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What is a 501c3?


A 501c3 is an Internal Revenue Service code meaning an organization is a non-profit and is therefore tax exempt. To qualify, an organization must be religious, charitable, scientific, educational, amateur sports or the prevention of cruelty to children or animals.

Organizations must file Form 1023 to obtain 501c3 status. The IRS also requires a 501c3 to file a Form 990 every year.

A 501c3 status means your organization does not have to pay federal sales tax on any purchases, although proof of tax exemption status and your ID number are required at the time of purchase.

Some stores will keep your paperwork on file or issue you a special tax-free card. Or you may be required to present your paperwork every time you make a purchase. Most states also allow 501c3 organizations to be exempt from state tax

In order for donors to receive a tax deduction for donations of any kind, your organization must be registered as a 501c3. Donors are entitled to a tax deduction for monetary donations as well as for the appraisal value of any artifacts or archival materials donated to a museum. Museums provide proof of a donation but DO NOT provide appraisal values for donations. Only an appraiser is qualified to provide an appraisal value for tax purposes.

For fundraising events, donors are entitled to a tax deduction for the ticket price minus the cost of any benefits they receive. For example, if you are charging $100 for a ticket to a dinner but the actual cost of the caterer is $60 per person, the patron can deduct $40 of the ticket price as a charitable donation.

The IRS strictly regulates a 501c3 organization. No part of the organizationís profits or activities can benefit a private individual. Non-profits cannot endorse political candidates, and no more than 10-20% of the organizationís activities or resources can be allocated to lobbying or legislative activities, according to 501c3.org.

Some granting organizations require proof of 501c3 status in order to be eligible to receive funding. A 501c3 orgainzation also qualifies for reduced bulk mail rates from the US Postal Service.
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Why Museums Cannot Provide Appraisal Values
Museum Donations are Tax Deductible
Making a Donation to a Museum
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Content copyright © 2014 by Kim Kenney. All rights reserved.
This content was written by Kim Kenney. If you wish to use this content in any manner, you need written permission. Contact Kim Kenney for details.

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