This was a story told to us by another Tax Advisor that we promised to protect their privacy if they shared their story with us and allowed us to share it with our audience. Therefore, we are publishing this under my name and encourage your comments at the end of this blog post.
Last spring, I become a relatively involved with St. Peter’s Stewardship Committee out here in Greenwood Village, Colorado. With membership ranks and pledged donations struggling, my wife and I developed a plan to drill down into several aspects of charitable giving and report findings along the way.
If an organization receives non-profit status from the state upon its organization, it must take another step if it wishes to have the ability to accept tax-deductible contributions from potential donors. It must apply to the Internal Revenue Service for tax-exempt status. Many are unaware that non-profit and tax-exempt are not interchangeable terms.
When an organization that will operate as a non-profit corporation is initially formed, it applies to the state for a corporate charter as a non-profit corporation. This assures that any excess revenues received over expenses incurred will not be taxable income to the organization or its owners. This status does not confer on the organization the right or ability to accept tax-deductible contributions from outsiders. Read More
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