Forming a new nonprofit organization for charitable, religious, or educational purposes? How exciting! Doing so involves careful planning, leadership development, donor prospecting, and of course nonprofit paperwork. For Section 501(c)(3) tax-exempt status, that likely means completing the IRS Form 1023 application too. What is involved with the IRS Form 1023 application, and why is it so important not only for the coveted IRS approval but also for an organization’s long-term success? The stakes are high, the details are of critical importance, and accompanying learning-curve opportunities may be quite helpful for nonprofit leadership.
International philanthropy is heartily encouraged under US tax laws, which generously allow section 501(c)(3) nonprofits to financially support other organizations and projects operating entirely outside the United States. But foreign grantmaking rules for 501(c)(3) organizations differ depending on whether an organization is a public charity, a private foundation, or a sponsoring organization for donor advised funds (DAFs). Nonprofit leaders should therefore understand not only what rules apply, but also available compliance options.
Many nonprofit leaders and tax practitioners have eagerly awaited news of whether the United States Supreme Court would consider a legal challenge to California’s requirement that 501(c)(3) public charities annually submit a list of their major donors to the California Attorney General, as contained in their IRS Form 990 Schedule B return. On January 8, 2021, the Supreme Court granted a petition for writ of certiorari in Thomas More Law Society v. Becerra, consolidating that case with Americans for Prosperity Foundation v. Becerra. In these troubled times of increasing polarization, protests, and “cancel culture” tactics, these cases represent extremely important constitutional freedom issues that will substantially affect public charity operations and associated privacy rights of their donors.