You are here:About>Business & Finance>Nonprofit Charitable Orgs> Nonprofit Basics> Becoming Tax-Exempt> Learn Difference Between Exempt and Nonexempt Charities
About.comNonprofit Charitable Orgs
Newsletters & RSSEmail to a friendSubmit to Digg

Q. Do I Have to File for Tax Exempt Status to Be a Nonprofit?

From Joanne Fritz,
Your Guide to Nonprofit Charitable Orgs.
FREE Newsletter. Sign Up Now!
A. Do not confuse an IRS registered, tax-exempt 501(c)(3) nonprofit with a non-exempt charitable organization. Many groups serve the public but are not registered with the IRS as a nonprofit.

Some "charitable" organizations do register with the state in which they reside and even incorporate in that state as nonprofit corporations and never apply for federal tax-exempt status

However, many small "charitable" organizations never seek recognition as a nonprofit from their state or the federal government. The disadvantage to not becoming a registered nonprofit is that donors cannot take a tax deduction on their donations, and you cannot receive grants from foundations or corporations.

Becoming a 501(c)(3) organization is not for the faint of heart. It involves a lot of paperwork and some expense. Think carefully before you begin the arduous process of a becoming a tax-exempt nonprofit organization. If your purpose is simple and/or time limited, you may be able to accomplish your mission without tax-exempt status.

 All Topics | Email Article | | |
Advertising Info | News & Events | Work at About | SiteMap | Reprints | HelpOur Story | Be a Guide
User Agreement | Ethics Policy | Patent Info. | Privacy Policy©2008 About, Inc., A part of The New York Times Company. All rights reserved.