Non Profit And Tax And Status

Posted on November 04, 2011 by Admin
Non Profit And Tax And Status

Non Profit And Tax And Status

501(c) (3) organizations are charitable organizations that receive tax-favored status from the IRS in order to perform a public service. They are commonly called non-profits, not because they cannot earn money or because they must have a zero balance at the end of the year. According to the IRS, they are non-profits because the earnings of the organization cannot enrich any shareholder or individual. Property of non-profit organizations is free of taxation and contributions to non-profits can be deducted from a donor’s income tax.

Non-Profit Organization Mission

Non-profit organizations have a mission to perform a public service such as helping the homeless, mentoring youth, or providing cultural enrichment activities for children. The first step when considering formation of a non-profit is whether the mission is already being done by an existing organization. If so, you may want to consider partnering with that organization instead of starting a new non-profit.

If not, then you and any supporters should formulate a mission statement. The mission statement will be required in the founding documents and also will serve to guide the organization as time passes. The best mission statements are short, easily understandable, and broad enough to allow organizational flexibility. The mission statement answers the question, “Why does this organization exist?”