Does My Nonprofit Really Need to Apply for 501(c)(3) Status?
Does My Nonprofit Really Need to Apply for 501(c)(3) Status?Answer: Many nonprofits do not need to apply for 501(c)(3) status. Here are two questions to ask yourself before you go through the arduous process of applying: • Will your nonprofit bring in enough taxable income to make avoiding taxes a concern? If your organization does not bring in any income from business activities, it won’t owe any taxes. Furthermore, if income is from a business activity that is not related to your nonprofit purposes (unrelated business activity), that income will be taxable whether you are tax-exempt or not. But, if you plan to have a business activity that is related to your mission (fees from clients receiving your services for instance), then being tax-exempt will save you money. • Do you need to be eligible for grants or to attract large contributions? Many organizations depend on contributions and grants, but many others do just fine with smal
