Legal Notice

Non-profit organizations are a special corporation status dedicated to entities with a charitable, educational, religious, literary, or scientific purpose. The primary advantage of non-profit corporation status is that it exempts the corporation from certain federal, state, and local tax requirements, and thus the entity does not pay taxes on money it raises to support its objectives. Additionally, individuals who donate money to a non-profit corporation that has 501(c)(3) status can receive an individual deduction for their contributions to the non-profit.

Tax Exemption
Once a non-profit corporation obtains tax-exempt status, it must take certain steps and refrain from certain activities in order to retain that status. Non-profit corporations must make sure to keep excellent financial records that carefully document how funds are obtained and used so that they can provide explanation for the profits of the non-profit corporation and file comprehensive corporate tax returns. Additionally, non-profits must refrain from certain activities in order to keep their status.

Raising Funds as a Non-Profit
Fundraising is a central goal of many non-profits, since it is often one of the only ways that they obtain money to support the causes and missions that are at the heart of the organization. In many states, before a non-profit corporation can begin to solicit funds from individuals, it must first register as a non-profit organization that will be soliciting contributions. This is not a difficult process and primarily requires the non-profit corporation to file an application with the relevant state agency. Once the non-profit is registered, it is free to solicit funds through a wide range of means, including events, telephone calls, and appeals via mail. However, if donations are not in the form of cash, but goods or property, non-profits should be careful to abide by the IRS requirements for reporting these types of donations, including accurate appraisal of the items.