The removal of the 501(c)3 status isn't even about tax exempt status. It's about losing the handouts AKA charitable organization/government grants (along with the tax deductions for their members who donate to their organization) that caused them to sell out in the first place.
What Is 501(c)(3) Exemption Status?
So what does it mean to be a 501(c)(3) church, and is the designation beneficial? In short, if an organization, including a church, receives 501(c)(3) exemption status from the IRS, it is recognition that they are exempt from federal income and property taxes. In addition, people who make contributions to 501(c)(3) organizations may deduct the contribution amount from their taxable income.
According to the IRS, “Churches that meet the requirements of IRC section 501(c)(3) are automatically considered tax exempt and are not required to apply for and obtain recognition of tax-exempt status from the IRS.” So it isn’t required for your church to apply for 501(c)(3) in order to be tax exempt.
Keep in mind, churches may lobby for legislation or ballot initiatives, but they are prohibited from showing support for political candidates. If a church is shown to be in violation of this restriction, they risk losing their exempt status.
What most people don’t realize is that churches and nonprofits exist under this definition whether or not they have officially received 501(c)(3) status from the IRS.
So Why Get The Status?
While becoming a 501(c)(3) church is not a necessity, it does have benefits.
The IRS recognition gives added assurance to church leaders, members, and contributors that the church is recognized as exempt and their contributions are generally tax-deductible.
501(c)(3) status enhances an organization’s financial transparency. Maintaining your status requires that informational tax returns be filed on an annual basis and this information is available to the public on GuideStar. As a result, potential contributors are able to gain an essential understanding of the organization and determine whether or not he/she would like to give to them. If your church administers a lot of charitable missions and services, this transparency has the potential to be highly beneficial.
A grant is an amount of money that is set aside through a charitable organization or the government. When a grant is awarded to a group, such as a church, it does not have to be paid back, ever. Think of it as a one-time donation, but on a larger scale. Typically a church grant is only awarded to a church when there is a specific need, and the grant money must be used to fill that need.
AND
There is one important thing that applies to every church seeking a grant. You must ensure that your church has a 501(c)(3) IRS ruling. This establishes your church as a non-profit organization. You cannot receive grants from either the government or a private foundation if your organization is not a 501(c)(3). Take the time to establish this as you work towards finding the right church grant.
The removal of the 501(c)3 status isn't even about tax exempt status. It's about losing the handouts AKA charitable organization/government grants (along with the tax deductions for their members who donate to their organization) that caused them to sell out in the first place.
What Is 501(c)(3) Exemption Status?
So what does it mean to be a 501(c)(3) church, and is the designation beneficial? In short, if an organization, including a church, receives 501(c)(3) exemption status from the IRS, it is recognition that they are exempt from federal income and property taxes. In addition, people who make contributions to 501(c)(3) organizations may deduct the contribution amount from their taxable income.
According to the IRS, “Churches that meet the requirements of IRC section 501(c)(3) are automatically considered tax exempt and are not required to apply for and obtain recognition of tax-exempt status from the IRS.” So it isn’t required for your church to apply for 501(c)(3) in order to be tax exempt.
Keep in mind, churches may lobby for legislation or ballot initiatives, but they are prohibited from showing support for political candidates. If a church is shown to be in violation of this restriction, they risk losing their exempt status.
What most people don’t realize is that churches and nonprofits exist under this definition whether or not they have officially received 501(c)(3) status from the IRS.
So Why Get The Status?
While becoming a 501(c)(3) church is not a necessity, it does have benefits.
The IRS recognition gives added assurance to church leaders, members, and contributors that the church is recognized as exempt and their contributions are generally tax-deductible.
501(c)(3) status enhances an organization’s financial transparency. Maintaining your status requires that informational tax returns be filed on an annual basis and this information is available to the public on GuideStar. As a result, potential contributors are able to gain an essential understanding of the organization and determine whether or not he/she would like to give to them. If your church administers a lot of charitable missions and services, this transparency has the potential to be highly beneficial.
https://archive.is/bnpS3
What Are Church Grants?
A grant is an amount of money that is set aside through a charitable organization or the government. When a grant is awarded to a group, such as a church, it does not have to be paid back, ever. Think of it as a one-time donation, but on a larger scale. Typically a church grant is only awarded to a church when there is a specific need, and the grant money must be used to fill that need.
AND
There is one important thing that applies to every church seeking a grant. You must ensure that your church has a 501(c)(3) IRS ruling. This establishes your church as a non-profit organization. You cannot receive grants from either the government or a private foundation if your organization is not a 501(c)(3). Take the time to establish this as you work towards finding the right church grant.
https://archive.is/NocC6