What is the 501(c)(3) status?

You may have heard the term 501(c)(3) being bandied about.

This refers to an organization that has applied for and obtained a tax-exempt status from the Internal Revenue Service under Section 501(c)(3) of the Internal Revenue Code. For this an organization is required to be any of the following:

1. Formed for a charitable purpose.

2. Formed for a religious purpose.

3. Formed for an educational purpose.

4. Formed for a scientific purpose.

5. Formed for a literary purpose.

6. Formed to foster national or international amateur sports competition

7. Formed to prevent cruelty to children or animal.

An organization with 501(c)(3) status does not pay taxes related to nonprofit purposes and can also receive tax deductible contributions from donors and is eligible for private foundation grants.