So You’re a Non-Profit Really? Are you Sure?

Right before and after the holidays, there are many solicitations for “tax deductible” donations to many organizations.  Some you recognize, some you don’t.  If you donate to a non-profit that does not have 501(c)(3) status, you could be jeopardizing your right to take that deduction.

A 501(c)(3) public benefit organization or corporation is an organization that has gone through the scrutiny of the IRS to determine if its purpose serves the public good.  A non-profit (501(c)(3)) that has been in existence for several years may not have filed the “Form 1023” that is now required by the IRS to obtain 501(c)(3) status. 

However, if your organization, an existing non-profit, has not filed the 990 tax return with the IRS for the past 3 years, you will lose your status, and then have to file the Form 1023 to be reactivated….And there is no guarantee that this time around, you will be granted non-profit status.

Once you receive Federal “tax exempt” status (501(c)(3)), you must then apply to the State for equivalent status.  You can create a completely new application with the state on the Form 3500 for California, or you can wait for your status to come through with the Federal Government, and then make an abbreviated application with the state (details on how to do that are not covered by this article).

After you receive the State’s approval, then you must submit an application to the California State Attorney General’s office to be entered into the Charitable Registry.  This brings us full circle. If you are a potential contributor to a non-profit, you can visit www.oag.ca.gov/charities and look at the Tools on the right side of the page for a Registry Search to see if your charity is listed.  There is also an explanation of the site on the left toward the bottom.

If as an officer of a non-profit, you assume that you are in good standing, guess again.  The majority of non-profits started out legitimately, but failed to file necessary paperwork to stay in good standing.  As the founder of a non-profit corporation, I have direct experience that will help you determine if your non-profit is in good standing, and what to do if it is not.

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