What is a 501(c)(3) Nonprofit Organization?
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What Is a 501(c)(3) Nonprofit Organization?
If you’ve read about car donation programs, chances are, you’ve already heard of 501(c)(3) nonprofit organizations.
The question is what is a 501(c)(3) nonprofit organization? Why are prospective donors being encouraged to choose charitable organizations with the 501(c)(3) status? What’s so special about these organizations?
What You Need to Know
A nonprofit organization with a 501(c)(3) status means that it has been approved by the Internal Revenue Service (IRS) as a tax-exempt charitable organization. In the IRS Code, there is a section specifying that such nonprofit organizations are permitted to obtain federal tax exemptions. As defined in the code, the primary activities of 501(c)(3) nonprofits are charitable, religious, educational, scientific, literary, testing for public safety, fostering amateur sports competition, preventing cruelty to children, or preventing cruelty to animals.
Simply put, any contributions made to 501(c)(3) charities are automatically considered as tax-deductible.
There are two exempt categories of 501(c)(3) nonprofit organizations as defined by the IRS—public charity and private foundation.
- Public charity
The IRS identifies public charity simply as “not a private foundation.” Public charities usually receive a significant portion of their income from the government or the general public. They are basically nonprofits that aim to help the community, providing services such as shelters for the homeless and animal welfare facilities. This type of nonprofit includes churches and educational organizations.
- Private foundation
Private foundations are non-operating foundations, meaning they do not have any active programs. Considered as nonprofit charitable entities, private foundations are generally set up by a single benefactor, normally an individual or a family or a business. They help promote educational, religious and other charitable activities by making grants to other charitable nonprofits.
Since they do not solicit funds from the public, private foundations get their revenue from a relatively small number of donors, oftentimes from a single source such as corporate or family money. Except for religious organizations and nonprofits with gross receipts of less than $5,000, all charitable organizations are categorized as private foundations.
How to Identify a 501(c)(3) Nonprofit Organization
It’s not uncommon for many donors to make the mistake of contributing to other types of nonprofit organizations where tax deductions are not allowed for donations. There are 29 types of nonprofit organizations in the United States that are exempt from some federal income taxes. However, only the 501(c)(3) type allows donors to claim tax deductions.
For instance, if you mistakenly donated to a 501(c)(4) nonprofit organization—which the IRS defines as civic leagues, social welfare organizations, and local associations of employees—you would not receive any tax benefits at all. That is why it’s really important that you’re fully aware of the status of the charity you plan to donate to.
To make sure that your chosen nonprofit has 501(c)(3) status, follow these steps:
- Check with your state’s Secretary of State.
Organizations are normally required to register with the state before they can start operating. Visit their website or give them a call for details regarding the charity of your choice.
- Ask the organization to provide you with a letter of determination.
If they hesitate to give you this document or if they claim that they lost it, they are likely to be scammers. You may try to give them the benefit of the doubt and tell them to request for a copy of such document from the IRS.
- Visit the nonprofit.
The simplest way to determine a legitimate organization is by asking them for basic details. Do not hesitate to ask them about their background, goals, and where donation funds will go.
- Do your research.
Many nonprofits would share their financial statements online for potential donors. If you notice unaudited statements or drastic annual revenue changes, consider them as red flags and look for another organization.
- Be vigilant.
It’s difficult to detect a fraudulent organization nowadays. Warning signs that are indicative of one include the
- The charity asks for cash donations only.
- The charity thanks you for a contribution you never gave.
- The charity has a title similar to that of another organization.
- The charity demands to collect your donation as soon as possible.
We Can Be Your Trusted 501(c)(3) Nonprofit Partner!
With Breast Cancer Car Donations, you have the assurance that your vehicle donation is 100% tax-deductible!
We’ll auction off your donated vehicle and use the proceeds to help finance the comprehensive breast health services being provided by our IRS-certified 501(c)(3) nonprofit partners—the American Breast Cancer Foundation (ABCF) and Women Involved in Nurturing, Giving, Sharing, Inc. (WINGS). These charities provide needy patients with free breast cancer screening, financial assistance, information, and access to medical facilities to aid in the early detection of breast cancer and facilitate their treatment and eventual recovery and rehabilitation. Thus, you’d truly help save lives with your vehicle donation.
Our donation process only involves three quick steps. You contact us, we tow your car away for free, and you receive your tax-deductible receipt a few weeks later. Your vehicle doesn’t even need to be in good shape when we take it from you.
If you’re interested to learn more about how our vehicle donation process works, what we normally take as donations, or anything else related to car donations, feel free to visit our FAQs page. We would also love to hear from you, so give us a call at 866-540-5069. You may also send us a message online.
Re-purpose Your Old Car Today
Now that you know what is a 501(c)(3) nonprofit organization, you are now in the best position to make a vehicle donation to us at Breast Cancer Car Donations. Not only will you be helping save lives with your charitable contribution but you will also save money when you receive your tax deduction and other benefits from us.
Call us at 866-540-5069 and turn your beater into a life-saving instrument!