What Are the Benefits of Starting a 501c3 Nonprofit?
If you are considering starting a nonprofit, you may be wondering what benefits the 501c3 status offers. Having the 501c3 status for your nonprofit means that your organization has been approved by the IRS as a tax-exempt, charitable organization. This means that you will be entitled to certain benefits including funding, credibility, tax benefits, and limited liability. Keep reading to find out how these benefits will help you and your organization.
One of the biggest benefits the 501c3 status offers nonprofits is help with funding. Just like any business, your nonprofit needs money, and the best ways to earn that money are through programs only available to 501c3 nonprofits. The 501c3 status allows you to apply for grants and accept tax-free donations, both of which are two of the biggest ways nonprofits raise money.
Without the 501c3 status, any donations given or received would not be able to be written off on your taxes, and you would not be eligible to apply for grants which provide large amounts of funding to many nonprofits. The reality is your nonprofit requires money, so you can make a difference in the world. The 501c3 status makes this goal more achievable.
2. Tax Benefits
Just as it provides benefits for funding, the 501c3 status is also beneficial when it comes to paying taxes. While this might be one of the most obvious reasons, the 501c3 status for your nonprofit allows you to receive a huge break on your taxes. You will be able to write off all of the charitable contributions that were given to you, which gives you more money to make an impact on your community.
3. Establishes Credibility
For some people, the funding and tax benefits that the 501c3 status offers are not that important. Your nonprofit, however, depends on the community and its trust in you, whether you need to accept donations or not. Being a 501c3 nonprofit, which has been approved by the IRS and is regulated by the government, establishes credibility between your nonprofit and the community. If you want your nonprofit to make the biggest impact it can, you need that trust. The 501c3 status proves to anyone looking to volunteer or contribute to your organization that your nonprofit is an established foundation that they can depend on.
4. Limits Personal Liability
One benefit that’s often overlooked when applying for the 501c3 status is the limited personal liability of a separate nonprofit organization. If you are operating your nonprofit without the 501c3 status, you can be personally liable for anything that might go wrong in regards to your nonprofit. For example, if you are hosting an event where someone slips and falls, without a 501c3 status you could be held personally responsible for the accident. If you have an established 501c3 nonprofit, however, your liability is limited and your personal assets are protected in the event of an accident. There are of course some conditions to this, but generally speaking, you are far better off if something were to go wrong when you have an established nonprofit.
As you can see there are many benefits to starting a 501c3 nonprofit, however, it can be a little challenging to figure out how to start. If you’re thinking about starting a 501c3 nonprofit, contact Chisholm Law Firm today. Our highly trained team is here to help you simplify the process so you can make a difference in the world.