Does a nonprofit have to be 501(c)(3)? We are incorporating and filing/drafting by-laws. Can the 501(c)(3) portion wait if we don't take in any funds and can give charitable contribution receipts by an umbrella org? Can we still call ourselves a nonprofit until we get 501(c)(3) status?
There is a lot of confusion in this question. “ Nonprofit” does not equate to charitable. There are a lot of nonprofit organizations that are not 501(c)(3) charities, and some are not even tax-exempt. (See Ready Reference Page: “What Do We Mean When We Say Nonprofit”)
If you intend to apply for 501(c)(3) charity recognition ultimately, you probably want to be sure that your articles of incorporation include the language required to qualify for the status. (See Ready Reference Page: “Articles of Incorporation Establish Basic Form of Nonprofit Corporations”) If you don’t have the language in the original articles, you will still be a nonprofit, but will have to amend the articles before you can qualify for charitable status.
If you plan to use a fiscal sponsor as a “conduit” organization, the sponsor will undoubtedly want you to qualify for charitable status even if you haven’t been recognized. (See “Fiscal Sponsorship: 6 Ways to Do It Right” in our bookstore)
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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