How to Apply to the IRS for Charity Certification

Thousands of groups apply to the Internal Revenue Service each year to obtain charity status. In 1995, more than 67,000 groups applied. Only 619 of those applications were denied, while an additional 16,000 were held over for consideration in 1996.

To qualify as a charity under Section 501(c)(3) of the Internal Revenue Code, an organization must prove to the service that it operates exclusively for religious, educational, scientific, or similar purposes. Donors to such groups may take charitable- contribution deductions from their taxes, which they cannot do with contributors to other kinds of non-profit organizations.

Following are the basic steps involved in seeking charity status:

  1. Draw up the rules that will govern the charity. Those will become the organization's by-laws, which must be submitted to the I.R.S.

  2. Obtain status as an incorporated charity; organizations that are not incorporated cannot obtain status as a charity.

  3. Collect financial statements showing receipts and expenditures for the current year and the three preceding years to submit along with he application for charity status. Organizations that have been in existence for four years or less only have to provide such information for every year they have operated.

  4. Be prepared to submit the organization's publications and copies of leases, contracts, or other legally binding agreements. The service does not require those materials to be submitted, but it has the option of asking for them.
The Exempt Organization Division of the I.R.S. has publications that explain how to apply for non-profit status. Contact the I.R.S. to get Publication 557, Tax-Exempt Status for Your Organization, which outlines the basic procedures for winning charity status and maintaining it. Also ask for Form 1023 (to file for 501(c)(3) status), Form 8718 (to calculate the fee for filing the exemption), and Form SS-4 (to apply for an employer identification number). Forms are available from the service's headquarters at 1111 Constitution Avenue, N.W., CP:E:EO, Room 6411, Washington 20224; (202) 622-5088. They may also be obtained from any local I.R.S. office by calling (800) 829-3676.

Publication 557 also can be found on the revenue service's World-Wide Web site at https://www.irs.gov/publications/p557/.

Source: Marilyn Dickey, Chronicle of Philanthropy, April 3, 1997, p.35.



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