Charity - Required Provisions for Organizing Documents


What provisions must be in an organization's organizing documents for it to qualify for exemption?

A charity's organizing document must limit the organization's purposes to exempt purposes set forth in section 501(c)(3) and must not expressly empower it to engage, other than as an insubstantial part of its activities, in activities that do not further those purposes. This requirement may be met if the purposes stated in the organizing document are limited by reference to section 501(c)(3). 

In addition, an organization's assets must be permanently dedicated to an exempt purpose. This means that if an organization dissolves, its assets must be distributed for an exempt purpose described in section 501(c)(3), or to the federal government or to a state or local government for a public purpose.  

To establish that an organization's assets will be permanently dedicated to an exempt purpose, the organizing document should contain a provision insuring their distribution for an exempt purpose if the organization dissolves. For examples of provisions that meet these requirements, see Sample Articles. In certain situations, reliance may be placed upon state law to establish permanent dedication of assets for exempt purposes.  

Revenue Procedure 82-2PDF provides more information about when reliance can be placed upon state law.  If the organizing document does not contain these provisions, an organization should amend it before submitting its exemption application. State websites can provide more information about how to amend organizing documents.

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