If you are considering obtaining 501(c)(3) status for your California nonprofit, contact A People’s Choice for help. Below is a detailed overview of filing for 501c3 status in California for your nonprofit organization. Read on to learn more.
501c3 Tax Exempt Purpose
The IRS grants 501(c)(3) status to a nonprofit that meets a tax exempt purpose. The nonprofit organization must be organized and operated exclusively for one or more tax exempt purposes. The IRS recognizes the following nonprofit organization tax exempt purposes:
- Preventing cruelty to children and animals
- Fostering sports competition
- Public safety testing
In order for the IRS to recognize your organization’s tax exemption request, you must first be organized as a trust, corporation, or an association. You will need to file the proper documentation with the California Secretary of State to legally form your business entity. Your nonprofit’s organizing documents (example – articles of incorporation, trust documents, or articles of association) must detail the following:
The nonprofit organization must limit its purpose to those described in IRC section 501(c)(3);
- Must be engaged in activities that furthers its exempt purposes; and
- Permanently dedicate all assets to tax exempt purposes.
In addition to being organized, the nonprofit organization must show that it is operated to further its exempt purpose. This means the nonprofit must prohibit certain activity within its organization. For example, 501(c)(3) organizations must refrain from participating in political campaigns for federal, state, and local politicians. In addition, lobbying activities must be an insubstantial part of its activities and its activities must not be illegal or violate widely accepted public policy.