Section 501(c)(3) status is recognized by the Internal Revenue Service for federal income tax purposes and the states are not involved. 501 (c)(3) status does not have to be “renewed.”
But under the new provisions of the Pension Protection Act of 2006, a small charity that is not required to file a Form 990 because its gross receipts are below the threshold for filing will be required to file a new statement that it continues to exist. Any charity required to file the new report or a tax information return will lose its exempt status if it fails to do so for three consecutive years. The report is not so much a renewal as a confirmation of continued activity. (See Ready Reference Page: “Small Nonprofits Must File E-Postcard to Retain Exemption.”)
Many organizations receive an “advance ruling” that they qualify as public charities rather than private foundations when they receive their original letter of recognition of exemption. Those organizations must subsequently prove to the IRS that they have sufficiently broad sources of support to qualify as public charities on the basis of their first five years of income. But the question is whether they are public charities or private foundations, not whether they are 501(c)(3) exempts. (See Ready Reference Page: ‘Calculating Public Support.”)
Some states require periodic reports to maintain corporate status within the state and failure to do so can cause lose of corporate status. Some require periodic renewal of charitable exemption for sales or other taxes. Check with a knowledgeable attorney in your state.
Planned giving sounds complicated, with its CRUTs and CRATs, CLUTs and CLATS, and CGAs. It can be incredibly complicated, but it needn’t be. Keeping it simple may be the best way to start a planned giving program for a charity that hasn’t already put one in place.
This webinar offered a review of major planned giving instruments and a discussion of ones that make the most sense to emphasize in starting a planned giving program. It discussed the advantages of integrating planned giving into an existing development program, targeting the best prospects, getting buy-in from the board that is likely to generate results, and setting a structure to make it all happen.
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