What Does “Nonprofit” Really Mean Anyway?

Time to bust a MAJOR nonprofit myths. Ready?

Nonprofit is a tax status, NOT a business plan.

Ok, but what does that really mean?

Just because you started a nonprofit doesn’t mean that you’re a 501(c)(3) public charity.

Incorporating as a nonprofit just means…that you incorporated a nonprofit. You’ve started a business that’s supposed to serve the public. In other words, you can incorporate but…

• You still have to pay your federal income tax
• Donations aren’t tax deductible

Those things only come after you apply for tax exemption from the IRS.

501(c)(3) is a TAX STATUS that the IRS gives to nonprofit corporations that qualify. You have fill out the application forms and pass IRS standards before you can call yourself a 501(c)(3) and get those benefits.

Running a 501(c)(3) nonprofit isn’t easier than other businesses (and YES, it’s still a business!).

Lots of people think, “Once I get my c3, I can figure out all the details later!” Lots of people assume that once you get c3 status, free money and free software will start falling from the sky and you can sit back and relax.

NOPE.

Here’s the thing: nonprofits are still businesses. In other words, for a new nonprofit to get off the ground, you better figure out how it’s going to operate. There’s not some magical formula that you follow to make a good nonprofit.

You have to put the work into figuring out….

• What you’re going to do everyday
• Who’s going to do it
• Where you’re going to do it
• How you’re going to get the money to do it
• Whether anyone cares enough to support ($$$) your idea
• And so on

Getting c3 status from the IRS won’t answer these questions for you. You need to get these things figured out before you waste your time and money applying for tax exemption.

Say it with me now: nonprofit is a tax status not a business plan.