Nonprofit Insurance Program

Maintain Your Status as a 501(c)(3)

By Alexa Connelly
September 11, 2015

When you have done all of the hard work to be of service to your community through your nonprofit organization it’s important to do the work to keep your status, too. Since your nonprofit serves the public, here are some easy ways to maintain your 501c3.

1. Stay out of politics.

As a 501c3  nonprofit serving the public interest, your nonprofit cannot be involved in political campaigns. That includes any kind of activity that favors one candidate over another, like making financial  contributions, public statements or endorsements. Your nonprofit also cannot enter into business relationships with a candidate either, like renting out office space or renting their mailing lists. Political neutrality is required.

A politically neutral stance also means knowing how and when your organization is allowed to lobby. However, the activities should not cost more than a small percentage of

2. Give receipts.

Many nonprofits accept and rely upon donations from individuals to cover expenses. When yours receives a donation, you must give out written receipts and then register and file annual reports. Any goods and services must be given at fair market value.

And if you are fundraising, ensure that you are registered before you begin asking for donations from residents in your state.

3. File tax returns.

Your nonprofit must comply with all state and federal tax laws. As such, like businesses, 501c3 nonprofits must also file tax returns, unless you are one of the exempt organizations.

4. Keep your nonprofit public.

One way to lose nonprofit exempt status is by allowing the organization’s public funds to benefit a private person who is working at or involved in the organization, or who can control the organization’s activities. This is what lawyers have called “private increment.” Importantly, the exempt status is meant to ensure that the organization continues to be public so that its interests serve public, not private interests, which is key to maintaining nonprofit status.

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