Frequently Asked Questions

Question 1

What does 501(c)(3) actually refer to?

Accepted Answer

It's a section of the Internal Revenue Code—26 U.S.C. § 501(c)(3)—that makes qualifying organizations exempt from federal income tax and allows them to accept tax-deductible donations.

Question 2

Which groups qualify for 501(c)(3) nonprofit status?

Accepted Answer

Ones that benefit the general public, such as charitable, educational, literary, religious, and scientific organizations.

Question 3

Which groups don't qualify for 501(c)(3) nonprofit status?

Accepted Answer

Civic leagues, homeowner's associations, and groups endorsing a political candidate are common types of nonprofits that don't qualify for 501(c)(3) status.

Question 4

How do I get 501(c)(3) status?

Accepted Answer

After filing your nonprofit paperwork, we can help you file a 1023-EZ with the IRS to see if you qualify for tax-exempt status. (Most of our customers file this streamlined version of the longer Form 1023 application.) Just remember it needs to be filed within 27 months—starting from the last day of the month in which you formed. (So if you formed October 1, 2023, you have until January 31, 2026 to submit your application.)

Question 5

What's the difference between a public charity and a private foundation?

Accepted Answer

Both have 501(c)(3) status, but how they get funding differs. Public charities typically get funding through the general public and government. Private foundations typically get funding from a few individuals, a family, or a corporation.

Question 6

Do I need to incorporate my nonprofit?

Accepted Answer

No, but there are many advantages. Incorporating helps protect your personal assets, build credibility with potential donors, and unlock funding reserved for nonprofits with an official corporate structure.

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