One-Third Rules?
Goopy Ghost
Ambassador character for Little Ray Children's Books, Inc., a 501c3 nonprofit.
There are IRS rules about revenue sources for 501c3 continuing eligibility:
More than 1/3 of revenue must come from donations or activities related to the mission.
Less than 1/3 of revenue can come from investments or unrelated activities.
Large and uncommon grants are excluded from calculations of public support.
More than 2 percent donated by one individual is excluded as excess support.
Contributions from disqualified individuals (more than $5,000 and 2 percent) and family members are excluded from public support calculations.
?
Failure to meet the public support requirement results in decertification.
Organizations are not subject to this requirement for the first 5 years.
The percentage of public support must be reported to the IRS yearly.
Drops below 10 percent in one year require a letter to the IRS outlining plans to rise above 1/3.
Drops below 10 percent for two years results in loss of the organization’s 501c3 status.
Loss of certification affects the tax deductibility of donors.
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6 个月Clear and concise guide to IRS public support requirements. Easy to understand and navigate. Valuable resource for non-profits and tax professionals. Helps ensure compliance and maintain tax-exempt status. Highly recommended!
Assistant Underwriter | Melbourne, Australia
9 个月Cool!!
Healthcare Professional, TGH | Driving Positive Change, Ensuring Healthcare Access To All | Workplace Well-Being & Diversity Advocate | Doctor of Business Administration (DBA) Candidate | USF Alumna I PADI Dive Master
9 个月Thanks for sharing!
Contractor (Data Entry, GIS, Medical Records Technician, AP Clerk, Etc.)
9 个月This was well written and informative. There's always something new to learn about the IRS.
Ambassador character for Little Ray Children's Books, Inc., a 501c3 nonprofit.
9 个月Thank you for your reactions to this article. My Takeaway from “One-Third Rules?”: Small donations indicate public support. Small donations provide diversity. Small donations don’t put missions at risk when they end. Small donations widen the base of public support for the IRS.