What Are The Qualifications Required For A 501c3 Status?

Now that we understand what a 501c3 nonprofit is, let’s talk about how to know if the nonprofit you want to start qualifies to become one. Section 501c3 of the Internal Revenue Code is the section that lays out the criteria for nonprofits to be considered tax-exempt under this section of the Code.

In this section of the I.R.S. code, a 501c3 nonprofit is defined as a nonprofit that is “organized and operated exclusively for exempt purposes.” This means that the only purpose of your organization should be a religious, educational, charitable, scientific or literary purpose. There are other types of organizations that are tax-exempt but many of them fall under other sections of the I.R.S. code. For example, there is a different section for civic leagues or real estate title companies. Fraternal societies, as well as insurance associations, also have their own sections of the code. So, the first thing you want to do is to make sure that you fall under Section 501c3 instead of one of the other sections of the code. Diving into all of the different types of nonprofits that qualify for 501c3 status is a bit beyond the scope of this book, but you can visit the I.R.S. website ( www.IRS.gov) for a complete listing of 501c3 criteria and qualifying organizations. My law firm includes this evaluation free of charge for our clients to let them know up front if their proposed nonprofit will qualify.

Also Read: Top 6 Benefits of Starting a 501c3 Nonprofit Organization