Prepare Your Own 501(c)(3) Application

By Sandy Deja © 2020  400 pages ISBN 978-1-7340724-1-9​


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Prepare Your Own 501(c)(3) Application has detailed guidance on unusual grants, calculating public support and modifying public charity status.

WOW! Exactly what I needed.  Everything I needed in one place.

​As described on this page, the information below is out of date.

Pages 10 and 11 - Part X - Public Charity Status

Current tax law divides all 501(c)(3) organizations into two broad subcategories - public charities and private foundations.  When you file a 501(c)(3) application, you are actually asking the IRS to decide not only whether your group qualifies as a 501(c)(3), but also whether it is publicly supported.

Page 10 - Part X - Question 1 - Are you a private foundation?
A private foundation is an organization that receives most of its support from a limited number of sources, such as one family or one corporation.  It is generally less favorable to be a 501(c)(3) private foundation because these organizations must pay a 1% or 2% tax on interest, dividends, capital gains and other investment income, and are subject to a wide variety of restrictions with respect to how they invest their assets and conduct their operations.  Percentage limits placed on the amount donors can deduct on their individual income tax returns are also lower.  I am not including detailed coverage of private foundations in this website because I have seen too many small groups get themselves in trouble with the "wide variety of restrictions" mentioned above.  If you are forming this type of group, I recommend you sit down with a professional who can alert you to the potential pitfalls as well as help you prepare your 501(c)(3) application.

Page 10 - Part X - Questions 2 through 4 - Private Operating Foundation
Private Operating Foundations are outside the scope of this website.  If you are forming this type of group, you should  seek professional help in preparing your 501(c)(3) application.

Pages 10 and 11 - Part X - Question 5 - Public Charity Status
Some organizations are public charities solely because of the activities they carry on 

(boxes 5a through 5g on pages 10 and 11 of Form 1023):

  • Churches (if you check this box, you must complete Schedule A of Form 1023) [ebook Supplement for Schedule A]
  • Schools
  • Hospitals
  • Supporting organizations
  • Testing for public safety organizations
  • Certain agricultural research organizations

Other organizations are public charities because they receive at least one third of their support from the general public. Organizations whose public support is mostly in the form of gifts or contributions would check box h on page 11 of Form 1023; organizations whose public support  is mostly in the form of payments for goods or services, such as admission to cultural events, fees for therapy, or payments at fundraising events, would check box i.  Many groups check box j, which asks the IRS to decide for you.

Attention: Advance Rulings Have Been Eliminated!  If  the Form 1023 you are using asks about Advance Rulings, you are using an out-of-date Form!   (It only took 10 years for the IRS to change this page of Form 1023.)

Page 11 - Part X - Question 6 - In Existence 5 Years
Only provide the information requested in Part X - Questions 6b or 6b if your group has been in existence for 5 or more tax years.  The information described is needed to calculate whether organizations described in Question 5h or 5i have met the "one third" tests.

Page 11 - Part X -  Question 7 - Unusual grants
Read the definition of unusual grants given in the Form 1023 instructions, IRS Publication 557, or Prepare Your Own 501(c)(3) Application before deciding that any amounts your organization has received are unusual grants.

​​​​​​​​​​​​Real Help With Your 501(c)(3) Application

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Form 1023 - Part X