501(c)(3) Status & Nonprofit Startup Package
Most start-up nonprofits seek Section 501(c)(3) status to both avoid income tax and facilitate fundraising efforts (e.g., tax-deductible gifts from donors, eligibility for foundation grants).
To be eligible for 501(c)(3) status, an organization must be both organized and operated exclusively for one of the following purposes:
- Charitable (generally defined very broadly to mean “providing services beneficial to the public interest”)
- Testing for public safety
- The prevention of cruelty to children or animals
- Fostering national or international amateur sports competition
But the IRS does not recognize exempt status simply because you ask for it—you must prove in writing that your organization meets a category of exempt status.