When applying for 501(c)(3) tax-exempt status, the IRS has found that the number one reason for delay in insurance of determination letters (the letter that confers your organization with tax-exempt status) is the absence of the all-important purpose and dissolution clauses in an organization’s Articles of Incorporation. Many states do not require these provisions to be included an organization’s documents when filing for incorporation; thus, many people do not realize that these clauses are required for gaining 501(c)(3) status with the IRS. This is particularly important for organizations that are not eligible to file form 1023-EZ, as form 1023 requires applicants to identify where the purpose and dissolution clauses are located in an organization’s Articles of Incorporation. If your organization does not have the proper clauses written in its Articles, an amendment to the Articles will need to be filed before submitting form 1023, and the amendment will need to be included in the organization’s application for 501(c)(3) tax-exempt status.
Public charities and private foundations, though often used interchangeably, are two different kinds of tax-exempt organizations. Public charities are known for doing charitable services and private foundations are known for supporting the work of public charities. They are closely related but there are some key components that make them different. Below are two definitions provided by google of what a public charity and a private foundation is.
Do you remember getting back a paper that you totally bombed and you have no clue why? Even if the content was some of your best, if you did not check the syllabus, you could have miss the key points; you did not comply with the teacher’s expectations. In a similar fashion, nonprofits can lose their compliance when they do not meet the government standards. If the company does not maintain certain standards, their 501(c)(3) status can be revoked. It is crucial to fully understand all the different requirements for compliance to be able to maintain it.