FAQ
- 501(c)(3) organization: A 501(c)(3) organization is typically known as a charitable organization. 501(c)(3) organizations can receive contributions that are tax-deductible. To qualify, these organizations must not be run for private interests, and none of their net earnings can go to private shareholders or individuals. For more in-depth information, you can visit the IRS website.
- 501(c)(4) organization: The term 501(c)(4) refers to a specific section of the U.S. federal income tax code that relates to social welfare organizations. Corporations recognized by the IRS as 501(c)(4) are exempt from paying federal income taxes. However, unlike 501(c)(3) charitable organizations, contributions made to 501(c)(4) groups are not tax-deductible for the person or corporation making the donation. These organizations are permitted to engage in political activities, including lobbying and participating in campaigns. This also includes donating to political committees involved in political efforts like ballot measures or referendums. For further information, Ballotpedia provides a comprehensive overview.
- Fiduciary oversight: According to Finance Strategists, fiduciary oversight entails overseeing and managing the conduct of individuals or entities tasked with managing assets or resources entrusted to them for others.
- Fiscal sponsorship fee: A fiscal sponsor charges a monthly or yearly administrative fee based on the donations received by the sponsored project. This fee is calculated as a percentage of donations a project receives. For Future Incubator projects, the sponsorship fee is 8% for fiscal projects with employees or contractors and 5% for all other projects.
- Form 990: Form 990 is a tax form that all 501(c)(3) tax-exempt charitable and nonprofit organizations in the United States must file annually with the Internal Revenue Service (IRS). Form 990 aims to increase financial transparency by including details on revenue, expenditure, and income, alongside information used to evaluate if a nonprofit meets the federal requirements for-exempt status. For more information, visit the Library of Congress Resource Guide.
- Tax-deductible: Tax-deductible refers to certain expenses or items that can lower the amount of tax you need to pay. These deductions are taken away from your total taxable income, which can significantly decrease the taxes you owe. A common example is charitable donations. However, what you’re allowed to deduct and how much can differ based on the tax rules of the area and whether the deductions are for an individual or a business. For more detailed information, you can visit Cornell Law School’s website.
- Tax-exempt: A tax exemption means that certain types of income, earnings, or even specific people or organizations don’t have to pay taxes. For instance, non-profit organizations that meet certain criteria don’t have to pay income tax, thanks to a special status given by the IRS. For more information, visit Tax Foundation.
- The Internal Revenue Service: The Internal Revenue Service (IRS) is a part of the U.S. Department of the Treasury. Its main duties include enforcing and managing federal tax laws, handling tax returns, conducting audits, and assisting American taxpayers.