091: REFRESH Nonprofit Basics: Navigating the Complex Rules That Describe a Public Charity

EO Radio Show

Welcome to EO Radio Show - Your Nonprofit Legal Resource. I'm Cynthia Rowland, and this is the fourth "refresh" of several original episodes published in the summer of 2022. As we near the end of summer, it's a good time to wrap up our revisit of some of our "nonprofit basics" episodes that cover fundamental topics that nonprofit leaders and aspiring leaders need to understand.

This refresh of episode #5 is intended to help the founder of a new charity navigate the complex rules that describe a publicly supported charity. Many people think that the designation 501(c)(3) means an organization is a charity, but there is more to it than that. In this episode, I talk about the IRS classifications that distinguish between a public charity and a private foundation. Both of these types of organizations are described in 501(c)(3), but they are subject to very different rules. So, this episode covers the four basic paths to public charity status. Then, we’ll close out with some tips for a new organization that intends to qualify for public support based on fundraising from the public or, alternatively, primarily from generating income from their exempt function.

Since this episode was first published in 2022, we've added our show to the Farella Braun + Martel YouTube channel. Listeners might want to look over the playlist on our channel that covers all the basics and also our broad coverage of the formation mechanics in many states. Take a look at the show notes for updated links.

Show Notes:

Exempt Organization Types: https://www.irs.gov/charities-non-profits/exempt-organization-types

Schedule A, Public Charity Tests: https://www.irs.gov/pub/irs-pdf/f990sa.pdf

Instructions to Schedule A: https://www.irs.gov/pub/irs-pdf/i990sa.pdf

The Wonderful World of Foundation Classification: https://www.stayexempt.irs.gov/home/depth-topics/wonderful-world-foundation-classification and

https://www.stayexempt.irs.gov/se/files/downloads/FoundationClassification_Print.pdf

Internal Revenue Code Sections: https://www.law.cornell.edu/uscode/text/26/509

https://www.law.cornell.edu/uscode/text/26/170

EO Radio Show #84: Nonprofit Book Review: ABA Guidebook for Directors of Nonprofit Corporations

Farella YouTube podcast channel

If you have suggestions for topics you would like us to discuss, please email us at [e-mail]. Additional episodes can be found at EORadioShowByFarella.com.

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