Knowledgebase

Must all nonprofits be purely about helping others?

This may be the objective/requirement of a 501(c)3 organization in the US; but it is not a requirement for other US non-profit organizations, including coops, trade & professional associations, community development organizations, etc. These are all authorized under US law to be tax exempt because of their "public interest" and "mutual benefit" character; but donations to such organizations generally do not qualify for deductibility from federal income tax. University-based academics and artists regularly submit proposals and receive funding for their research and artistic projects through their educational institutions. However, the institutions are obliged to provide regulatory oversight and detailed reporting on the use of those funds. As has been previously noted, only nonprofits whose mission includes the specific activities of the funding agencies are able/willing to serve in that "sponsoring" capacity. The above is a somewhat oversimplified summary of the situation; but it is generally sufficient for most purposes. Before trying to raise funds, start a nonprofit organization, or make commitments to donors, it is essential to get legal advice from an attorney with extensive experience in the formation and operation of US nonprofit organizations.

Robert D. Shriner, Ph.D. (rshriner@aol.com) of SHRINER-MIDLAND COMPANY, Management & Economic Consultants in Falls Church, Virginia