Create Your Charitable Organization and Benefit from New IRS Changes

Creating a charitable organization is not a difficult task with the help of a good accountant. Many successful individuals, business owners and family trusts spend a significant amount of time, money and effort seeking out and/or vetting organizations to meet their donor goals, when in reality, establishing their own 501(c)(3) may be a much more successful way of creating a legacy of support for a particular cause. Additionally, local charitable service organizations can greatly impact communities with significant at-risk populations.

“There are just two critical steps in creating a charitable organization at the state and federal level in terms of filing articles of incorporation and applying for 501(c)(3) status respectively,” said Kyle Kasperek, of John Kasperek Co., Inc., a certified public accounting firm in Calumet City, Illinois. “Both tasks certainly can be accomplished on your own, but I would recommend guidance from an accounting professional to ensure a successful application particularly as it pertains to gaining tax exemption recognition from the IRS.”

 Kasperek most recently assisted with the establishment of a local youth organization and says the momentum can be “inspiring, impactful and immediate” during the infancy of a charitable organization.

Another common misconception is that creating a charitable organization is expensive. In fact, the Internal Revenue Service (IRS) further lowered the cost of applying for tax-exempt status effective July 1st from $400 to $275 for “small” organizations using the new short-form.  Organizations with less than $250,000 in assets or $50,000 in annual gross income can utilize the three-page 1023-EZ. The Form 1023-EZ was first established back in 2014 to streamline the application process under Section 501(c)(3) of the Tax Code. Previously, all groups seeking charity status regardless of their size were required to use the lengthy 26-page Form 1023.

“Perhaps more significant than the recent fee reduction is that the 1023-EZ has helped and will continue to reduce the backlog of submissions, allowing applicants to move forward much faster with their strategic planning,” added Kasperek.  “And it is a much simpler, less time-consuming form to complete.”