Page 18 - Washington Nonprofit Handbook 2018 Edition

the members will elect the board of directors. See Chapter 13 for more on
membership.

d. Will the Organization Seek to Have Tax-Exemption as a 501(c)(3)
Organization?

Tax-exemption under section 501(c)(3) of the Internal Revenue Code of 1986,
as amended, is a tax status for which charitable nonprofit organizations can qualify.
To obtain such tax-exempt status, the nonprofit organization must apply to the IRS.
There are many issues and requirements to address when you are applying for this
tax-exemption and it is a relatively complicated process. See Part 4 on Obtaining
Recognition As A Code Section 501(c)(3) Organization.

The 3 main reasons for obtaining tax-exemption as a 501(c)(3) organization
are:

(a) Donations can be tax-deductible to the donor,

(b) The ability to qualify for grants from private foundations and
governments, and

(c) The organization is “exempt” from federal corporate income tax.

WASHINGTON NONPROFIT HANDBOOK -7- 2018