Frequently Asked Questions

Organizations described in section 501(c)(3) of the Internal Revenue Code are commonly referred to as charitable organizations. Contributions to 501(c)(3) organizations are considered tax deductible. To be tax-exempt under section 501(c)(3), an organization must be organized and operated exclusively for exempt purposes set forth in section 501(c)(3), and none of its earnings may inure to any private shareholder or individual. In addition, it may not be an action organization (i.e., it may not attempt to influence legislation as a substantial part of its activities) and it may not participate in any campaign activity for or against political candidates. The organization must not be organized or operated for the benefit of private interests, and no part of a section 501(c)(3) organization's net earnings may inure to the benefit of any private shareholder or individual. If the organization engages in an excess benefit transaction with a person having substantial influence over the organization, an excise tax may be imposed on the person and any organization managers agreeing to the transaction.