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Becoming a Nonprofit
- 1. The Components of a Complete Board
- 2. "Contracts, Contracts, Contracts - Five Common Mistakes to Avoid"
"Comparison of 501(c)(3), 501(c)(4) and 501(c)(6) Organizations"
Sandra Pfau Englund
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Comparison of 501(c)(3), 501(c)(4)
and 501(c)(6) Organizations
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Treatment
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501(c)(3) -- Charities
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501(c)(4) -- Advocacy
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501(c)(6) -- Trade &
Prof.
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| What is the primary purpose of the organization? | Charitable, educational and/or scientific | Advocacy | To promote a line of trade or business |
| Is the organization exempt from federal taxes? | Yes | Yes | Yes |
| Is the organization exempt from state and local taxes? | Yes, usually, however some states are tightening requirements | No, not usually | No, not usually |
| Are donations tax-deductible as charitable contributions? | Yes | No | No |
| Are dues or member fees tax-deductible? | Yes, to extent fees exceed benefits received | No | Yes, if qualify as ordinary and necessary business expense |
| May the organization engage in lobbying? | Yes, but only an insubstantial portion activities may be lobbying | Yes | Yes, but beginning in 1993 lobbying expenditures are no longer deductible |
| May the organization engage in political election campaign activity? | No | Yes, but taxed on expenditures | Yes, but taxed on expenditures |
| Is the organization required to file an annual information return (IRS Form 990)? | Yes, if gross receipts exceed $25K | Yes, if gross receipts exceed $25K | Yes, if gross receipts exceed $25K |
| Is the organization subject to UBIT? | Yes | Yes | Yes |
| Will the organization qualify for nonprofit postal permit? | Yes | No, unless also qualify as an "educational" organization within the meaning of 501(c)(3) | No, unless also qualify as an "educational" organization within the meaning of 501(c)(3) |
| Is the organization required to have an independent board of directors? | Yes | Yes | Yes |
| Are volunteers of the organization subject to legal liability? | Yes, but trend is to exempt volunteers of charities | Yes | Yes |
| May the organization have certain employee benefit plans: | |||
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Yes | Yes | Yes |
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Yes | No | No |
Copyright © 2002 Sandra Pfau Englund. All rights reserved.
Courtesy
of
Pfau Englund Nonprofit Law, P.C.
1451 Juliana Place, Alexandria, VA 22304-1516
Voice: 703/751-8203 Fax: 703/823-8692
Email: spfau@nonprofitlaw.com
website:
www.nonprofitlaw.com
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