To be tax exempt, an organization must have one or more exempt purposes stated in its organizing document. In the case of nonprofits or 501(C)(3) organizations, they must be charitable, educational, or religious.
For an organization to be considered charitable, it must conduct activities that promote:
- Relief of the poor, the distressed, or the underprivileged
- Advancement of religion
- Advancement of education or science
- Erection or maintenance of public buildings, monuments, or works
- Lessening the burdens of government
- Lessening neighborhood tensions
- Eliminating prejudice and discrimination
- Defending human and civil rights secured by law
- Combating community deterioration and juvenile delinquency
Educational organizations include:
- Schools
- Day care centers (nonprofit)
- Organizations that offer a “distance learning” course of instruction by correspondence or through television, radio, or the Internet
- Organizations that conduct public discussion groups, forums, panels, lectures, or similar programs
- Museums, zoos, planetariums, symphony orchestras, similar arts and educational organizations
- Youth sports organization
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