Thanks for the chance to help. I am an attorney with over 12 years experience. Hopefully I can help you with your legal question.
I am very familiar with 501(c)(3). This is a provision of the US Tax code. Specifically it is an "exemption" that allows certain cooperations to be exempt from US tax law.
501(c)(3) exemptions apply to corporations, and any community chest, fund, cooperating association
or foundation, organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary, or educational purposes, to foster national or international
amateur sports competition, to promote the arts, or for the prevention of cruelty to children or animals.
For your question
When an organization opts to become a 501C3 does that take over all operations and funds of that organization?
The answer is no...if granted by the IRS, the corporation is exempt from paying taxes...it does not otherwise change the structure of the corporation.
Did you have a specific question?