Launch Nonprofit 501(c)(3) Guarantee

A form 1023 is used to apply for exemption under IRS 501(c)(3).

Nearly all types of 501(c)(3) organizations will qualify for tax exemption. A few examples include:

• Organizations serving public health, such as hospitals and clinics.
• Organizations helping people maintain access to their civil liberties, such as by combating discrimination.
• Organizations helping people in poverty, including on issues such as hunger and housing.
• Organizations that improve public access to green spaces and nature.

The recognition of your organization as a 501(c)(3) tax-exempt entity by the Internal Revenue Service (IRS) offers many advantages in helping your organization receive donations and establish credibility.

• Tax Deduction for Donors: This encourages donors to donate and receive a benefit, thus incentivizing donors to actively donate to a 501(C)(3) charity or charities.
• Grant Funding Eligibility for the nonprofit: Many foundations and government agencies limit their grants to public charities. Nonprofit organizations also can offer tax deductions to individuals or businesses that give charitable contributions
• Potential Tax Exemption at both State and Federal level: Avoid or minimize paying taxes at federal and state levels, depending the local and state laws.
• Federal Unemployment Tax Exemption: Potentially higher thresholds before incurring federal and/or state unemployment tax liabilities
• Reduced Postal Rates: Discounts on US Postal rates.

Tax Exempt doesn’t always mean taxes don’t need to be paid!

501(C)(3) organizations are exempt from federal taxes, and donations are tax-deductible. However, the organization may still need to pay state and local taxes.

On average the IRS takes 6-9 months from the time they receive the application package, however there are exceptions. Animal organizations tend to receive determinations quite quickly, and foreign or housing organizations may take an extended period of time. Doing it right the first time is critical, and that is where BryteBridg’s experience helps. Also, if you are in a hurry our staff can assist with tips to help expedite the process.

IRS Approval Times:

The 1023 EZ is approved on average between 2-6 weeks after submission.

The 1023 Full application on average will be approved between 2-6 months after submission.

During times where the IRS is experiencing delays (i.e. COVID, government shut down, or Tax Season): We have seen delays as long as 8-10 Weeks for the EZ, and up to 3-6 months for the 1023 Full.

The more clear the application and narrative are, the more likely the application will be approved quickly. This is an area where BryteBridge excels and helps our clients receive their approval quicker.

Typically Nonprofits will receive their 501c3 Determination Letter in the mail before it is posted on the IRS website. However, you can look-up your status anytime on the IRS site

Yes, founders, initial board members, and donors may claim a deduction for contributions made to set up and establish the organization on their individual or corporate tax return once the organization has obtained the 501(C)(3) status.

The organization should acknowledge the payments by issuing donation receipts and confirm in writing that no goods or services were received in return (assuming that is an accurate statement), so that the donor has the requisite substantiation letter if ever audited by the IRS.

Helpful resources: IRS Publication 535, Business Expenses: https://www.irs.gov/publications/p535 IRS Publication 17, Federal Income Tax for Individuals: https://www.irs.gov/publications/p17

Disclaimer: Individuals, corporations, and nonprofit organizations should confirm their tax obligations by speaking to a Tax advisor.

BryteBridge completes most services within 10-15 business days after receiving all the documentation needed. Much of our services depend on state and federal cooperation and timelines. It may only take a few days for us to do our part, much of the time awaiting communication from the state or IRS. Depending on how fast the state processes its filings, it can generally take a few days to two weeks.

There are, however, times of the year when it can take longer than expected, so you’ll want to plan accordingly. At the end of the year, the states may be short-staff due to the holidays. In addition, there is typically high volume during the early new year as new businesses and nonprofits are being formed or conducting annual renewal filings. We can expedite most services for an additional fee. You may check estimated completion date and monitor orders by logging into your client portal.

Yes, through our online portal you may monitor our work throughout the process. Additionally, you can check the IRS website for your 501(C)(3) status.  Additionally, you may access documents through the portal.