What is a 501c3?

Tax form on what is a 501c3 - 501 c 3

What is a 501c3? The term is used to define a charitable organization, named after Internal Revenue Code Section 501(c)(3), which gives such organizations tax-exempt status. (Financial Dictionary

Wikipedia defines a 501c3 organization as:

A 501(c) organization, or simply a 501(c), is a tax-exempt nonprofit organization in the United States. Section 501(c) of the United States Internal Revenue Code provides that 29 types of nonprofit organizations are exempt from some federal income taxes. Sections 503 through 505 set out the requirements for attaining such exemptions. Many states refer to Section 501(c) for definitions of organizations exempt from state taxation as well. 501(c) organizations can receive unlimited contributions from individuals, corporations, and unions.

A majority of 501c3s are nonprofits, but corporations, trusts, LLCs, and unincorporated associations can also seek 501c3 determination from the IRS. An organization with 501 c 3 status does not pay income taxes related to its nonprofit mission and purposes, is able to receive tax-deductible contributions, and is eligible for foundation grants. By law 501 c 3 organizations are required to not participate in any political or lobbying activity, although under the Trump administration these laws could change.

How to Start a 501c3  Download Free Guide Today!
What to learn more about filing for tax-exempt status and 501c3s? Here are some of NPQ‘s top stories on similar topics:

  1. Advocacy and Lobbying Without Fear: What Is Allowed within a 501c3 Charitable Organization
  2. Changes in the IRS Oversight of Nonprofits: A Conversation with Virginia Gross
  3. To 501c3 or Not to 501c3: Is That the Question?
  4. Does My Nonprofit Need to Pay Tax? Understanding Unrelated Business Income Tax
  5. Making the Most of Your 990: A Red Flag Guide for Nonprofits

 

  • angeliabeene

    can we change our name after we have set up a 5013c organization?