As we approach tax season and our first experience with current tax reform, there seems to be a lot more buzz around corporation tax law and specifically the term 501(C)(3). In events a 501(C)(3) is extremely valuable to access when looking to do any type of charitable contribution at an event.
Most communities are seeing cuts in government support for low socioeconomic areas and a lot of citizens have turned to taking care of their communities be developing community outreach programs, fundraising through events and pulling concerned citizens together to develop the support they need. A term that keeps rising to the surface is the idea of using a 501(C)(3). Someone that has a 501(C)(3) allows for a federal tax exemption of not for profit organizations. This can be borrowed from an existing organization for events.
One of the main benefits of using a 501(C)(3) for events is it allows an event organizer to raise funds through the not for profit organization that is filed for the 501(C)(3). The not for profit can help collect funds and supply a tax write-off to individuals and corporations that donate on the behalf of the charitable portion or activity at the event. Many events would like to collect a charitable contribution, the option to provide a tax break is not available to them unless they partner with someone that has filled for the 501(C)(3).
If you are an event organizer that specializes in community outreach or charitable contributions, obtaining a 501(C)(3) is a bit more tricky than applying for a business license. The 501(C)(3) comes with compliance that must be met from state and federal regulation throughout the year. There are requirements to be kept and met to continue to comply as a not for profit organization.
There are also certain corporations that don’t qualify to apply for a 501(C)(3) such as a limited liability corporation. In my experience, it’s been best to partner with a not for profit company that you trust and has already obtained the 501(C)(3).
Find out more on the IRS government site.