501(c)(3) Purposes Defined: Education
So, your nonprofit teaches people things? I guess that makes your nonprofit an…educational charity? That just might be true. Today, we’re looking at the 501(c)(3) purpose category of education.
Today, we’re continuing our series on the nonprofit purpose categories, specifically those that qualify for 501(c)(3) status, those categories being:
- Religious
- Educational
- Scientific
- Literary
- Testing for public safety
- Amateur sports promotion
- Prevention of cruelty to animals and children, and a rollup category of
- Generally charitable
The 501(c)(3) purpose category of education is one of the broadest there is. When you say that a charitable organization is educational in nature, that statement captures a really broad swath of possibilities.
At a base level, the IRS considers a nonprofit to be educational if either of these activities describe that nonprofit’s mission:
- The instruction or training of individuals for the purpose of improving or developing their capabilities, or
- The instruction of the public on subjects useful to individuals and beneficial to the community
Now that covers a lot a ground, doesn’t it? It also leaves a lot of ambiguity, so let’s dive a little deeper. First, I want to go over three types of charities that most represent the spectrum of educational nonprofits, then I want to spend a few minutes at the end talking about what is NOT considered educational for 501(c)(3) purposes.
The first, and I think most obvious, type of educational nonprofit is a school. Now, this can encompass a preschool, a K-12 private school, a college or university, or even a trade school. Lots of possibilities here. The thing they all have in common is a student body, a teaching faculty, a curriculum, and usually a physical location.
You may remember that we ran into this physical location issue when we talked about churches in our discussion of religious charities. We’re running into that again, here. It’s not that a school cannot have some virtual learning, but the IRS still expects brick and mortar. They phrase it this way: “a regularly enrolled student body at a place where the educational activities are regularly carried on.”
So we all know what a school is without going into too much detail. The question is, are all schools, then, 501(c)(3) charitable nonprofits? Not necessarily. Here’s two examples of schools that aren’t 501(c)(3)s.
- Public schools and public colleges or universities – Public schools are a unit of government, so they don’t apply for 501(c)(3) status. Interesting thing about them, though, is that they often qualify to receive tax-deductible contributions from the public as if they were 501(c)(3). Bet you didn’t know that.
- The other type of non-501(c)(3) school is the for-profit variety. These are newer to the scene overall, but you see this with some colleges like the University of Phoenix, DeVry, or Kaplan University. These institutions provide collegiate education and many are even accredited, but are run as a business.
What are some other peculiarities about schools? Well, for one, when a new school applies to the IRS for 501(c)(3) recognition, they not only have to answer all the questions any applicant organization would have to. They also have to disclose the racial makeup of the faculty and student body, as well as take out a newspaper ad of a minimum column width to disclose their anti-discrimination policy.
Once a school is approved, they must continue to disclose these numbers on their Form 990 annually, as well as publish their non-discrimination policy each year. This all has its roots in the 1960s during desegregation and the requirements still stand today.
Our next type of educational charity is what I would call “generally charitable”. Remember what I said earlier about “instruction of the public on subjects useful to individuals and beneficial to the community”?
Well, this is that. And does it ever cover a wide range of possibilities. Here are some example charities that come straight from the IRS description list in Publication 557.
- An organization whose activities consist of conducting public discussion groups, forums, panels, lectures, or other similar programs.
- An organization that presents a course of instruction by correspondence or through the use of television or radio. I think these days the internet would be the most likely medium with this type.
- A museum, zoo, planetarium, symphony orchestra, or similar organization. Yep, nonprofits that promote the arts qualify as educational charities.
- A nonprofit children’s day-care center. Now with this one, there can be for-profit examples, as well, so you can’t assume all daycares are nonprofits. Many are not.
Here’s one more that is interesting: Children’s sports organizations. If a sports group is exclusively geared toward kids under 18 years old, it will probably qualify as an educational 501(c)(3). We’re talking about little league baseball, youth football, or your local travel soccer club. Again, some may be set up as commercial businesses.
Our third type of educational nonprofit is what I call “topical education”. By this, I mean a charity whose purpose is to educate the public about one or more topics in a non-scholastic environment. This could be virtual over the internet. It could be also be done through radio or TV. It could be conducted through a lecture circuit, or all of the above.
Topical education also includes “issue advocacy”. This is where a nonprofit is very focused on a particular subject, and its efforts are concentrated on building public awareness of that subject and even encouraging action around it. Interestingly, there is absolutely no requirement that issue advocacy be “unbiased” or presented without slant. If we’re honest, no one is without bias and it’s almost impossible to present any subject without a bent to it. The IRS doesn’t prohibit these groups from encouraging their audience members to reach a pre-determined viewpoint.
Here’s specifically what the IRS says about advocacy: “Advocacy of a particular position or viewpoint may be educational if there is a sufficiently full and fair exposition of pertinent facts to permit an individual or the public to form an independent opinion or conclusion. The mere presentation of unsupported opinion isn’t educational.”
So, in other words, you can’t just make stuff up, but there is no explicit notion of lack of bias. Advocacy wouldn’t be advocacy without a something to advocate for, right?
So, that last bit leads me into a brief discussion about what is NOT considered educational. Here’s how the IRS describes advocacy that isn’t educational, and I think you can see a theme developing:
- The presentation of viewpoints unsupported by facts
- The facts that support the viewpoint are distorted or false
- Presentations that make use of inflammatory and disparaging terms and express conclusions more on the basis of emotion rather than objective evaluations
- And finally, the approach used isn’t aimed at developing an understanding on the part of the audience because it doesn’t consider their background or training.
In other words, if your educational purpose consists of flame-throwing and manipulating your audience, you’re welcome to do it, but you won’t be doing it with 501(c)(3) status.
Another quick, but very important point to make here, too: Advocacy doesn’t include campaigns for public office. That’s a no-go for any 501(c)(3). And, advocacy that involves lobbying directly or indirectly about legislation and/or public policy, beyond a small percentage of the activities, will not qualify as 501(c)(3). Organizations seeking to do that often choose to be a 501(c)(4) instead, but that’s a topic for another day!
The category of educational nonprofits under section 501(c)(3) of the IRS code is incredibly broad. It encompasses everything from personal development and community education to various forms of public instruction. Yet, this also introduces ambiguity, highlighting the need for clearer distinctions. By examining specific examples of educational nonprofits and understanding what doesn’t qualify, we gain a better understanding of the diverse landscape within this important sector of charitable organizations. Clarity in these distinctions helps ensure that nonprofits meet the IRS criteria effectively.
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