Economic Empowerment for New 501c’s

The irony is that ALL 501cs originate as a For Profit Business, they remain so until The IRS — courtesy of it application for tax-exempt status process — grants you permission to operate at a Tax-Exempt Entity. The Letter of Determination is the result of their research of your Application, where once approved, the IRS then classifies or “determines” in what manner your tax-exempt will operate, what Federal tax forms it will be required to file, if your entity was found to be a Public or Private entity and subsequently what taxes your exempt status applies to (sub-charter classification), what percentage (IF ANY) donors are entitled to receive for their contributions, and a host of other terms that are specific to one of the 25+ types of tax exempt entities there are that are applicable to your entities specific exemption type+classification.

The Tax Exempt Status is no different than a Drivers License, its is not guaranteed its is issued as Permission and must be complied with in order to maintain, else it will be terminated.

Having started as a 70’s volunteer, this commitment has morphed into volunteer Execs focused on delivering the full complement of Economic Development support to the New 501c as can be done.

Through a number of gap-filling programs for more than 35 years we supported Client Charitable efforts, Tax-Exempt Fiscal Sponsors and began serving as a Fiscal Sponsor ourselves more than a decade ago. We’ve always done more in silence than with a big splash, which has empowered us as a fingerful of volunteers with the capacity to do more with less for more who need help than would have been possible otherwise.

Beginning with the turbulent 2015-16 primary-election season, the subsequent 2017 redirection of Federal funds, followed a few years later COVID with no recovery in between, we experienced the same challenges the designed our effort to establish more impactful resources. The result is our restructure turned unexpected expansion, and services turned turned into a growing collaborative sibling charities that remains focused on serving an ignored community of 501c startups, entrepreneurs, and small businesses. Why, because we are one of them — we ARE who we serve!

The IRS has more than 25 types of tax exempt entities it approves, not just 501c3’s, and ALL are served here. Tell us what you need and how it needs to work for your 501c, we will work to make it happen. Among other resources, Fiscal Sponsors are customized to each Awardee and are deployed thru the Fiscal Sponsorship Programs itself as well as a growing number of Sub-Sponsorship level services.

Applicants must be less than 2 years of operations, and possess their Non-Stock Corporation business registration from their state indicating they are registered as a tax-exempt.

People tend to be confused by this but the State Registration is your Business License to operate and is governed by the state who, as a “courtesy” treats you “as a Tax-Exempt” BEFORE the IRS grants you permission to operate that way. You are NOT a tax exempt until the IRS issues Letter of Determination that says you are!

The Business License is a requirement by the IRS to:

• ensure the entity is registered with its home State before applying for Tax Exempt status,
• ensure the home state recognizes the entity as a business concern based within its borders,
• ensure the business entity has established the appropriate Sales Tax Accounts with the States Comptroller

The other primary reason for this requirement pertains to fundraising — “Permission to fundraise by the State issuing the business license, it is only issued under specific criteria and time frames and conditions, all of which must be verifiable. When fundraising needs to occur outside of the Home State Borders, Home State credentials must be in order and in Good Standing as they will be required to obtain “Permission for each State beyond the Home State of Registration.

This permission must be renewed EACH Year with each credential issued, and Home State must be in Good Standing for that to happen.

On the Home State’s end, they are responsible for:

• to tracking how fundraising is conducted,
• by whom,
• is that person/entity/group of persons compensated, if so how much & from what source(s),
• how fundraised dollars come in, who they come from, where they originate,
• how fundraised money flow out,
• the percentage of money spent conducting fundraising activities relative to business operation expenditures,
• where those activities take place & at what frequency are those activities acted upon, and
• how much/what percent is directly returned to the intended mission or purpose of the fundraising effort

Many of these list items are factored into the IRS analysis of your applications mission and activities, both direct and supporting. On acceptance, its then used to determine the sub-charter classification for your entities exempt status.

As an incubator volunteer for more than 40 years our Founder knows there are instances where sponsorship itself is not needed, might not be possible or may require special accommodation. With that in mind, a portfolio of sponsorship caliber assistance was pilot tested and overwhelmingly successful, such that we had two Awardees request to transition into them and we retooled a path for that to happen.

We are also working to close the distance to what is needed and how. Following are some of those Supplemental Sponsorship programs, its participants are either 3^S Clients or Awardees: