The two exempt classifications of 501(c)(3) organizations are as follows:

The basic requirement of obtaining tax-exempt status is that the organization is specifically limited in powers to purposes that the IRS classifies as tax-exempt purposes. Unlike for-profit corporations that benefit from broad and general purposes, non-profit organizations need to be limited in powers to function with tax-exempt status, but a non-profit corporation is by default not limited in powers until it specifically limits itself in the articles of incorporation or nonprofit corporate bylaws. This limiting of the powers is crucial to obtaining tax exempt status with the IRS and then on the state level.^[12] Organizations acquire 501(c)(3) tax exemption by filing IRS Form 1023.^[13] As of 2006, the form must be accompanied by an $850 filing fee if the yearly gross receipts for the organization are expected to average $10,000 or more.^[14][15] If yearly gross receipts are expected to average less than $10,000, the filing fee is reduced to $400.^[14][15] There are some classes of organizations that automatically are treated as tax exempt under 501(c)(3), without the need to file Form 1023:


The IRS released a software tool called Cyber Assistant in 2013, which was succeeded by Form 1023-EZ in 2014.


There is an alternative way for an organization to obtain status if an organization has applied for a determination and either there is an actual controversy regarding a determination or the Internal Revenue Service has failed to make a determination. In these cases, the United States Tax Court, the United States District Court for the District of Columbia, and the United States Court of Federal Claims have concurrent jurisdiction to issue a declaratory judgment of the organization's qualification if the organization has exhausted administrative remedies with the Internal Revenue Service.^[19][20]


Prior to October 9, 1969, nonprofit organizations could declare themselves to be tax-exempt under Section 501(c)(3) without first obtaining Internal Revenue Service recognition by filing Form 1023 and receiving a determination letter.^[21] A nonprofit organization that did so prior to that date could still be subject to challenge of its status by the Internal Revenue Service.^[21]

Tax-deductible charitable contributions[edit]

Individuals may take a tax deduction on a charitable gift to a 501(c)(3) organization that is organized and operated exclusively for religious, charitable, scientific, literary or educational purposes, or to foster national or international amateur sports competition (but only if no part of its activities involve the provision of athletic facilities or equipment), or for the prevention of cruelty to children or animals.^[22]


An individual may not take a tax deduction on gifts made to a 501(c)(3) organization that is organized and operated exclusively for the testing for public safety.^[23]


In the case of tuition fees paid to a private 501(c)(3) school or a church school, the payments are not tax-deductible charitable contributions because they are payments for services rendered to the payee or the payee's children.^[24][25][26] The payments are not tax-deductible charitable contributions even if a significant portion of a church school's curriculum is religious education.^[27][28] For a payment to be a tax-deductible charitable contribution, it must be a voluntary transfer of money or other property with no expectation of procuring financial benefit equal to the transfer amount.^[29]


Before donating to a 501(c)(3) organization, a donor can consult the searchable online IRS list of charitable organizations to verify that the organization qualifies to receive tax-deductible charitable contributions.^[30]


Consumers may file IRS Form 13909, with documentation, to complain about inappropriate or fraudulent (i.e., fundraising, political campaigning, lobbying) activities by any 501(c)(3) organization.^[31]


Most 501(c)(3) must disclose the names and addresses of certain large donors to the Internal Revenue Service on their annual returns, but this information is not required to be made available to the public,^[32] unless the organization is an independent foundation.^[33] Churches are generally exempt from this reporting requirement.^[34]

Transparency[edit]

All 501(c)(3) organizations must make available for public inspection its application for tax-exemption, including its Form 1023 or Form 1023-EZ and any attachments, supporting documents, and follow-up correspondence with the Internal Revenue Service.^[35] The same public inspection requirement applies to the organization's annual return, namely its Form 990, Form 990-EZ, Form 990-PF, Form 990-T, and Form 1065, including any attachments, supporting documents, and follow-up correspondence with the Internal Revenue Service, with the exception of the names and addresses of donors on Schedule B.^[35][36] Annual returns must be made publicly available for a three-year period beginning with the due date of the return, including any extension of time for filing.^[35][36]


The Internal Revenue Service provides information about specific 501(c)(3) organizations through its Tax Exempt Organization Search online.^[37][38]


A private nonprofit organization, GuideStar, provides information on 501(c)(3) organizations.^[39][40]


ProPublica's Nonprofit Explorer provides copies of each organization's Form 990 and, for some organizations, audited financial statements.^[41]


Open990 is a searchable database of information about organizations over time.^[42]


WikiCharities, a nonprofit organization, is a growing global database that allows nonprofits and charities to be searchable by name, location, and topic.^[43] WikiCharities also gives each nonprofit a personalized webpage where nonprofits can improve transparency by listing updated contact information, leadership, board members, financials, annual reports, project activities, and more.^[44]