501 c 3's are organized exclusively for charitable, educational, and scientific purposes, including, for such purposes, the making of distributions to the organizations that qualify as exempt organizations under the IRS federal tax code. No part of the net earnings of the organization shall inure to the benefit of, or be distributable to its members, trustees, officers, or other private persons, except that the organization shall be authorized and empowered to pay reasonable compensation for services rendered. No substantial part of the activities of the organization shall be the carrying on of propaganda, or otherwise attempting to influence legislation, and the organization shall not participate in, or intervene in including publishing or distribution of political campaign on behalf of any candidate for public office.
Upon the dissolution of the organization, assets shall be distributed for one or more exempt purposes within the meaning of section 501 c 3 of the IRS code, or corresponding section of any future federal tax code, or shall be distributed to the federal government, or to a state or local government, for the public purpose. Any such assets not disposed of shall be disposed of by the Court of Common Pleas of the county in which the principle office of the organization is then located, exclusively for the purpose or to which organization or organizations, as said court shall determine, which are organized and operated exclusively for such purposes.
Step 1.Incorporate as a nonprofit corporation
Step 2.Apply to the IRS for a Federal Employee Identification Number (FEIN).
Step 3.Application for Tax Exempt Status (IRS Publications 557, 1023 and 1024)
a. Complete IRS Form 1023 found in the instruction book (1023). You must include a two-year proposed budget, your FEIN number, a copy of your Corporation Charter and a signed and dated copy of your By-laws.
b. Form 872-C in the back of the book must also be included.
c. Form 8718 plus a $300 filing fee if your past or current contributions are less than $10,000. If they exceed this amount, the filing fee increases to $850.
This application process can take up to six months for approval. In the meantime, you may indicate to prospective contributors that an Application for 501(c)(3) exemption is pending.