subject: The Benefits Of Becoming A 501c3 Nonprofit Organization [print this page] There are many benefits to being recognized by the IRS as a 501c3 nonprofit organization. One of the biggest benefits would be tax exemption from the IRS. Being exempt from paying taxes means that your organization will not have to pay federal taxes, and in many locations sales taxes and property taxes are also exempt. Being tax exempt can save you a great deal of money over time, allowing you to focus more of your funding efforts towards actual programs and services. The recognition of your organization as 501c3 tax exempt non profit by the IRS offers numerous advantages and is necessary to help your organization grow. We will take a closer look at each of these advantages in the following paragraphs.
Aside from the tax and monetary benefits, being recognized by the IRS as a 501c3 nonprofit can offer a huge boost to an organization's legitimacy. 501c3 recognition has the ability to make your organization more credible in the eyes of the public and other entities within your community. After being approved by the IRS as a 501c3 organization you will have the ability to clearly state your 501c3 nonprofit status on all materials you distribute and any announcements made about your organization. This notifies any interested parties that you are a legitimate organization and have proven to the IRS that the work you are doing is serving the public. Most importantly, when soliciting donations from for profit corporations you will find they often inquire about your tax exempt status for two reason: to prove legitimacy and so they can receive a tax write-off.
Another major benefit to becoming a 501c3 nonprofit organization is having the ability to give tax deductions to individuals who make a donation to your organization. As a 501c3 organization all donations made, whether monetary or in-kind, can be claimed on that individual's personal income taxes. This is very appealing for potential donors, specifically those who are interested in making large donations or contributions to your organization. Having 501c3 nonprofit status also makes it much easier to solicit donations. Many individuals and companies will not make contributions to organizations that are not recognized as 501c3 nonprofit organizations since they are unable to receive any benefit from their donations.
Having 501c3 nonprofit status will also allow your organization to be eligible for many grants. These grants can be from both private foundations as well as the government. Most grant funding organizations require applicants to be recognized as a 501c3 before considering their grant proposal. Upon approval by the IRS your organization will be issued a letter showing confirmation of your approval. This letter will be required by most grant funding organizations when applying for a grant.
Other benefits include discounted postage rates as well as special mailing privileges for nonprofit organizations. The United States Postal Service provides opportunities for bulk mailing to nonprofit organizations, which is another method nonprofit organizations can save money. Finally, a 501c3 tax exempt organization could receive free or discounted rates from media outlets, e-mail services and newswires for announcements and press releases related to your organization. This can provide your organization with the opportunity to increase awareness of the activities you are holding as well as the work you are doing in the community.
Receiving 501c3 nonprofit status from the IRS is typically a big turning point for many nonprofit organizations. But it did not come without much hard work, anxious waiting and possibly assistance from a professional nonprofit consultant. While the benefits of becoming a 501c3 nonprofit are big, so is the amount of paperwork and package preparation. Therefore, if your organization is seeking 501c3 status from the IRS it is encouraged to seek assistance to make sure the application is completed correctly and speedily.
