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Law Educator, Esq.
Law Educator, Esq., Attorney
Category: Business Law
Satisfied Customers: 111460
Experience:  All corporate law, including non-profits and charitable fraternal organizations.
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We have been raising funds for a billboard for Sgt Bowe Bergdahl

Customer Question

We have been raising funds for a billboard for Sgt Bowe Bergdahl (http://BringBoweHomeWOD.com). Now we realize we will be taxed on the funds we raised. We would like to be 501c3 status and not 501c4 - right now we are just 2 individuals raising money. What do I need to do to become a 501c3?
Submitted: 4 years ago via RocketLawyer.
Category: Business Law
Expert:  sberanek83 replied 4 years ago.

Obtaining status as a 501(c)(3) organization can be a lengthy process. First, the organization collecting the funds needs to be incorporated, which is done through the Secretary of State in state where you want your corporation to be domiciled. Typically, people incorporate in the state where they live and for a presumptively not-for-profit entity I don't think you need to incorporate in corporation-friedly states like Delaware. The Articles of Incorporation (formation document) need to have provisions which mirror the Internal Revenue Service's prohibitions on 501(c)(3) organizations. Once the organization is incorporated you then need to apply to the IRS for tax-exempt status. At some point thereafter the IRS will advise you whether you qualify. Probably the best thing to do at the beginning is to read Publication 557 (Tax-Exempt Status for Your Organization) which can be found on the IRS website. It lays out exactly what you need to do.

Customer: replied 4 years ago.
I would like to know how I can make raising awareness for a Prisoner of War into a 501c3 and not a 501c4. Typically raising awareness for Prisoner of War issues falls under lobbying/influencing elected officials.
Expert:  sberanek83 replied 4 years ago.
The only suggestion I can give is to broaden the purpose of the organization so that it will fall within the exempt categories contained in 501(c)(3). Since I can't give a more specific answer, I will opt out and perhaps another attorney can give you a more specific answer.
Expert:  Law Educator, Esq. replied 4 years ago.
Your previous expert has opted out, but was correct. If you are using the funds for the charitable purpose of supporting the Sgt. or his family, then it becomes a charitable purpose. If you are using them to raise social awareness, then you run into the social welfare organization, which is still tax exempt under 501(c)(4). Either way, 501(c)(3) or 501(c)(4) your earnings for the support of your cause are not taxed.


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