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501(c)(3) ORGANIZATIONS Then Form 8940 will need to be submitted, along with the appropriate supporting documentation, for the IRS to consider the reclassification. For both processes above, an appropriate user fee will need to be submitted as well.
Grants from a 501(c)(3) to a 501(c)(4) should not be made to cover fundraising costs or general support of the 501(c)(4) (this is to protect the 501(c)(3) from the grant being used for impermissible purposes).
What are the advantages of a 501(c)(4)? A 501(c)(4) nonprofit has more leeway to participate in biased political or lobbying activities than some other nonprofit types, such as 501(c)(3)s. In addition, you are not required to apply for 501(c)(4) status.
In addition to standard terms describing grant amounts and purposes, agreements also include provisions regarding intellectual property rights, reporting requirements, and indemnification, among other subjects. Special provisions are included that deal with international philanthropy.
To receive a letter of recognition from the IRS, a 501(c)(4) organization must file a Form 1024 (?Application for Recognition of Exemption Under Section 501(a)?) within 27 months of formation to receive a letter recognizing exempt status dating back to the formation of the organization.
In addition to 501c3 organizations, 501c3 nonprofits can also donate to 501c4 organizations. These contributions must be used for charitable purposes, and no amount can be used for political activities.
The process of ?converting? a 501(c)(3) into a 501(c)(4) is quite involved and needs to be handled with an attorney's assistance. The Church Law Center of California counsels churches and secular nonprofits.
Answer: An organization that was previously recognized as tax-exempt under another subsection of 501(c), such as 501(c)(4) or 501(c)(6), generally may convert to 501(c)(3) status by making the necessary amendments to its Articles of Incorporation and submitting a Form 1023 application to the IRS.