To be tax-exempt under section 501(c)(3) of the Internal Revenue Code, an organization must be organized and operated exclusively for exempt purposes set forth in section 501(c)(3), and none of its earnings may inure to any private shareholder or individual. In addition, it may not be an action organization, i.e., it may not attempt to influence legislation as a substantial part of its activities and it may not participate in any campaign activity for or against political candidates.
Organizations described in section 501(c)(3) are commonly referred to as charitable organizations. Organizations described in section 501(c)(3), other than testing for public safety organizations, are eligible to receive tax-deductible contributions in accordance with Code section 170.
The organization must not be organized or operated for the benefit of private interests, and no part of a section 501(c)(3) organization’s net earnings may inure to the benefit of any private shareholder or individual. If the organization engages in an excess benefit transaction with a person having substantial influence over the organization, an excise tax may be imposed on the person and any organization managers agreeing to the transaction.
Section 501(c)(3) organizations are restricted in how much political and legislative (lobbying) activities they may conduct. For a detailed discussion, see Political and Lobbying Activities. For more information about lobbying activities by charities, see the article Lobbying Issues; for more information about political activities of charities, see the FY-2002 CPE topic Election Year Issues.
Source: http://www.irs.gov/charities-non-profits/?id=96099,00.html
Additional Information
Life Cycle of a Public Charity/Private Foundation
Links to helpful information about points of intersection between charitable organizations and the IRS, including access to explanatory information and forms that an organization may need to file with the IRS.
Exemption Requirements
A brief description of the requirements for exemption under IRC Section 501(c)(3).
Publication 4573, Group Exemptions
A publication describing, in question and answer format, the federal tax rules that apply to group rulings of exemption under Internal Revenue Code section 501.
The Restriction of Political Campaign Intervention by Section 501(c)(3) Tax-Exempt Organizations
Political Campaign Activity by section 501(c)(3) tax-exempt organizations
Employment Taxes for Exempt Organizations
Links to information about employment taxes for tax-exempt organizations.
Tax Information for Private Foundations
Tax Information for Private Foundations
Tax Information for Churches and Religious Organizations
Tax Information for Churches and Religious Orgs
Tax Information for Contributors
Tax Information for Contributors
State Links
A collection of links to State government web sites with useful information for exempt organizations.
Web-Based Mini-Course – Can I Deduct My Charitable Contributions?
Web-Based Mini-Course – Can I Deduct My Charitable Contributions? (https://www.stayexempt.irs.gov/)
Charitable Contributions – YouTube video
DISCLAIMER: This information is not intended to provide legal or accounting advice, or to address specific situations. Please consult with your legal or tax advisor to supplement and verify what you learn here.
