Page 75 - Washington Nonprofit Handbook 2018 Edition

b. Requirements and Limitations on 501(c)(3) Organizations

Organizations that obtain 501(c)(3) tax-exempt status must operate in

accordance with specific rules applicable to 501(c)(3) organizations.

(i) Permissible Purposes

In order to gain recognition as a 501(c)(3) organization, an organization must
be organized and operated exclusively for one or more of the purposes specified in
section 501(c)(3) (e.g., charitable, educational, religious, literary or scientific
purposes, fostering national or international amateur sports competition, testing
for public safety or prevention of cruelty to children or animals). In addition, a
501(c)(3) organization must serve public rather than private interests. Generally,
this means that its activities benefit a large and indefinite class of individuals (e.g.,
the general public, homeless people, youth), rather than a small identifiable group
(e.g., residents of a single neighborhood, employees of a small company). The
organization may not be organized or operated for impermissible private interests
such as those of specifically designated individuals, the creator of the organization
or his/her family, or persons (including companies) controlled, directly or indirectly,
by such private interests.

Treasury Regulations provide that “charitable” includes “relief of the poor and
distressed or of the underprivileged; advancement of religion; advancement of
education or science; erection or maintenance of public buildings, monuments, or
works; lessening the burdens of government; and the promotion of social welfare
by organizations designed to accomplish any of the above purposes.” See Treas.
Reg. Section 1.501(c)(3)-1(d)(2). Some of these purposes are described in more
detail below; however, a comprehensive discussion of permitted section 501(c)(3)
purposes is beyond the scope of this Chapter. A more detailed discussion of
permissible Code section 501(c)(3) activities is included in Chapter 3 of IRS
Publication 557, available at http://www.irs.gov.

Descriptions of Common Categories of Charitable Purposes

Relief for the poor, distressed or underprivileged includes:
a. helping low-income persons find employment;

b. promoting the rights of public housing tenants; or

c. providing other social services like low-income housing, food, or health services.

WASHINGTON NONPROFIT HANDBOOK -64- 2018