Non-Profit Series: 7. Benefits of 501(c)(3) Status

Written by Sagan L. Carman-Downer

The previous article in this series explained what the term 501(c)(3) means, and briefly which organizations can qualify for tax-exempt status under 501(c)(3). As explained in that article, many non-profit entities seek tax-exempt status under this provision as charitable organizations.

In order to qualify under the charitable portion of 501(c)(3), your organization must be operated for a purpose that is recognized by the federal government as “charitable.” Purposes that are recognized include:

• 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;
• Eliminated prejudice and discrimination;
• Defending human and civil rights secured by law; and
• Combating community deterioration and juvenile delinquency.

When seeking tax-exempt status, the non-profit organization must go through an application process to be recognized as having 501(c)(3) status. During this process, the organization must ensure that they operate for one or more of the purposes listed above to qualify as a charitable organization.

If the organization’s application is approved, it will be considered tax-exempt for purposes of federal law. There are two major tax benefits to obtaining 501(c)(3) status. First, the organization is exempt from paying federal income tax. Second, the organization can receive tax deductible contributions. This allows people who donate to the organization to deduct their contribution from their income, which may lower the income tax they would otherwise owe. This provides a direct benefit to the donors, and an indirect benefit to the organization. Because the donors’ contributions may help lower their tax burden, it can encourage donors to contribute to an organization that has 501(c)(3) status over one that doesn’t.

If you believe your organization could benefit from having status as 501(c)(3), it is best to speak with an attorney in your state to discuss the requirements further. This article provides general guidelines, but you should seek advice specific to your situation to determine whether this is the best option for your organization.

We're Hiring!

Fye Law Office seeks candidates for an Associate Attorney position. Applicants with all levels of experience are encouraged to apply. A successful candidate will have an interest in family law, juvenile law, estate planning/probate. Interest in other areas of law is also welcome. Travel to counties in South Central NE should be expected. Applicants must either be admitted to practice law in the State of Nebraska or eligible to apply for admission.

A cover letter, resume, and references may be submitted to: Tana Fye, Fye Law Office, 713 Fourth Avenue, Holdrege, NE 68949, or fyelaw@gmail.com.

Rural Areas Need More Lawyers

I live and work primarily in rural Nebraska, but am from the Rapid City area of South Dakota.  And I hear about and see first hand that there is a shortage of lawyers able to handle the caseload that exists.  The American Bar Association recently wrote a fantastic article about this issue, and how different states are seeking to address it.  Really a lawyer shortage equates to a justice shortage, because of the long distances that people have to travel to find attorneys and the cost associated with doing so.  I applaud the work of the State Bars that are trying to find solutions, and hope that this will continue.

ICWA and the SCOTUS

For only the second time, the Supreme Court of the United States will hear a case involving the Indian Child Welfare Act (ICWA).  This Reuters article describes the situation as a "human tragedy," which pretty much can describe any case on appeal involving ICWA, as the failure to abide by ICWA's mandates can essentially 'undo' an adoption.

Whatever the result, it will be wonderful for attorneys involved in these types of cases to have a little more guidance from the Supreme Court.

First Amendment, Pastors, and the IRS

I thought that this story (here and here) was fascinating.  Currently churches can lose their 501(c)(3) status if the pastor endorses candidates, as the church is no longer purely a religious organization.  These pastors believe that such a rule violates their First Amendment right to free speech.  I guess we'll have to wait and see what happens.  Any pastors in South Dakota participating?

Right to Counsel for Children

This link has a report card for each state on a child's right to counsel.  South Dakota only earns a D.  This report card is based on laws actually on the books, not based on how those laws are applied by the Courts. When we look at how the laws are applied, I think that South Dakota would score a little higher, but perhaps it raises a good question about whether the laws should reflect the best practices of the state courts?

Thanks to the Children's Advocacy Institute, FirstStar, and the University of San Diego School of Law for conducting this study and making your results public.

Trauma

Trauma seems to be the new hot button issue for those who work in the child welfare system.  So...what exactly is trauma?  The definition that I received at the session on Polyvictimization and Child Trauma at the National Association of Counsel for Children (NACC) conference is as follows (and note that this definition is geared toward children, but is more broadly applicable):
- extraordinary experience that threatens the life or physical integrity of a child or of someone important to that child
- this extraordinary experience causes overwhelming sense of terror, helplessness, and horror
- this extraordinary experience produces intense physical effects.

Okay, but we all know that those who are involved in the child welfare system, whether they are parents or children, have experienced some truly awful things.  Why is trauma as a concept so important for us to consider and look for?  A study called the Adverse Childhood Experiences (ACE) study found that childhood trauma results in a reduction of life expectancy of 19 years.  This is a big deal.  Nineteen years can mean the difference between seeing your child graduate from college or get married, or meeting a grandchild.

So how do we know whether the experiences are just a bad thing (or a series of bad things) that happened to a person, or whether they constitute a trauma, which the person may need assistance in dealing with?  We look for symptoms, such as diagnoses of PTSD, ODD, bipolar disorder, ADD, ADHD, and conduct disorder.  Other symptoms besides diagnoses include avoidance, feeling numb or disengaged, hyperarousal or emotional/behavioral agitation, re-experiencing, feelings of powerlessness and helplessness, and feelings of hyper-vigilance.  These types of symptoms may also be a clue that there is an underlying trauma, if you were not already aware of the trauma and were only aware of the diagnoses.

Once you are aware of the types of symptoms listed above, and that there may be trauma underlying those symptoms, it is key to conduct a trauma assessment, which is more in-depth and is different from a routine general mental health treatment.  The person conducting a trauma assessment should be a mental health provider with training on trauma.  The assessment is intended to determine whether the child (or person) needs trauma focused treatment.

So why am I writing about trauma on a blog that is not necessarily geared toward other attorneys and professionals in the child welfare system (although I certainly welcome them to read as well!)?  Because anyone can look for trauma and recognize some of the symptoms of trauma and then assist the person to obtain an assessment and trauma-focused treatment, if necessary.  And because 19 years is a really big deal.

Thanks to the presenters at the NACC Conference on this topic, as well as the National Child Traumatic Stress Network, Child Welfare Committee for the resources for this post.