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Finance: What is a 501c3? 8 Views


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Description:

What is a 501c3? A 501c3 is an organization that is tax-exempt according to the IRS because they are considered to be a charitable or non-profit organization. Such organizations must apply for this designation and continue to follow certain rules in order to receive the perks of avoiding a variety of taxes. The most common 501c3 organizations are churches, charities like the Red Cross, schools, and organizations like Girl Scouts and Boy Scouts.

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Transcript

00:00

Finance a la shmoop... what is a 501c3.... well it's a charity people and it [Man discussing 501c3 charity]

00:11

sounds way cooler if you call it a number and with a letter than a number

00:15

right 501cPO...remember 007 yeah, way cooler than just

00:20

James right all right well 501c3 is the United States legal code number that

00:25

created space for federally tax-exempt charities that's a C there; C for

00:31

charity and there are 29 flavors of charitable category that they addressed [Ice cream flavors]

00:35

now the government's working hard to catch up to baskin-robbins numbers but

00:38

they're not there yet specifically some of those 29 flavors [Girl given an ice cream cone]

00:42

include religious organizations, scientific literary or educational

00:47

charities, charities for amateur sports, testing for public safety kind of

00:53

charities yeah like the crash dummies charities involving cruelty to children [Woman on a swing with a child]

00:57

women and animals and yeah most of these are anti so why the special treatment

01:02

well if a 501c3 follows the many strict rules to maintain its nonprofit status

01:07

then donors giving money to it get to deduct that money right off the top when [Donor gives money to charity]

01:13

they're doing their taxes like if a tax payers paying 40 percent marginal tax

01:17

and they donate a dollar well that dollar only costs um 60 cents to donate

01:21

the US government essentially underwrites charitable donations at

01:25

least to a point like they forgive 40 cents of tax in that dollar and that's a

01:29

good thing we need noblesse oblige charities in the world they do good work

01:33

well most of them do.. [People standing behind charity stalls]

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