Are tax-exempt organizations required to disclose their major donors on their IRS Form 990 Schedule B’s, or not? In July 2018, the IRS issued Revenue Procedure 2018-38, answering “no” for Section 501(c)(4) and other tax-exempt organizations, but leaving the disclosure requirement intact for Section 501(c)(3) organizations and Section 527 political action committees (known as PACs).
Has your nonprofit ever engaged in joint activities with a business, perhaps with resulting revenues? Such arrangements are increasingly common for many Section 501(c)(3) organizations. A key legal requirement is that the tax-exempt organization maintain control of the project, so that its charitable resources will be “exclusively” used in furtherance of tax-exempt purposes, as required by the Internal Revenue Code. What does “control” mean for IRS purposes, and what happens to resulting revenues? Careful planning is essential to answering these questions for optimal tax compliance.
May a nonprofit that makes loans to private individuals and businesses qualify as a Section 501(c)(3) organization? Or is making a loan a “business,” not suitable for public charity status? In the world of microfinance—making small loans to those who lack ready access to funds— the IRS allows for such public charity qualification, albeit within restrictive parameters. Charitable microfinance activities are well grounded in historical practice, they can provide significant societal benefits to disadvantaged communities, and thus they can fulfill tax requirements for “charity.”