By Marc F. Herron The Internal Revenue Code breathes life into charitable organizations. For an organization to be recognized as a non-profit or charitable organization it must be limited in its activities to the purposes set out in Section 501(c)(3) of the Internal Revenue Code (26 USC 501(c)(3)). Such purposes are as follows:
-charitable, -scientific, -religious, -educational, -literary, -testing for public safety, -fostering of national or international amateur sports competition, and -preventing the cruelty to children and animals.
Moreover, none of the net earnings of the organization (the profit of the organization after paying salaries and other expenses) can benefit any shareholder or individual and all of its assets must be permanently dedicated to one of the exempt purposes.
Let’s recap: 1. Section 501(c)(3) of the Internal Revenue Code governs. 2. Limit purpose to those set out in 501(c)(3). 3. No net earnings to benefit any shareholder or individual. 4. Assets permanently dedicated to charitable purpose.
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