A nonprofit is an organization that does not share its profit among individual people, such as owners or shareholders. Instead, the income of the organization is used to further the organization’s commitment to public service. The nonprofit sector is also known as the third sector, independent sector, voluntary sector, philanthropic sector, social sector, tax-exempt sector, or the charitable sector.
Currently, there are about 1.2 million different organizations that are registered with the IRS as nonprofit organizations. It is further estimated that millions more small formal and informal associations exist that do not register with the IRS because they have revenues of less than $5,000 per year.
There are many kinds of nonprofits – some are exempt from paying taxes while some are not. If you find yourself in a situation where you want to donate to a nonprofit organization so as to get tax deduction, you may want to verify the nonprofit status of the organization to know if they have received a tax-exempt status from the IRS. In the United States, this status is called 501(c)(3) after the relevant part of the tax code.
Checking the IRS Database
In order to check the IRS website, you will need to gather some information about the nonprofit in question. To properly check whether a non-profit has exempt status, you need to gather as much of the following information as possible: name, city, state, county, and employer Identification Number (EIN)
- Next, you should visit the IRS Select Check website. The IRS maintains an Exempt Organization List, which you can check using the Select Check website.
- You need to select a database. Choose “Are eligible to receive tax-deductible charitable contributions.”
- Enter the requested information. Organizations will be listed under whatever name is on file with the IRS, either their legal name or their doing business as (or both). If you enter Salvation Army, then entries with either the word “Salvation” or “Army” will show up. Put the name between quotation marks to search for the phrase.
- When you are making your search, it is best to leave out common words such as Foundation.
- You can also check to see if a nonprofit status has been revoked. This is a separate database. Select “Were automatically revoked” from the IRS website to get access to that information.
- You can search the Revocation database using the same information: name, city, state, county, and employer Identification Number (EIN). You can also search by Revocation Posting Date. Enter a date range.
- If your organization has recently submitted an application as a 501(c)(3)–the designation for a tax-exempt charitable–you may wonder if your application was approved. Speaking with the Internal Revenue Service department processing your application may not be an option, however, other methods exist that can help you check your 501(c)(3) status.
- You should bear in mind that it may take several days for the IRS to update the website. This list is often used for potential donors to ensure the validity of your organization prior to donating. You may also call the IRS to see if an organization is tax exempt by contacting 1-877-829-5500.
- The review process for an IRS 501(c)(3) determination may take several weeks to several months, so avoid calling or searching prior to three months after submission to the IRS.
- When a non-profit organization has been granted a nonprofit status with the IRS they usually receive a determination letter. You can ask for a copy of the letter. If the organization hesitates to show you its letter, you should hesitate to donate to them. If you should lose your letter of determination, you can call the IRS on 1-877-829-5500 to request a new one.