Nonprofits By the Numbers: The Impacts of IRS Automatic Revocation and Form 1023-EZ

How has the number of tax-exempt nonprofit organizations changed over the past decade? According to IRS data released this year, significant shifts have occurred for Section 501(c)(3) and Section 501(c)(4) organizations, in large part due to new “auto-revocation” consequences for not filing required Form 990s and the introduction of IRS Form 1023-EZ.  Author Michael Wyland’s excellent Nonprofit Quarterly article provides substantial data analysis,[1] from which further observations can be made on nonprofit trends.

 

Defining “Church” with an IRS Focus

What is a church? According to materials released early 2018, the venerable Christian radio and publishing ministry Focus on the Family pressed that question with the IRS, successfully garnering official reclassification as a “church.” The IRS’s willingness to accede to Focus’ request, as reflected in recently released IRS documentation, may be surprising and certainly invites further evaluation of what constitutes a “church” for legal purposes.

Building on “Newman’s Own” Recipe for Charity: What Else is on the Menu?

May a Section 501(c)(3) nonprofit engage in business operations to generate revenue? Such organizations often brainstorm creative solutions to accomplish their charitable purposes and ensure revenue is sufficient to support their charitable endeavors, including business-related ideas. These activities may blur the lines between a nonprofit organization engaging in permissible commercial activity, on the one hand, and a de facto for-profit business with charitable overtones. How does a Section 501(c)(3) stay tax-exempt within applicable IRS constraints, and yet carry on a profit-generating business?  The “Newman’s Own” exception provides a fascinating example of charity mixed with business, within the broader context of other more common and far less complex nonprofit operational models.