IRS Section 501(c)(3) Status

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501(c)(3) is the designation most frequently sought by nonprofit housing development organizations because contributions to organizations with 501(c)(3) status are eligible tax deductions for donors.

The IRS has established standards for 501(c)(3) organizations. These are:

	The organization must be organized for at least one of the following purposes: religious, charitable, scientific, literary, educational, testing for public safety, or prevention of cruelty to animals;
	None of the net earnings of the organization may benefit private individuals;
	No substantial part of the organization’s activities may be devoted to lobbying (influencing legislation), and the organization may not participate in or intervene in political campaigns on behalf of candidates; and
	The group must be organized in its article of incorporation for charitable and/or educational purposes.

A 501(c)(3) nonprofit must operate as a charitable or educational organization, which includes purposes such as:

	Relief of the poor;
	Lessening burdens of government;
	Lessening community tensions;
	Eliminating prejudice;
	Defending human and civil rights; or
	Promotion of social welfare.