I just created a new nonprofit and applied for 501(c)(3) charitable exempt status. Due to the cutbacks at the Internal Revenue Service, I have heard it might take 9 months to 1 year for the IRS to send me a determination letter. While it will be retroactive to the date applied for, what do I say in my solicitations? Is "Tax-exempt 501(c)(3) determination pending" enough? What's the best practice? I do not want to burden another nonprofit by asking it to be a fiscal sponsor.
I think you are saying the best that you can with a statement like the one you suggest saying that the application for exemption is pending. I don’t know whether what you have heard will be accurate, but I doubt that there is any reason to believe that the IRS will be significantly quicker than usual in making determinations.
Assuming that the exemption is received, it will relate back to the date the organization was formed if you applied within 27 months of the last day of the month of its formation. (Only if you applied after the 27-month date does your application revert back to the date of the application.)
Your proposed statement is not likely to be sufficient to get grants from private foundations unless they are willing to do expenditure responsibility on your grant. But for individuals, especially those who don’t itemize charitable contribution deductions, it should be sufficient. For the approximately 92% of taxpayers who don’t itemize, it won’t make any difference even if the IRS declares your purpose uncharitable so you don’t get the exemption.
Don’t forget about charitable solicitation registration rules that might apply to your solicitations. Those rules apply to organizations making appeals for a charitable purpose (which you obviously think you will be doing) and not exclusively to organizations recognized as charitable by the IRS.
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