by law; and combating community deterioration and juvenile delinquency."

501(c)(3) organizations must not be operated for the benefit of any private interests, and arte limited in the amount of political activity and lobbying in which they can engage. Do note that while political organizations, such as parties, committees, and candidates, are "nonprofit" and "tax exempt," they are not classified as 501(c)(3) organizations and therefore different tax standards and codes apply.

*See IRS Publication 78 for a listing of all 501(c)(3) eligible institutions.

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