Thursday, April 22, 2010

What is a Non-Profit Organization? (Part 1)

Non-profit consultant Derek Link sheds some light on non-profit organizations eligible for non-profit status:

Around April 15 each year people think about non-profit organizations because they’re filling out tax forms. Most people think of a non-profit organization as one that gives them a benefit when they donate to it; that is, their donation is considered tax-deductible by the IRS. The organizations that are given tax deductible status are listed in IRS Publication 526.

Examples given in Publication 526 include:
  • Churches, a convention or association of churches, temples, synagogues, mosques, and other religious organizations.
  • Most nonprofit charitable organizations such as the Red Cross and the United Way.
  • Most nonprofit educational organizations, including the Boy (and Girl) Scouts of America, colleges, museums, and daycare centers if substantially all the childcare provided is to enable individuals (the parents) to be gainfully employed and the services are available to the general public. However, if your contribution is a substitute for tuition or other enrollment fee, it is not deductible as a charitable contribution, as explained later under Contributions You Cannot Deduct.
  • Nonprofit hospitals and medical research organizations.
  • Utility company emergency energy programs, if the utility company is an agent for a charitable organization that assists individuals with emergency energy needs.
  • Nonprofit volunteer fire companies.
  • Public parks and recreation facilities.
  • Civil defense organizations.
And something I didn’t know is that these may also be included for a tax deduction:
  • Canadian charities. You may be able to deduct contributions to certain Canadian charitable organizations covered under an income tax treaty with Canada. To deduct your contribution to a Canadian charity, you generally must have income from sources in Canada. See Publication 597, Information on the United States-Canada Income Tax Treaty, for information on how to figure your deduction.
  • Mexican charities. You may be able to deduct contributions to certain Mexican charitable organizations under an income tax treaty with Mexico.

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