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Faculty Blogs: Not for Profit Status

A 501c3 must be organized and operate according to the standards for a not for profit corp.  

The 3 requirements for organization are:1. that is will operate for the charitable purpose stated in the articles of incorporation, 2. that it will not operate contrary to the non for profit status, and 3. that upon dissolution that assets go to another 501c3.  

"Community benefit" describes how to comply with the charitable purpose requirement (#1).  "Operational test" defines how to comply with the requirement that the corp not do anything contrary to its status as a not for profit (#2).

1. Charitable purpose is defined in the revenue rulings.  It used to be defined by indigent care, but is  now measured by community benefit.

2. Operational test requires operating without private inurement or private benefit or for political activity.

Full post as published by University of Louisville Law Faculty on April 21, 2009 (boomark / email).