Grassroots nonprofits might benefit from filing for 501(c)3 designation

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Grassroots nonprofits are a great way to get a mass movement behind a social mission. Still, the more popular they become, the more skeptical donors become about protecting themselves against scams. In the aftermath of the Haitian earthquake, countless groups that labeled themselves as nonprofits started pooling money together to send to victims of the quake. Still, it became apparent that some organizations were a fraud, stealing from donors.

To reassure supporters that an organization is the “real deal,” nonprofit leaders can apply for a 501(c)3 service designation. In a report for the North Carolina Lumina News, Trisha Lester, vice president of the N.C. Center for Nonprofits, says “a 501(c)3 nonprofit is a tax-exempt organization that provides charitable education, religious or scientific benefits to the public.”

The designation ensures that the earnings of an organization are being used to benefit a viable social issue. It also comes with the benefit of tax exemption from the IRS.

Lester told the source that many organization leaders say the biggest hindrance to the 501(c)3 exemption is that the filing process is “strenuous” – but it doesn’t have to be tedious.

Organization leaders can visit online incorporation services to learn about quick and inexpensive filing services. Moreover, the investment might pay off – donors and volunteers will be more likely to work with a group that is a certified nonprofit.