Chapter 2 Summary: Federal Law

Download the Federal Law Legal Checklist and identify action items for your organization.

Legal Checklist: Federal Law

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1.  Federal tax law provides tax benefits to 501(c)(3) organizations because they provide a benefit to society in some way. In return, these organizations must further one or more “charitable purposes” and provide assurance that the organization’s assets will remain charitable.
2. Individuals or organizations may not benefit personally from the activities of a tax-exempt organization.
3. 501(c)(3) organizations are limited in their advocacy activities. Lobbying conducted by 501(c)(3) organizations cannot be a “substantial part” of their activities. There is an important difference between education and lobbying.
4. 501(c)(3) organizations may not participate in or intervene in the campaign of a candidate for public office.
5. Tax-exempt organizations may not operate in the dark. Tax-exempt organizations must make some documents available for public inspection and must file annual informational tax returns. Organizations must also provide donors with appropriate donation receipts.

• Is there an individual or organization who is receiving a private benefit from your nonprofit? Does your nonprofit have a Conflict of Interest Policy? If yes, is the policy followed?
• How does your organization currently educate the community, including policymakers, about your work and issues related to achieving your nonprofit’s mission?
• If you are not already, would your nonprofit benefit from engaging in lobbying activities?

• Advocacy can be a powerful tool to advance your mission. Learn more about nonprofit advocacy by exploring Bolder Advocacy’s materials.