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What benefit does being 501(c)(3) offer my nonprofit and its contributors?

One of the primary benefits of being tax-exempt under IRC Section 501(c)(3) is the ability to accept contributions and donations that are tax-deductible to the donor. Additional benefits include, but are not limited to:

  • Exemption from federal and/or state corporate income taxes
  • Possible exemption from state sales and property taxes (varies by state)
  • Ability to apply for grants and other public or private allocations available only to IRS-recognized, 501(c)(3) organizations
  • Potentially higher thresholds before incurring federal and/or state unemployment tax liabilities
  • The public legitimacy of IRS recognition
  • Discounts on US Postal bulk-mail rates and other services
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