Nonprofit: An organization with tax-exempt federal status that typically serves the common interest. Private shareholders and individuals cannot benefit from profits however salaries can look at what other people are paying to determine salaries.
501(c)(3): Organizations for any of the following purposes: religious, educational, charitable, scientific, literary, testing for public safety, fostering national or international amateur sports competition, or the prevention of cruelty for children or animals. 1.7 million active 501(c)(3)s of 1.9 million tax-exempt organizations.
501(c)(4): Social welfare organizations that are created to benefit a small group of people. Fewer restrictions on lobbying and a lot of them are quasi-political organizations.
Organizations have to apply to the IRS to receive tax-exempt status. Organizations’ application forms only become public once the IRS approves their tax-exempt status.
Most of the time, organizations file a Form 1023 which has information about what the organization does.
Form 1023EZs are for smaller organizations but they have a history of misuse. The IRS releases an annual dataset of what is approved of in a given year.
Form 1024 and 1024A are for other kinds of organizations.
501(c)(4)s are not required to file an application. If they don’t apply to the IRS, they submit a Form 8976 which is a notice of intent to operate which is not public.
Once the IRS approves an organization, it sends a letter notifying the organization of its status, then adds the organization to the roster of tax-exempt organizations.
The IRS has a Exempt Organization Business Master File that includes a roster of every tax-exempt organization. Publication 78 and determination letters may also be helpful.
Organizations are required to file a tax return annually.
Form 990 is the standard form. Don’t look at the big bolded date because that is the IRS date, look at line A for the date the form was filed.
Form 990N: For small organizations and just say that they are still operating.
Form 990EZ: For smaller organization.
Form 990PF: For personal foundations.
Form 990T: Used to declare taxable income within a nonprofit, for example ad revenue.
There are audits if an organization uses a certain amount of public grant money.
Annual financial data extract: IRS selects certain data from forms and creates a dataset with all the nonprofits they have.
Schedules are used for if organizations took part in particular activities or had certain operations.