The Nonprofit FAQ

How do we apply for a grant if we're part of a group exemption?

Theresa Cornelius asked in Nonprofit (see http://www.rain.org/mailman/listinfo/nonprofit) in March of 2004: The support group I run became a branch of a national support group... The national organization is supposed to file all paperwork...they have not... I want to file an application for a grant for seed money for our group. Will the problem with tax exempt status cause me problems getting a grant? Do you have any advice on how to handle this situation? Sandy Deja replied: First, check the IRS website to make sure your parent group actually has been recognized by the IRS as a central organization. The IRS url is http://www.irs.gov - go to the charities & non-profits home page, and click on "Search for Charities" in the lower left hand area of the page. Look for "Code 1" under the entry for your parent organization. If the parent organization has not taken care of this, you are are your own for your tax exempt status, no matter what the national group has told you. Even if the IRS has recognized 'group exemption' status for your parent, you have another set of problems. Unfortunately, the IRS does not normally issue separate letters recognizing subordinate organizations covered by a group exemption, nor are subordinates covered by a group ruling separately listed, either in Publication 78 or in the list of qualified charities that appears on the IRS website. To establish that it is, in fact, exempt, a subordinate organization usually will need to provide both a copy of the IRS group exemption letter addressed to the parent and a letter from the parent acknowledging the subordinate as a bona fide member of the group. Whether this unusual proof of exempt status will be a problem when you apply for grants depends mostly on whether the grantor you are dealing with is knowledgeable about this type of IRS ruling... Sandy Deja is the author of "Prepare Your Own 501(c)(3) Application" an ebook for lay people - http://www.501c3book.com/ Posted 3/4/04 -- PB