Contact Attorney Richard Keyt: 480-664-7478|rk@keytlaw.com

Nonprofit Law Jargon Buster – Tax-exempt Purpose

CharityLawyer:  “We love getting calls from potential clients with exciting ideas. However, surprisingly often, we are in a position which we do not enjoy of letting the caller know that as exciting as their idea is, it does not qualify for tax-exemption.  Some common examples of ideas that will not qualify include fundraising for a fallen officer or a specific individual’s medical care, raising money to invest in start-up technology companies, or running a business that will turn over all of its profits to 501(c)(3) organizations.  Before embarking on a plan to change the world by starting a 501(c)(3) organization, it’s a good idea to think carefully about the organization’s purpose and whether it will qualify for 501(c)(3) tax-exemption.”

Top 50 Resources for Starting Your Own Charity or Scholarship

Executive MBA Programs:  “Charities and scholarships are usually created solely on one’s passion to help others or a life experience that has inspired them to provide aid to others in the same situation.  With an outpouring of individuals wanting to start charitable organizations that can make the world a better place, it is important to do your research.  Starting a nonprofit organization can be both fulfilling and exciting, but it also requires an extreme amount of focus and planning.  Even though you are not starting this foundation for monetary purposes, it is still necessary to equip yourself with a support system that will start you on the road to success.  The below resources can give you the basic advice and principles needed to get you established.”

New Nonprofit Corporations: Beware of Legal Document Preparers

Charity Lawyer:  “In my practice representing nonprofit and tax-exempt organizations, there are often themes that emerge.  Over the last few weeks I have had a spate of calls from would be nonprofits that paid either a nonprofit start-up ‘consultant’ or a document preparation company to form their nonprofit and handle their IRS filings.   In each case, the work product that made it to my office required substantially more work to fix than it would have taken to do properly the first time around.  Typical mistakes include:”

Are Charity Boards Ready for Tough Times Ahead?

The Nonprofit Law Blog has a two part article that members of boards of directors of nonprofit organizations should read in these tough economic times.

Board members must understand their roles during challenging periods and how they may be in a better position in some ways than their executives in leading the organization.

See part 1 and part 2.

ABC’s for Tax Exempt Organizations

Before forming a nonprofit corporation that will become a tax exempt organization or charity, watch the IRS video called “Applying for Tax Exemption – an Overview.”  See also the IRS website called “Tax Basics for Exempt Organizations,’ which has several tax-exempt entity educational videos.

The IRS offers the following resources to help the manager of a new exempt organization navigate tax issues.

  • Life Cycle of an Exempt Organization: Helpful information about points of intersection between tax-exempt organizations and the IRS, including access to explanatory information and forms that an organization may need to file with the IRS. Separate life cycle sites are provided for public charities, private foundations, social welfare organizations, labor organizations, agricultural or horticultural organizations, and business leagues (trade associations).
  • Applying for Tax-Exempt Status (brochure): Criteria and procedures for applying for 501(c)(3) tax-exempt status.
  • Compliance Guide for 501(c)(3) Public Charities (brochure): Activities that may jeopardize a charity’s exempt status, federal tax filings, recordkeeping, changes to be reported to the IRS, required public disclosures, and IRS resources. Separate guides are available for private foundations .
  • Frequently Asked Questions About Tax-Exempt Organizations
  • EO Forms and Publications: IRS forms, publications, and internal training materials relating to tax-exempt organizations.
  • Employment Taxes for Exempt Organizations: Links to information about employment taxes for tax-exempt organizations.
  • Schedule of Events: Workshops and conferences for exempt organizations.
  • On-Line Workshops and Mini-Courses: An on-line version of IRS workshop for small and mid-sized exempt organizations, and mini-courses on applying for exemption, foundation status, annual return preparation (Form 990), deductibility of contributions, and resources for exempt organizations.
  • Retirement Plan Information for Exempt Organizations: Information and resources for tax-exempt organizations interested in establishing retirement plans for employees.
  • Exempt Organizations Products and Services Navigator (brochure): Resources for exempt organizations.
  • Annual Electronic Filing Requirement for Small Exempt Organizations – Form 990-N (e-Postcard)
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