People have grown more conscious about the power of individuals to effect change in our world. Social activism has grown and more and more people are engaged with the great issues of the day. One of the key elements of effecting the change that we want to see is through charities. A key element is that your charity must qualify as tax exempt under Section 501(c)(3) of the Internal Revenue Code (IRS. This is because donors typically deduct their charitable contributions on their tax returns, so they are more likely to donate to your charity if it has §501(c)(3) tax exempt status. A §501(c)(3) charity is also exempt from both federal and state income taxes on its activities. If you want to start a charity, then this is your guide.
There are many different kinds of charities so the first thing you have to figure out is what kind of charity you want to start. Common issues that motivate charities are animal rights and welfare; healthcare; education; art and culture; climate change; conservation; disaster relief, humanitarian aid, or peace-building; religion; and human service.
In terms of the IRS, there are two kinds of §501(c)(3) charities: “public charity” and “private foundation”. Public charities, an example of which is the American Cancer Foundation, or ASPCA, receive most of their funding from the government or public agencies. When people think of charities, these are the kinds of organizations that they are thinking of.
A private foundation is a nonprofit that is typically founded, funded and controlled by a small group of individuals or family. The most famous private foundations are the Rockefeller Foundation and the Rhodes Trust. There are various restrictions that govern private foundations and are not applicable to public charities. They are bound to donate at least 5% of the fair value of their assets every year to qualifying recipients. Private foundations normally operate by giving grants or gifts to public charities. There are instances of public charities which make grants to public charities. United Way is one such public charity.
Ensure that Your Charity Can Earn §501(c)(3) Status
The IRS will grant tax-exempt status if it is organized for what the IRS terms, “exempt purposes”. By charitable the IRS means those activities that include relief of the poor, distressed or underprivileged; advancement of education or science; advancement of religion; lessening the burdens of government; erecting of maintaining public buildings, monuments, or works; lessening neighborhood tensions; defending human and civil rights secured by law; eliminating prejudice and discrimimination; and combatting community deterioration and juvenile delinquency; among other such activities.
Charities cannot be organized to aid what the IRS calls, “private interests”, and so, no part of its net earnings should benefit the shareholders or any individuals. This does not mean that charities cannot pay their employees fair compensation, however.
If you feel you can meet these criteria, then go to your dental implant dentist and get your teeth worked on and then head to the IRS and apply for §501(c)(3) status.