What is a 501 (c)(3) Non-Profit?

Section 501(c)(3) of the Internal Revenue Code allows for the tax deductibility of donations to registered organizations. These organizations themselves do not pay income tax, and some states exempt them from sales and property taxes. The organizations can be charitable, religious, scientific, literary, educational, sports, or dedicated to preventing cruelty to animals.

Why Might a Student Organize a Non-Profit?

Colleges love to see volunteering and service. They particularly love seeing leadership and initiative when it comes to volunteering and service. Donors want to deduct their charitable giving, which they can only do when they’ve given to a 501(c)(3). And being registered as such gives one’s charity legitimacy. A donor’s first question is likely to be: are you a 501(c)(3)? The primary purpose of registering as a 501(c)(3) is to raise funds. Students can start school clubs and activities that don’t require a level of fundraising beyond bake sales and bottle drives. Most clubs and activities fall into that category. It is also possible to start an umbrella organization, such as a school Red Cross club, that doesn’t need to be registered individually. 

Examples of Student-Created Non-Profits

So what sort of high school club or activity might need 501(c)(3) status? Read Good is a non-profit founded by a high school student in California. Its mission is “to improve literacy and promote a love for reading in underprivileged elementary school students.” Since its beginning in 2019, it has raised over $72,000 in donations and grants and has provided over 3000 books for students in East Palo Alto.

Project Water was started by Pennsylvania teenagers and has raised over $100,000 to construct community wells and septic systems in Africa. It runs an annual dodgeball tournament.  STEM and Gems is a for-girls, by-girls initiative founded by high school students from Pittsburgh aimed toward elementary schools to alleviate the gender gap in STEM.

A Non-Profit May Not be the Best Idea

Starting a non-profit simply to look good for college is not a good idea. A non-profit is a long-term commitment. People depend on charities. Running a non-profit is not easy. Many are run by full-time executive directors with MBAs. High school and college students are busy with other commitments. Students must be confident that they can follow through with their commitments and must be dedicated to their causes.

How to Start a 501(c)(3)

The first step is to become a corporation, which is a state-by-state process. Most state secretary of state websites have a corporation page with clear instructions on how to incorporate. One of the first steps is to name the non-profit. Corporate officers are required, and one person can occupy more than one position. The IRS prefers that three people fill the board and officer spots. Then bylaws and articles of incorporation need to be drafted. There are templates online. The state fees are usually small.

The next step is to obtain an EIN (employer identification number) from the IRS website. Then comes the actual 501(c)(3) application, which is IRS Form 1023, It must be filled out at Pay.gov. It’s a lengthy application. The fee is $600. If your organization has three years of gross receipts under $50,000 and assets of less than $250,000, you may be able to file Form 1023-EZ. The fee is $275.

You Need a Website 

Chances are you have a website already. Potential donors will look up your organization. They’ll want to see a website. It will be one of the highest basic expenses you will have in starting your non-profit. You may think you can do it yourself, but you want a professional-looking website.

Good luck. And don’t forget: bake sales and bottle drives are always an option.