CHAPTER 1
What Is a 501(c)(3) and Why Get It?
In simple terms, a 501(c)(3) is a section of the federal tax code that identifies your organization as a tax-exempt nonprofit. It's the "gold standard" for charities.
Benefits of 501(c)(3) Status
Tax Exemption
Your nonprofit doesn't pay federal income tax on revenue related to its exempt purpose.
Deductible Donations
Donors can write off their contributions to your organization on their taxes.
Grant Eligibility
Most major foundations and government grants only fund 501(c)(3) organizations.
Basic Requirements
- •Clear charitable, religious, educational, or scientific purpose
- •Defined mission statement that guides all activities
- •Organizational structure that prevents private profit or benefit
- •Activities that serve the public good, not private interests
💡 Key Insight
The 501(c)(3) designation is more than just a tax benefit—it's a seal of trust that tells donors, grantmakers, and the community that your organization is committed to public service and transparency.