From 501(c)(3) Formation To Lasting Compliance In Florida
Starting a charity involves decisions about how it will raise money, use donations and carry out its mission. Applying for 501(c)(3) status adds federal requirements that govern its formation and operations after approval.
At Haft Law Group, attorney Scott Haft helps founders work through these decisions, prepare their applications and address ongoing compliance. He is admitted to practice in Florida, Colorado and Washington, D.C..
What Sets 501(c)(3) Organizations Apart?
Unlike gifts to most social welfare groups or trade associations, donations to eligible 501(c)(3) organizations generally qualify for charitable deductions under Section 170 of the Internal Revenue Code. The organization must be organized and operated exclusively for exempt purposes, such as religious, charitable, educational, scientific or literary work, or work involving the prevention of cruelty to children or animals. Its net earnings may not benefit insiders, although it may pay them reasonable compensation for services.
Funding affects its classification as well. Many public charities must meet an IRS test that measures support from the public over time. If the nonprofit does not qualify as a public charity, the IRS generally classifies it as a private foundation, which faces stricter rules on transactions with insiders.
How Does A Nonprofit Obtain 501(c)(3) Status?
Before applying to the IRS, a Florida nonprofit must form under state law and set out its charitable purpose. Attorney Haft guides founders through these steps.
An IRS application filed within 27 months after the end of the month of formation generally makes an approval retroactive to the formation date. If an annual filing deadline arrives before the IRS decides, the nonprofit must still file its return on time.
How Does A Charity Keep Its 501(c)(3) Status?
After approval, most charities must file a Form 990 series return or submit Form 990-N each year. If they miss required filings for three consecutive years, their exemption is automatically revoked. In Florida, a nonprofit corporation must also file an annual report with the Department of State, and most charities must register with the Department of Agriculture and Consumer Services before soliciting contributions. Attorney Haft helps charities manage these duties and seek reinstatement if they lose their status.
A 501(c)(3) cannot endorse or oppose political candidates. Public charities also face limits on lobbying, and eligible groups may choose a Section 501(h) test based on how much they spend.
If a charity regularly runs a business unrelated to its mission, the income may be taxable. Once gross income from that activity reaches $1,000, the charity must file Form 990-T.
Discuss Your Charity’s Next Steps
Whether you are preparing a 501(c)(3) application or addressing ongoing compliance, call Haft Law Group’s West Palm Beach office at 561-781-8984 to discuss your plans with attorney Haft.