Part III. Your Specific Activities

Consider your past, present, and planned activities when responding to these questions.

Line 1. Briefly describe your mission or most significant activities (limit 250 characters). Describe the most significant activity or activities you conduct or will conduct to accomplish your tax-exempt 501(c)(3) purposes (see below for examples and a description of various 501(c)(3) purposes). For example, an organization that plans to provide relief for the poor and distressed by providing free meals at a homeless shelter could enter “We will provide relief for the poor and distressed by providing free meals at a homeless shelter.”

Don't refer to or repeat purposes in your organizing document or speculate about potential future programs. You should describe either actual or planned mission or activities. For example, an organization that furthers educational purposes by operating an after-school homework club could enter “We further educational purposes by operating an after-school homework club.” If the organization was also contemplating offering scholarships in the future but currently had no definitive plans to do so, then the scholarship activity would be speculative and should not be described.

Examples of activities or missions that were determined to further tax-exempt 501(c)(3) purposes:

Example 1. In Rev. Rul. 69-161, 1969-1 C.B. 149, a nonprofit legal aid society that was organized and operated for the purpose of providing free legal services to indigent persons who were otherwise financially incapable of obtaining such services qualified for exemption under section 501(c)(3) as a charitable organization providing relief to the poor and distressed.

Example 2. In Rev. Rul. 67-148, 1967-1 C.B. 132, an organization formed to increase the knowledge of its members and the public about historic events by researching, studying, and involving its members in historically accurate reenactments to which the public was invited qualified for exemption under section 501(c)(3) as an educational organization.

Example 3. In Rev. Rul. 74-194, 1974-1 C.B. 129, an organization formed to prevent cruelty to animals by subsidizing spaying and neutering for pet owners who otherwise couldn’t afford the services qualified for the exemption under section 501(c)(3) as an organization formed and operated exclusively for the prevention of cruelty to animals.

Examples of activities or missions that were determined to not further tax-exempt 501(c)(3) purposes:

Example 1. In Wendy L. Parker Rehabilitation Foundation Inc. v. Commissioner, T.C. Memo. 1986-348, an organization created to aid an open-ended class of persons suffering from a disease or illness wasn’t described in section 501(c)(3) because it anticipated spending a portion of its income for the benefit of one specifically named individual. The specifically named individual’s family controlled the organization and made significant contributions to it. The distributions for her support

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relieved them of the economic burden of providing for her care and thus constituted prohibited inurement of the organization’s fund. The benefit didn’t flow primarily to the general public as required under Regulations section 1.501(c)(3)-1(d)(1)(ii) and instead provided an impermissible private benefit.

Example 2. In Rev. Rul. 71-395, 1971-2 C.B. 228, an organization created as a cooperative art gallery formed by artists to exhibit and sell their works didn’t qualify for exemption under section 501(c)(3) because the gallery was a vehicle for advancing the careers of the artists and for promoting the sale of their works. The Revenue Ruling explains that “the gallery serves the private purposes of its members, even though the exhibition and sale of paintings may be an educational activity in other respects.” The organization failed to qualify for exemption because it was operated for the benefit of private individuals within the prohibition of Regulations section 1.501(c)(3)-1(d)(ii).

Example 3. In Rev. Rul. 67-367, 1967-2 C.B. 188, an organization was created to operate a scholarship fund plan for making payments to preselected, specifically named individuals. The subscribers deposited a certain amount of money with a designated bank. The subscribers also named a specific child to be the recipient of the scholarship money. The organization failed to qualify for exemption under section 501(c)(3) because it was operated for the benefit of private interests, the designated recipients, rather than to serve a public interest.

Line 2. National Taxonomy of Exempt Entities (NTEE) code. An NTEE code is a three-character series of letters and numbers that generally summarize an organization’s purpose. Enter the code that best describes your organization from the list of NTEE codes, later. For more information and more detailed definitions of these codes developed by the National Center for Charitable Statistics (NCCS), visit the Urban Institute, NCCS website at nccs.urban.org .

Note. NTEE codes are also used for purposes other than identification of organizations described in section 501(c)(3). Therefore, all codes in the list do not necessarily describe a 501(c)(3) purpose. Selecting the appropriate NTEE code is important as some donors use the codes to identify potential recipients of grants.

Line 3. Exempt purposes. In order to qualify for exemption as an organization described in section 501(c)(3), you must be organized and operated exclusively for one or more of the following purposes: charitable, religious, educational, scientific, literary, testing for public safety, fostering national or international amateur sports competition, or preventing cruelty to children or animals. An organization is not regarded as being organized and operated exclusively for exempt purposes if more than an insubstantial part of its activities is not in furtherance of an exempt purpose. For more information, see Pub. 557.

Note. An organization does not qualify for exemption as an organization described in section 501(c)(3) if its purposes are illegal or contrary to public policy. See Rev. Rul. 71-447, 1971-2 C.B. 230 (a private school that does not have a racially nondiscriminatory policy as to students does not qualify for exemption). Furthermore, an organization operated for the primary purpose of carrying on a trade or business for profit shall not be exempt from taxation under section 501(c)(3), even if all of its profits are payable to one or more organizations exempt from taxation under section 501.

Charitable. The generally accepted legal definition of “charitable” includes relief of the poor, the distressed, or the underprivileged; advancement of religion; advancement of education or science; erecting or maintaining public buildings, monuments, or works; lessening the burdens of government; lessening neighborhood tensions; eliminating prejudice and discrimination; defending human and civil rights secured by law;

and combating community deterioration and juvenile delinquency.

Religious. To determine whether an organization meets the religious purposes test of section 501(c)(3), the IRS maintains two basic guidelines.

1. That the particular religious beliefs of the organization are truly and sincerely held. If there is a clear showing that the beliefs (or doctrines) are sincerely held by those professing them, the IRS will not question the religious nature of those beliefs.

2. That the practices and rituals associated with the organization's religious belief or creed are not illegal or contrary to clearly defined public policy. Therefore, an organization may not qualify for treatment as an exempt religious organization for tax purposes if its actions are contrary to well established and clearly defined public policy.

Educational. The term “educational,” as used in section 501(c)(3), relates to:

• The instruction or training of the individual for the purpose of improving or developing his or her capabilities, or

• The instruction of the public on subjects useful to the individual and beneficial to the community.

An organization may be educational even though it advocates a particular position or viewpoint so long as it presents a sufficiently full and fair exposition of the pertinent facts as to permit an individual or the public to form an independent opinion or conclusion. An organization is not educational if its principal function is the mere presentation of unsupported opinion.

The term “educational” includes the provision of childcare away from the home if:

1. Substantially all of the care provided by the organization is to enable individuals (parents) to be gainfully employed, and

2. The services provided by the organization are available to the general public.

The following are examples of organizations which, if they otherwise meet the requirements of this section, are educational.

Example 1. An organization whose activities consist of presenting public discussion groups, forums, panels, lectures, or other similar programs. Such programs may be on radio or television.

Example 2. An organization which presents a course of instruction by means of correspondence or through the utilization of television or radio.

Example 3. Museums, zoos, planetariums, symphony orchestras, and other similar organizations.

Scientific. To be a scientific organization described in section 501(c)(3), an organization must be organized and operated in the public interest. Therefore, the term “scientific,” as used in section 501(c)(3), includes the carrying on of scientific research in the public interest. Scientific research does not include activities of a type ordinarily carried on as an incident to commercial or industrial operations, as, for example, the ordinary testing or inspection of materials or products, or the designing or construction of equipment or buildings.

Scientific research will be regarded as carried on in the public interest if:

1. The results of such research (including any patents, copyrights, processes, or formulas resulting from such research) are made available to the public on a nondiscriminatory basis;

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2. Such research is performed for the United States, or any of its agencies or instrumentalities, or for a state or political subdivision thereof; or

3. Such research is directed toward benefiting the public.

Testing for public safety. The term “testing for public safety,” as used in section 501(c)(3), includes the testing of consumer products, such as electrical products, to determine whether they are safe for use by the general public.

To foster national or international amateur sports competition. There are two types of amateur athletic organizations that can qualify for tax-exempt status. The first type is an organization that fosters national or international amateur sports competition, but only if none of its activities involve providing athletic facilities or equipment. The second type is a qualified amateur sports organization under section 501(j) (discussed below). The primary difference between the two is that a qualified amateur sports organization can provide athletic facilities and equipment.

An organization will be a qualified amateur sports organization under section 501(j) if it is organized and operated:

1. Exclusively to foster national or international amateur sports competition, and

2. Primarily to conduct national or international competition in sports or to support and develop amateur athletes for that competition.

The organization's membership can be local or regional in nature.

Prevention of cruelty to children or animals. Examples of activities that may qualify this type of organization for exempt status are:

1. Preventing children from working in hazardous trades or occupations,

2. Promoting high standards of care for laboratory animals, and

3. Providing funds to pet owners to have their pets spayed or neutered to prevent over-breeding.

Line 4. Prohibited or restricted activities. Certain activities are prohibited or restricted for organizations exempt from federal income tax under section 501(c)(3). Along with conducting activities that exclusively further one or more of the purposes listed in Part III, line 3, earlier, organizations exempt under section 501(c)(3) must:

a) Refrain from supporting or opposing candidates in political campaigns in any way.

An organization exempt under section 501(c)(3) is prohibited from directly or indirectly participating in, or intervening in, any political campaign on behalf of (or in opposition to) any candidate for elective public office. The prohibition applies to all campaigns, including campaigns at the federal, state, and local level.

Political campaign intervention includes any and all activities that favor or oppose one or more candidates for public office. The prohibition extends beyond candidate endorsements. Contributions to political campaign funds or public statements of position (verbal or written) made by or on behalf of an organization in favor of or in opposition to any candidate for public office clearly violate the prohibition on political campaign intervention. Distributing statements prepared by others that favor or oppose any candidate for public office will also violate the prohibition. Allowing a candidate to use an organization’s assets or facilities will also violate the prohibition if other candidates are not given an equivalent opportunity.

Certain activities will require an evaluation of all the facts and circumstances to determine whether they result in political campaign intervention. For example, section 501(c)(3) organizations are permitted to conduct certain voter education activities (including the presentation of public forums and the publication of voter education guides) if they are carried out in a non-partisan manner. In addition, section 501(c)(3) organizations may encourage people to participate in the electoral process through voter registration and get-out-the-vote drives conducted in a non-partisan manner. However, voter education or registration activities conducted in a biased manner that favors (or opposes) one or more candidates is prohibited. For examples of relevant facts and circumstances, see Rev. Rul. 2007-41, 2007-1 C.B. 1421. b) Ensure that net earnings do not inure in whole or in part to the benefit of private shareholders or individuals (that is, board members, officers, key management employees, or other insiders).

An organization is not operated exclusively for one or more exempt purposes if its net earnings inure in whole or in part to the benefit of private shareholders or individuals. The term “private shareholder or individual” refers to persons who have a personal and private interest in the organization, such as an officer, a director, or a key employee. Any amount of inurement may be grounds for loss of tax-exempt status.

Note. Examples of inurement include the payment of dividends and the payment of unreasonable compensation to private shareholders or individuals.

c) Not further non-exempt purposes (such as purposes that benefit private interests) more than insubstantially.

An organization cannot conduct activities that further any purposes other than those described in Part III, line 3 of these instructions more than insubstantially, including benefitting private interests rather than the public as a whole. For example, an organization whose sole activity is the operation of a scholarship program for making payments to pre-selected, specifically named individuals is serving private interests rather than public interests. See Rev. Rul. 67-367, 1967-2 C.B. 188.

d) Not be organized or operated for the primary purpose of conducting a trade or business that is unrelated to exempt purpose(s).

An activity is an unrelated trade or business (and subject to unrelated business income tax) if it meets three requirements.

1. It is a trade or business.

2. It is regularly carried on.

3. It is not substantially related to furthering the exempt purpose(s) of the organization.

Trade or business. The term “trade or business” generally includes any activity conducted for the production of income from selling goods or performing services. An activity does not lose its identity as a trade or business merely because it is conducted within a larger group of similar activities that may or may not be related to the exempt purposes of the organization.

Regularly carried on. Business activities of an exempt organization ordinarily are considered regularly conducted if they show a frequency and continuity similar to, and are pursued in a manner similar to, comparable commercial activities of nonexempt organizations.

Not substantially related. A business activity is not substantially related to an organization’s exempt purpose if it does not contribute importantly to accomplishing that purpose (other than through the production of funds). Whether an activity contributes importantly depends in each case on the facts involved.

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For more information, see Pub. 598. e) Not devote more than an insubstantial part of activities to attempting to influence legislation.

In general, if a substantial part of an organization's activities consists of carrying on propaganda or otherwise attempting to influence legislation, it does not qualify for exemption under section 501(c)(3).

Legislation includes action by Congress, any state legislature, any local council, or similar governing body, with respect to acts, bills, resolutions, or similar items (such as legislative confirmation of appointive office), or by the public in referendum, ballot initiative, constitutional amendment, or similar procedure. It does not include actions by executive, judicial, or administrative bodies.

An organization will be regarded as attempting to influence legislation if it contacts, or urges the public to contact, members or employees of a legislative body for the purpose of proposing, supporting, or opposing legislation, or if the organization advocates the adoption or rejection of legislation.

Most public charities are eligible to elect under section

TIP 501(h) to have their legislative activities measured solely

by an expenditure limit rather than by the “no substantial amount” limit. An election is made by filing Form 5768, Election/ Revocation of Election by an Eligible Section 501(c)(3) Organization To Make Expenditures To Influence Legislation. If you are eligible and would like to make the election, file Form 5768. Private foundations cannot make this election.

For additional information on the expenditure limit or the no substantial amount limit, see IRS.gov/Charities-&-Non-Profits/ Lobbying .

f) Not provide commercial-type insurance as a substantial part of activities.

An organization described in section 501(c)(3) shall be exempt from tax only if no substantial part of its activities consists of providing commercial-type insurance. The term "commercial-type insurance" does not include:

• Insurance provided at substantially below cost to a class of charitable recipients,

• Incidental health insurance provided by a health maintenance organization of a kind customarily provided by such organizations,

• Property or casualty insurance provided (directly or through an organization described in section 414(e)(3)(B)(ii)) by a church or convention or association of churches for such church or convention or association of churches,

• Providing retirement or welfare benefits (or both) by a church or a convention or association of churches (directly or through an organization described in section 414(e)(3)(A) or 414(e)(3)(B)(ii)) for the employees (including employees described in section 414(e)(3)(B)) of such church or convention or association of churches or the beneficiaries of such employees, and

• Charitable gift annuities.

Line 5. Attempting to influence legislation. Check “Yes” if you have attempted, or plan to attempt, to influence legislation. See the instructions for Part III, line 4, earlier, for a description of “attempting to influence legislation.”

Line 6. Compensation to officers, directors, or trustees. Check “Yes” if you pay or plan to pay compensation to any of your officers, directors, or trustees.

Compensation includes salary or wages, deferred compensation, retirement benefits whether in the form of a qualified or non-qualified employee plan (pensions or annuities), fringe benefits (personal vehicle, meals, lodging, personal and family educational benefits, low interest loans, payment of

personal travel, entertainment, or other expenses, athletic or country club membership, and personal use of your property), and bonuses.

Line 7. Donation of funds or payment of expenses to indi- viduals. Check “Yes” if you have donated funds to or paid expenses for individual(s), or plan to donate funds to or pay expenses for individual(s) (other than paying for or reimbursing employees’ business expenses).

An organization is not organized or operated exclusively