Can you tell me what percentage of income a 501(c)(3) organization must spend each year to retain its charitable status?
A Section 501(c)(3) charity which is classified as a private foundation must make qualifying distributions (which can include certain administrative costs) of at least 5% of its net investment assets (not its income) each year or pay an excise tax for failure to do so. If it fails to do so repeatedly, the IRS can tax it out of existence.
There is no percentage requirement for expenditures by a public charity, although it must carry on a legitimate charitable program or it will eventually lose its exempt status.
State Charitable Solicitation Statutes: Everything You Wanted to Know But Were Afraid to Ask
Charities that seek contributions nationally must typically register in 39 states and the District of Columbia before starting to solicit. Furthermore, for-profit fundraisers are also required to register and file their contracts and other documentation with many states. Since many states are increasing their enforcement efforts to ensure that charities and fundraisers are complying with initial and annual registration requirements, it's important that charities and fundraisers abide by these statutes.
Program materials include an extensive review of the statutes and their provisions, plus a copy of the Uniform Registration Statement for multi-state filings. Purchasers will receive an e-mail receipt that includes a link that will take them to the product download. The download is a pdf file. Learn More
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