01/29/2020

LCO 101: Protect Your 501(c)(3) Status

Categories: LCO 101

The foundation of our work as nonprofits is to provide public benefit. In order to keep doing the great work of climbing conservation and advocacy, local climbing organizations (LCOs) must maintain and protect their 501(c)(3) nonprofit status. Here’s a list of reminders, straight from the IRS, on how to maintain your nonprofit status.

Work must be for the public benefit

Your work must be for tax-exempt purposes, for the benefit of the public. Any activity that substantially benefits private interests or individuals jeopardizes your nonprofit status.

Income or assets can't be for insider benefit

Your group’s income or assets cannot be used to benefit insiders, such as board members or employees. If you don’t have a conflict of interest policy, your board should adopt one.

Lobbying must be insubstantial and reported

Lobbying means advocating for particular legislation. It’s OK to do a limited amount, but that activity must be insubstantial relative to your organization’s other activities. If you do it, you must report this insubstantial amount annually.

No political campaigning

Participating in a political campaign on behalf of any candidate running for public office is prohibited, at every level of government. As a 501(c)(3), you simply can’t do it.

Taxes may be required on unrelated business income

This one’s tricky, with exceptions and thresholds, so you may want an attorney or accountant to help you review. This rule refers to income your organization receives that’s not directly related to your mission and work—for example, leasing or renting property you own, or selling merchandise. These instances may result in tax liability for your organization.

Annual reporting is required

State and federal filings—you have to do it, every year. For the IRS, we’re talking Form 990. This discloses basic financial information and ensures you continue to qualify for your tax-exempt status. For transparency and member and donor confidence, it’s even better if you post these filings publicly, on your website.

For a guide to organizing as a 501(c)(3), check out this resource. To learn more about exemption requirements for 501(c)(3) organizations, visit the IRS website.