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Nonprofit

A vision to help others

Exempt organization types

Charitable organizations

Organizations organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary, educational, or other specified purposes and that meet certain other requirements are tax exempt under Internal Revenue Code Section 501(c)(3).

Churches and religious organizations

Churches and religious organizations, like many other charitable organizations, may qualify for exemption from federal income tax under Section 501(c)(3).

Private foundations

Every organization that qualifies for tax-exempt status under Section 501(c)(3) is classified as a private foundation unless it meets one of the exceptions listed in Section 509(a). Private foundations typically have a single major source of funding (usually gifts from one family or corporation rather than funding from many sources) and most have as their primary activity the making of grants to other charitable organizations and to individuals, rather than the direct operation of charitable programs.

Political organizations

A political organization subject to Section 527 is a party, committee, association, fund or other organization (whether or not incorporated) organized and operated primarily for the purpose of directly or indirectly accepting contributions or making expenditures, or both, for an exempt function.

Other nonprofits

Organizations that meet specified requirements may qualify for exemption under subsections other than 501(c)(3). These include social welfare organizations, civic leagues, social clubs, labor organizations and business leagues.

 

Organizations that meet the requirements of Internal Revenue Code section 501(a) are exempt from federal income taxation. In addition, charitable contributions made to some section 501(a) organizations by individuals and corporations are deductible under Code section 170.

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This website provides information about points of intersection between organizations and the IRS. The content includes explanatory information, and links to forms that an organization may need to file with the IRS. The materials cover five stages in an organization's life cycle:

  1. Starting Out: Creating an organization under state law, acquiring an employer identification number, and identifying the appropriate federal tax classification.

  2. Applying for Exemption:  Acquiring, completing, and submitting application forms; how the IRS processes applications; and getting help from the IRS during the application process.

  3. Required Filings:  Annual exempt organization returns, unrelated business income tax filings, Form 8976 – Notice of Intent to Operate Under Section 501(c)(4), and other returns, reports and notices that an organization may have to file.

  4. Ongoing Compliance:  How an organization can avoid jeopardizing its tax-exempt status, disclosure requirements, employment taxes, and other ongoing compliance issues.

  5. Significant Events:  Audits, private letter rulings, and termination procedures.

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Lifecycle pages — including requirements for exemption — are available for the following types of organizations:

Business leagues (trade associations) (section 501(c)(6))

Before applying for tax-exempt status

State law governs nonprofit status, which is determined by an organization’s articles of incorporation or trust documents. Federal law governs tax-exempt status. The Internal Revenue Code specifically refers to exemption from federal income tax.

Below are the steps you need to take before you can apply for tax-exempt status:

  1. Determine if your organization is one of the following:

  • Finding the best grants for a nonprofit requires matching your specific mission and funding needs with the right opportunities using specialized databases like Candid's Foundation Directory, Grants.gov, and GrantWatch. Success depends on targeting foundations that support your cause area and geographic location, and researching corporate giving programs for potential sponsorships. 

    Key Strategies for Finding Grants

    • Utilize Databases: Use Grants.gov for federal opportunities, and databases like GrantWatch or Foundation Directory Online to locate private and foundation grants.

    • Targeted Keyword Searches: Perform Google searches with specific, targeted keywords, such as "grants for [your area of interest] in [your city]".

    • Local and Community Foundations: Research local community foundations, as they are often focused on funding specific geographic areas.

    • Corporate Giving Programs: Look for companies with local branches, such as banks, retailers, or law firms, as they often have corporate social responsibility initiatives.

    • Research Similar Nonprofits: Examine the annual reports or websites of nonprofits with similar missions to identify their funders.

    Steps to Identify the Right Grants

    • Define Needs: Clearly identify the amount needed and whether the grant is for a specific program or for general operating expenses.

    • Ensure Eligibility: Confirm that your 501(c)(3) status matches the funder's requirement, as many foundations only fund registered nonprofits.

    • Evaluate Fit: Thoroughly read guidelines to ensure your project aligns with the funder’s priorities to avoid wasted effort.

    • Network: Build relationships by attending events, workshops, or meetings to connect with potential funders in person.

    Key Resources

    • Grants.gov: The official portal for U.S. federal grants.

    • Candid's Foundation Directory: A top database for private foundation research.

    • SAM.gov: For federal assistance listings.

    • ProPublica Nonprofit Explorer: To check potential funders' past giving.

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