You are here

Should a 501(c)(4) change to a 501(c)(3) charity?

Your Legal Questions Answered

Should a 501(c)(4) change to a 501(c)(3) charity?

We are a nonprofit youth baseball organization recognized as an exempt community organization under Section 501(c)(4). We believe that we should be a 501(c)(3) charity. Is there an advantage to changing and if so what do we do to change?
Also, we cannot find our articles of incorporation. How do we obtain that information if the State does not have a copy either?

Although both (c)(3)s and (c)(4)s are exempt from paying federal income tax on any surplus income (See Ready Reference Page: “What Do We Mean When We Say ‘Nonprofit’?”), the big advantage of (c)(3) status is that individuals and corporations may make contributions and claim charitable contribution deductions, which they can’t do for gifts to (c)(4)s. In addition, private foundations will much more readily make grants to 501(c)(3) public charities than they will to (c)(4)s. Check your governing documents and review your operations to see if you operate as a charity. You may have to make some changes to qualify, but if you can qualify you should file a Form 1023 Application for Recognition of Exemption. (See Ready Reference Page: “New Form 1023 Adds Many Questions Focusing on Currently Hot Issues.”)
 
If you can’t find your articles of incorporation, check with any leagues to which you might have submitted them, or try the IRS if you filed to get your (c)(4) status. But if your state does not have a record of your incorporation under your present or some previous name, you may not be incorporated at all and may be an unincorporated association. That is usually not a good form in which to operate. Check with a local attorney about forming a new corporation and starting over with the (c)(3) application.
Monday, February 26, 2007

Sign-up for our free weekly Q&A

Add new comment

Sign-up for our weekly Q&A; get a free report on electioneering