Ready to learn about the benefits of 501c3 nonprofits?

Once you know that you qualify to be a 501c3, you should take a moment to ensure that your organization isn’t already an approved 501c3 tax-exempt organization.

This is especially necessary if your nonprofit is already operating so that you reap the 5 unknown benefits of 501c3 nonprofit organizations which we’ll talk about below.  

The easiest way to know if you are already 501c3 tax-exempt is to look up your nonprofit using the I.R .S. website. 

Also, you can use the Exempt Organizations Select Check tool. This will allow you to type the name of your nonprofit or the taxpayer identification number and search if your tax-exempt status is active with the I.R.S.

This is a crucial step, as there is the risk of you later finding out during routine searches that your nonprofit’s tax-exempt status has been revoked. 

The important thing to know is that you won’t know this unless you take the time to look up your nonprofit.

5 benefits of 501c3 nonprofits you should know

Here are the benefits that a nonprofit receives when it applies and gets the 501c3 tax-exempt status. Understanding this will give you the adequate context to protect yourself legally when starting a 501c3 nonprofit. 

#1. Eligible for making grant applications 

501c3 nonprofits are often eligible to apply for federal grants, state grants, and private grants from corporations and foundations to help them fulfill their charitable purposes.

If you are unaware, a grant is money or resources given to an organization to carry out a specific purpose related to that nonprofit. 

For example, a nonprofit that raises health awareness could receive grant funding to host a community health fair from local doctors, hospitals, pharmaceutical companies, etc. 

#2. Permission to accept donations

501c3 nonprofits can accept donations from individuals and businesses to help them accomplish their mission. 

For example, a nonprofit to educate youth on sports safety would likely attract corporate sponsorships from energy drink companies, sports apparel stores, and athletic trainers. 

You can use these donations to purchase uniforms for the students, athletic gear, host seminars, hire staff, and open an office. 

#3. Donations received are tax-deductible. 

Donors that donate to 501c3 nonprofits can receive a tax write-off for donations they make to qualify as tax-exempt nonprofits throughout the year.

#4. Enjoy tax-free purchases. 

Qualified 501c3 tax-exempt nonprofits can buy items that help further their charitable purpose without being required to pay sales taxes on those items. 

#5. Limited Personal Liability. 

Generally speaking, forming a nonprofit can protect its founder, board members, and volunteers from being sued individually in lawsuits as a result of the activities of the nonprofit. There, however, are some exemptions to the case, which you will learn about in a future blog post. 

Now that you know the benefits for 501c3 nonprofits, the next post tells you about the laws governing them.