Instructions for F Instructions for Form 1023, Application for Recognition

Instructions for Form 1023

Department of the Treasury
Internal Revenue Service

(Rev. December 2017)

Application for Recognition of Exemption Under Section 501(c)(3) of the Internal
Revenue Code
Section references are to the Internal Revenue
Code unless otherwise noted.

Contents
Future Developments . . . . . . . .
What's New . . . . . . . . . . . . . .
Overview of Section 501(c)(3)
Organizations . . . . . . . . . .
General Instructions . . . . . . . . .
Answers . . . . . . . . . . . . . . . .
Purpose of Form . . . . . . . . . . .
Obtaining Tax-Exempt Status . .
What to File . . . . . . . . . . . . . .
When to File . . . . . . . . . . . . . .
Where To File . . . . . . . . . . . . .
Filing Assistance . . . . . . . . . . .
Signature Requirements . . . . . .
Representation . . . . . . . . . . . .
Public Inspection . . . . . . . . . . .
Foreign Organizations in General
Specific Instructions . . . . . . . . .
Part I. Identification of Applicant .
Part II. Organizational Structure .
Part III. Required Provisions in
Your Organizing Document .
Part IV. Narrative Description of
Your Activities . . . . . . . . .
Part V. Compensation and Other
Financial Arrangements With
Your Officers, Directors,
Trustees, Employees, and
Independent Contractors . .
Part VI. Your Members and Other
Individuals and Organizations
That Receive Benefits From
You . . . . . . . . . . . . . . . .
Part VII. Your History . . . . . . . .
Part VIII. Your Specific Activities .
Part IX. Financial Data . . . . . . .
Part X. Public Charity Status . . .
Part XI. User Fee Information . . .
Schedule A. Churches . . . . . . .
Schedule B. Schools, Colleges,
and Universities . . . . . . . .
Schedule C. Hospitals and
Medical Research
Organizations . . . . . . . . . .
Schedule D. Section 509(a)(3)
Supporting Organizations . .
Schedule E. Organizations Not
Filing Form 1023 Within 27
Months of Formation . . . . .
Schedule F. Homes for the Elderly
or Handicapped and
Low-Income Housing . . . . .
Schedule G. Successors to Other
Organizations . . . . . . . . . .
Schedule H. Organizations
Providing Scholarships,
Fellowships, Educational
Loans, or Other Educational
Jan 02, 2018

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Contents
Grants to Individuals and
Private Foundations
Requesting Advance
Approval of Individual Grant
Procedures . . . . . . . . . . .
Appendix A: Sample Conflict of
Interest Policy . . . . . . . . . .
Appendix B: States with Statutory
Provisions Satisfying the
Requirements of Internal
Revenue Code Section
508(e) . . . . . . . . . . . . . . .
Appendix C: Glossary of Terms .
Index . . . . . . . . . . . . . . . . . .

Page

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Note. Keep a copy of the completed
Form 1023 for your permanent records.

Future Developments

For the latest information about
developments related to Form 1023 and
its instructions, such as legislation
enacted after they were published, go to
IRS.gov/Form1023.

Phone Help

If you have questions and/or need help
completing Form 1023, please call
877-829-5500. This toll-free telephone
service is available Monday through
Friday.

What's New

New section 170(b)(1)(A)(xi). Form
1023 includes the new public charity
status for section 170(b)(1)(A)(ix)
agricultural organizations. See Part X.
Public Charity Status, new line 5g.
User fees are updated annually.
Organizations should reference Rev. Proc.
2017-5, 2017-1 I.R.B. 230, at http://
core.publish.no.irs.gov/irb/pdf/
wb201701.pdf or later revision for user
fees (revised in the first Internal Revenue
Bulletin (I.R.B.) issued each year). For
additional information on the user fee, see
Part XI. User Fee Information.

How To Get Forms and
Publications
Internet You can access the IRS website
24 hours a day, 7 days a week, at IRS.gov
to do the following.
Download forms, instructions, and
publications.
Order IRS products online.
Cat. No. 17132z

Research your tax questions online.
Search publications on by topic or
keyword.
Use the online Internal Revenue Code,
Regulations, or other official guidance.
View Internal Revenue Bulletins (IRBs)
published in the last few years.
Sign up to receive local and national tax
news by email. To subscribe, go to
IRS.gov/charities-non-profits.
Tax forms and publications. You can
download or print all of the forms and
publications you may need at IRS.gov/
FormsPubs. Otherwise you can go to
IRS.gov/OrderForms to place an order
and have forms mailed to you. You should
receive your order within 10 business
days.

Overview of Section 501(c)
(3) Organizations
Who Is Eligible for Section
501(c)(3) Status?

Organizations organized and operated
exclusively for religious, charitable,
scientific, testing for public safety, literary,
or educational purposes, or to foster
national or international amateur sports
competition, or for the prevention of
cruelty to children or animals are eligible
to file Form 1023 to obtain recognition of
exemption from federal income tax under
section 501(c)(3) of the Internal Revenue
Code.
Form 1023 not necessary. The
following types of organizations may be
considered tax exempt under section
501(c)(3) even if they don’t file Form 1023.
Churches, including synagogues,
temples, and mosques.
Integrated auxiliaries of churches and
conventions or associations of churches.
Any organization that has gross
receipts in each tax year of normally not
more than $5,000. For more information
on gross receipts exceptions, go to
IRS.gov/Charities.
Even though the above organizations
aren’t required to file Form 1023 to be tax
exempt, these organizations may choose
to file Form 1023 in order to receive a
determination letter that recognizes their
section 501(c)(3) status and specifies
whether contributions to them are tax
deductible.

Qualification of a Section 501(c)(3)
Organization
There are two requirements for an
organization to be exempt from federal
income tax under section 501(c)(3). A
501(c)(3) organization must be organized
and operated exclusively for one or more
exempt purposes.
Organized. An organization must be
organized as a corporation (including a
limited liability company), trust, or
unincorporated association. The
organizing document (articles of
incorporation if you are a corporation,
articles of organization if you are a limited
liability company, articles of association or
constitution if you are an association, or
trust agreement or declaration of trust if
you are a trust) must limit the
organization's purpose(s) and
permanently dedicate its assets to exempt
purposes.
Operated. An organization must be
operated to further one or more of the
exempt purposes stated in its organizing
document. Certain other activities are
prohibited or restricted, including, but not
limited to, the following activities. A 501(c)
(3) organization must:
Absolutely refrain from participating in
the political campaigns of candidates for
local, state, or federal office;
Absolutely ensure that its assets and
earnings don’t unjustly enrich board
members, officers, key management
employees, or other insiders;
Not further non-exempt purposes (such
as purposes that benefit private interests)
more than insubstantially;
Not operate for the primary purpose of
conducting a trade or business that isn’t
related to its exempt purpose(s);
Not engage in activities that are illegal
or violate fundamental public policy; and
Restrict its legislative activities.
Legislative activity. An organization
doesn’t qualify for section 501(c)(3) status
if a substantial part of its activities is
attempting to influence legislation.
Form 5768. Most public charities are
eligible to elect to make expenditures to
influence legislation by filing Form 5768,
Election/Revocation of Election by an
Eligible Section 501(c)(3) Organization To
Make Expenditures To Influence
Legislation. By filing Form 5768, an
eligible organization's legislative activities
will be measured solely by an expenditure
limit rather than by the “no substantial
amount” limit. For additional information
on the expenditure limit or the no
substantial amount limit, see Pub. 557,
Tax-Exempt Status for Your Organization.
For this purpose, “legislation” includes
action by Congress, a state legislature, a
local council, or a similar governing body,

with respect to acts, bills, resolutions or
similar items (such as legislative
confirmation of appointive offices).
Legislation also includes action by the
public in a referendum, ballot initiative,
constitutional amendment, or similar
procedure. Legislation generally doesn’t
include actions by executive, judicial, or
administrative bodies.
Organizations may involve themselves
in issues of public policy without being
engaged in legislative activity. For
example, organizations may conduct
educational meetings, prepare and
distribute educational materials, or
otherwise consider public policy issues.
Similarly, an organization may appear
before a governmental body to offer
testimony about a decision that may affect
the organization's existence.
A private foundation isn’t allowed

TIP to influence legislation.

Political campaign intervention. All
501(c)(3) organizations are absolutely
prohibited from directly or indirectly
participating or intervening in any political
campaign on behalf of (or in opposition to)
any candidate for elective public office.
Non-partisan voter education activities
(including public forums and voter
education guides) are permitted. Similarly,
non-partisan activities to encourage
people to participate in the electoral
process, such as voter registration and
get-out-the-vote drives, aren’t prohibited
political campaign activity. However, voter
education or registration activities that (a)
favor one candidate over another, (b)
oppose a candidate in some manner, or
(c) favor a group of candidates, are
prohibited.

Public Charities and Private
Foundations
Every organization that qualifies for
tax-exempt status under section 501(c)(3)
is further classified as either a public
charity or a private foundation. For some
organizations, the primary distinction
between a public charity and a private
foundation is an organization's source of
financial support.
A public charity has a broad base of
support, while a private foundation
receives its support from a small number
of donors. This classification is important
because different tax rules apply to the
operations of each entity.
Deductibility of contributions to a
private foundation is more limited than
contributions to a public charity. See Pub.
526, Charitable Contributions, for more
information on the deductibility of
contributions. In addition, private
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foundations are subject to excise taxes
that aren’t imposed on public charities.
Public charities. The following 501(c)(3)
organizations are classified as public
charities.
Churches.
Schools.
Hospitals, medical research
organizations, and cooperative hospital
service organizations.
Organizations that receive substantial
support from grants, governmental units,
and/or contributions from the general
public.
Organizations that normally receive
more than one-third of their support from
contributions, membership fees, and
gross receipts from activities related to
their exempt functions, and not more than
one-third of their support from gross
investment income and net unrelated
business income.
Organizations that support other public
charities.
If an organization requests public
charity classification based on receiving
substantial public support, it must continue
to seek significant and diversified public
support contributions in later years.
Private foundation. A 501(c)(3)
organization that can’t meet one of the
specific exceptions to be classified as a
public charity is a private foundation.
Classification as a private

TIP foundation has nothing to do with

the name of the organization.
There are many organizations that include
the word foundation in their names that
aren’t private foundations for tax
purposes.
Private operating foundations. A
private foundation that lacks general
public support but actively conducts
exempt programs (as opposed to making
grants to other organizations to conduct
exempt activities) may be treated as a
private operating foundation. Private
operating foundations are subject to more
favorable rules than other private
foundations in terms of charitable
contribution deductions and attracting
grants from private foundations. In order to
be classified as a private operating
foundation, an organization must meet
certain support tests. See support test at
IRS.gov/
PrivateOperatingFoundationSupportTests.
Also see new Private Operating
Foundations–new organizations at
www.irs.gov/charities-non-profits/privatefoundations/private-operatingfoundations-new-organizations

State Registration Requirements
Tax exemption under section 501(c)(3) is
a matter of federal law. After receiving
Instructions for Form 1023

federal tax exemption, you may also be
required to register with one or more
states to solicit for contributions or to
obtain exemption from state taxes. The
National Association of State Charity
Officials (NASCO) maintains a website
that provides informational links to the
various states for these purposes. It can
be accessed at www.nasconet.org.

General Instructions
Social Security Number. Don't enter
Social Security numbers on this form
because the IRS is required to disclose
approved exemption applications and
information returns. Documents subject to
disclosure include supporting documents
filed with the form and correspondence
with the IRS about filing.
“You” and “Us”. Throughout these
instructions and Form 1023, the terms
“you” and “your” refer to the organization
that is applying for tax-exempt status. The
terms “us” and “we” refer to the Internal
Revenue Service.
Definitions. Terms in bold type in Form
1023 are defined throughout these
instructions and in Appendix C.

Answers

Answer items completely. Where a “Yes”
or “No” reply isn’t requested, you may
answer “Not Applicable” where
appropriate. If you believe you have
previously answered the item, you may
refer to your previous answer.
Your answers must provide
sufficient detail about your past,
CAUTION present, and planned activities to
prove that you are an exempt
organization. We will not be able to
recognize you as tax exempt based on
generalizations. Therefore, we need to
understand the specific activities you will
undertake to reach your charitable goals.

!

Financial data. Form 1023 asks you to
answer a series of questions and provide
information to assist us in determining if
you meet the requirements for tax
exemption under section 501(c)(3). One of
the pieces of information requested is
financial data. This data, whether
budgeted or actual, should be consistent
with other information presented in the
application.
For example, if you are requesting
public charity status under one of the
public support tests, the financial data
should show contributions from the public
or receipts from providing exempt
services. Budgeted financial data should
be prepared based upon your current
plans. We recognize that the
organization's actual financial results may
vary from the budgeted amounts.
Instructions for Form 1023

Past, present, and planned activities.
Many items on Form 1023 are written in
the present tense; however, your answers
should be based on your past, present,
and planned activities.
Language and currency requirements.
Prepare Form 1023 and attachments in
English. Provide an English translation if
the articles of organization or bylaws are in
any other language.
We may ask you to provide English
translations of foreign language
publications you submit with your Form
1023.
Report financial information in U.S.
dollars (specify the conversion rate used).
Combine amounts from within and outside
the United States and report the total for
each on the financial statements.

Purpose of Form
Completed Form 1023 required for
section 501(c)(3) exemption. Form
1023 is filed by organizations to apply for
recognition of exemption from federal
income tax under section 501(c)(3). Upon
approval, we will issue a determination
letter that provides written assurance
about the organization's tax-exempt
status, and its qualification to receive
tax-deductible charitable contributions.
Every organization qualifying for
exemption under section 501(c)(3) will
also be classified as either a “public
charity” or a “private foundation.”
Other organizations that may file
Form 1023. Other organizations that
apply for tax-exempt status under section
501(c)(3) by filing Form 1023 include
section 501(e) and (f) cooperative service
organizations, section 501(k) childcare
organizations, and section 501(n)
charitable risk pools.

Obtaining Tax-Exempt
Status

To apply for tax-exempt status, file Form
1023 and pay the appropriate user fee.

Application for Reinstatement
and Retroactive Reinstatement

An organization must apply to have its
tax-exempt status reinstated if it was
automatically revoked for failure to file a
return or notice for three consecutive
years. The organization must:
1. Complete and file the appropriate
application form,
2. Pay the appropriate user fee and
enclose it with the application,
3. Write "Automatically Revoked" at
the top of the application and mailing
envelope, and

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4. Submit a written statement
supporting its request if applying for
retroactive reinstatement.
If the application is approved, the date
of reinstatement generally will be the
postmark date of the application, unless
the organization qualifies for retroactive
reinstatement. Alternate submissions and
standards apply for retroactive
reinstatement back to the date of
automatic revocation. See Rev. Proc.
2014–11, 2014–03 I.R.B. 411, for details.

Expedite Requests

We will only approve expedited
processing of an application where a
request is made in writing and contains a
compelling reason for processing the
application ahead of others.
Circumstances generally warranting
expedited processing include the
following.
A grant to the applicant is pending and
the failure to secure the grant may have an
adverse impact on the organization's
ability to continue operations.
The purpose of the newly created
organization is to provide disaster relief to
victims of emergencies such as floods and
hurricanes.
There have been undue delays in
issuing a letter caused by problems within
the IRS.

User Fee

The law requires payment of a user fee
with each application. Enclose payment
with your application. DON’T STAPLE or
otherwise attach your check or money
order to your application.
You may pay your user fee with a
personal or certified check, bank check, or
cashier's check. Processing your
application will not be delayed by the form
of payment unless your check is returned
to us for insufficient funds.
Additional guidance regarding user
fees is available in Rev. Proc. 2017-5,
2007-1 I.R.B. 230, at http://
core.publish.no.irs.gov/irb/pdf/
wb201701.pdf or later revision (revised in
the first I.R.B. issued each year).
For additional information on the user
fee, see Part XI. User Fee Information.

Group Exemption

Form 1023 isn’t used to apply for a group
exemption. A group exemption is issued to
a central organization that recognizes on a
group basis the exemption of subordinate
organizations on whose behalf the central
organization has applied. See Pub. 557 for
information on how to apply for a group
exemption.
Leaving a group exemption. If a
subordinate organization in an existing
group exemption wishes to apply for an

individual exemption, it should notify its
parent organization of its intention to leave
the group ruling before filing Form 1023.

What to File

All applicants, unless otherwise noted,
must complete Parts I through XI of Form
1023, plus any required schedules and
attachments.
The following organizations must
complete additional schedules to Form
1023.
IF your organization
is a(n) . . .
Church

THEN you
must file
Schedule . .

. . . . . . . . . . .

A

School, College, or
University . . . . . .

. . .

B

Hospital or Medical
Research
Organization . . . .

. . .

C

. . . .

D

Organization Not Filing
Form 1023 Within 27
Months of
Formation . . . . . . . . .

E

Section 509(a)(3)
Supporting
Organization . . .

Home for the Elderly or
Handicapped and
Low-Income
Housing . . . . . . . . . .

F

Successor to Other
Organizations . . .

G

. . .

Organization Providing
Scholarships,
Fellowships, Educational
Loans, or Other
Educational Grants to
Individuals and Private
Foundations Requesting
Approval of Individual
Grant Procedures . . . .

Assembly of Application
Package

Amendments to organizing document in
chronological order.
Bylaws or other rules of operation and
amendments.
Documentation of nondiscriminatory
policy for schools, as required by
Schedule B.
Form 5768.
All other attachments, including
explanations, financial data, and printed
materials or publications.

Attachments

Use an attachment where there is
insufficient space on the form for you to
legibly and accurately respond to a
question. For any attachments submitted
with your Form 1023:
Use 81 2 x 11 inch paper,
Provide your name and Employer
Identification Number (EIN) at the top of
each page, and
Identify the Part and number to which
the attachment relates.

Include any court decisions, rulings,
opinions, or any other documents that will
assist us in processing your Form 1023.
Attachments in the form of tape
recordings or other electronic media aren’t
acceptable unless accompanied by a
transcript. Attachments must be in
English.

When to File

H

To assist us in processing the application,
documents should be submitted in the
following order.
User fee enclosed but not attached to
the application form.
Form 1023 Checklist.
Form 2848, Power of Attorney and
Declaration of Representative (if needed).
Form 8821, Tax Information
Authorization (if needed).
Expedite request (if needed).
Application Form 1023 and Schedules
A through H (as required).
Organizing document.

Generally, if you file Form 1023 within 27
months after the end of the month in which
you were legally formed, and we approve
the application, the legal date of formation
will be the effective date of your exempt
status.
If you don’t file Form 1023 within 27
months of formation, the effective date of
your exempt status will be the date you
filed Form 1023 (submission date). The
date considered to be the date we receive
Form 1023 is generally the postmark date.
For exceptions and special rules,
including automatic extensions, see
Schedule E of Form 1023.

Where To File

Send the completed Form 1023, user fee
payment, and all other required
information to:
Internal Revenue Service
Attention: EO Determination Letters
Stop 31
P.O. Box 12192
Covington, KY 41012-0192

Private Delivery Service

Organizations can use certain private
delivery services (PDS) designated by the
IRS to meet the "timely mailing as timely
filing" rule for tax returns. Go to IRS.gov/
PDS for the list of PDS.
-4-

The PDS can tell you how to get written
proof of the mail date. If you're using PDS,
send your application, user fee, and all
other required information to:
Internal Revenue Service
Attention: EO Determination Letters
Stop 31
201 West Rivercenter Boulevard
Covington, KY 41011
Private delivery services can't
deliver items to P.O. boxes. You
CAUTION must use the U.S. Postal Service
to mail any items to an IRS P.O. box
address.

!

Filing Assistance

For help in completing this form or general
questions relating to an exempt
organization, you may access information
on our website at IRS.gov/EO.
Listed below are a number of
publications and a searchable link that
may be helpful to your organization.
Pub. 517, Social Security and Other
Information for Members of the Clergy and
Religious Workers
Pub. 526, Charitable Contributions
Pub. 557, Tax-Exempt Status for Your
Organization
Pub. 598, Tax on Unrelated Business
Income of Exempt Organizations
Pub. 1771, Charitable Contributions
Substantiation and Disclosure
Requirements
Pub. 1828, Tax Guide for Churches and
Religious Organizations
Pub. 3079, Gaming Publication for
Tax-Exempt Organizations
Pub. 3833, Disaster Relief: Providing
Assistance through Charitable
Organizations
Pub. 4220, Applying for 501(c)(3)
Tax-Exempt Status
Pub. 4221, Compliance Guide for
501(c)(3) Tax-Exempt Organizations
You can search organizations eligible
to receive tax-deductible charitable
contributions at IRS.gov/Pub78.

Signature Requirements

An officer, director, trustee, or other official
who is authorized to sign for the
organization must sign Form 1023 at the
end of Part XI. The signature must be
accompanied by the title or authority of the
signer and the date. Please clearly print
the accompanying information.

Representation
Form 2848. Attach a completed Form
2848 if you want to authorize a
representative to represent you regarding
your application. An individual authorized
by Form 2848 may not sign the application
Instructions for Form 1023

unless that person is also an officer,
director, trustee, or other official who is
authorized to sign the application.

!

CAUTION

A centralized authorization file
(CAF) number isn’t required to be
listed on Form 2848.

Form 8821. Form 8821 authorizes us to
discuss your application with the person
you have appointed.
Form 8821 doesn’t authorize your
appointee to advocate your position with
respect to the Federal tax laws; to execute
waivers, consents, or closing agreements;
or to otherwise represent you before the
IRS. If you want to authorize an individual
to represent you, use Form 2848.

After You Submit Form 1023

We will acknowledge receiving your
application in writing. You may expect to
receive this notice within 21 days of the
postmark date of the Form 1023. Read the
notice thoroughly because it will provide
further information about the processing of
your Form 1023.
Generally, we assign applications in
the order we receive them. Unless the
application is approved for expedited
processing, it will be worked in the order
received.
No additional information needed.
If our review shows that you qualify, we
will send you a letter stating that you are
exempt under section 501(c)(3) and
whether you are a public charity or a
private foundation.
Additional information needed. If
the review shows that we need additional
information or changes, we will call or
write you. Examples of the types of
questions you may be asked are available
at IRS.gov.
If the additional information indicates
that you qualify, we will send you a letter
stating that you are exempt under section
501(c)(3) and whether you are a public
charity or a private foundation. If we
conclude that you don’t qualify for
exemption, we will send you a letter that
explains our position and your appeal
rights.

Annual Filing Requirements

If an annual information return or tax return
is due while the Form 1023 is pending,
complete the return, mark “Application
Pending” in the heading, and send the
return to the address indicated in these
instructions.
Information on return filing
requirements and exceptions may be
found in Pubs. 557 and 598 and in the
instructions to the annual returns listed in
Figure 1.
Instructions for Form 1023

Figure 1. 990 Series Forms filed by Exempt Organizations
Type of Annual Return

Who Should File

Form 990, Return of Organization
Exempt from Income Tax

Section 501(c)(3) public charities

Form 990-EZ, Short Form Return of
Organization Exempt from Income Tax

Section 501(c)(3) public charities whose
gross receipts during the year were less
than $200,000 and total assets at the
end of the year were less than $500,000

Schedule A (Form 990 or 990-EZ),
Organization Exempt under Section
501(c)(3)

Section 501(c)(3) public charities

Schedule B (Form 990, 990-EZ, or
990-PF), Schedule of Contributors

All section 501(c)(3) organizations

Form 990-PF, Return of Private
Foundation

Private foundations, including private
operating foundations

Form 990-T, Exempt Organization
Business Income Tax Return

Public charities and private foundations
that have gross unrelated business
income of $1,000 or more

Form 990-N Electronic Notice
(e-Postcard) for Tax-Exempt
Organizations Not Required to File Form
990 or Form 990-EZ

Tax-exempt organizations that don’t file
Form 990 or Form 990-EZ can file Form
990-N. Most small tax-exempt
organizations with gross receipts of
$50,000 or less can file a Form 990-N.

You may also be required to file

TIP other returns, such as

employment tax returns or benefit
plan returns, which aren’t discussed here.

Public Inspection
Information available for public inspection. If we approve exempt status
under section 501(c)(3), the following
information will be open for public
inspection.
Your complete Form 1023 and any
supporting documents.
All correspondence between you and
the IRS concerning Form 1023, including
Form 2848.
The letter we issue approving your
exemption.
Annual information returns (Forms 990,
990-EZ, or 990-PF).
Schedule A, included with Forms 990 or
990-EZ.
Schedule B, included with Forms 990 or
990-EZ, except the names and addresses
of contributors and other identifying
information about contributors.
Schedule B, included with Form
990-PF, including names, addresses and
other identifying information about
contributors.

-5-

Information not available for public
inspection. The following items will not
be open for public inspection.
Any information relating to a trade
secret, patent, style of work, or apparatus
that, if released, would adversely affect
you. (We must approve withholding this
information.)
Any other information that would
adversely affect national defense. (We
must approve withholding this
information.)
User fee check.
Information only applications from the
United States Virgin Islands, Bureau of
Internal Revenue (BIR), and related
supporting documents.
Contributors' names and addresses
and identifying information about
contributors included with Forms 990 or
990-EZ and the Schedule B filed with
these forms.
Form 990-T, Exempt Organization
Business Income Tax Return.
When applying for tax-exempt status,
you must clearly identify any information
that isn’t open for public inspection by
separately marking it as “NOT SUBJECT
TO PUBLIC INSPECTION” and attaching
an explanation of why you are asking for
the information to be withheld. We will
decide whether to withhold the identified
information from public inspection.

Making documents available for public
inspection. Both you and the IRS must
make the information that is subject to
disclosure available for public inspection.
The public may contact us toll-free at
877-829-5500 to request public inspection
or copies of the information. The public
may also request inspection of the
information or a copy of the information
directly from you.
An exempt organization may post the
documents required to be available for
public inspection on its own website. The
information return and exemption
application materials must be posted
exactly as filed with the IRS. Only the
information that isn’t open for public
inspection may be deleted.
If an exempt organization posts the
documents on its website, it must provide
notice of the website address where the
documents may be found, but it need not
provide copies of the information.
However, documents posted on an
organization's website must still be made
available for public inspection without
charge at its main office during regular
business hours.
Documents aren’t considered available
for public inspection on a website if the
otherwise disclosable information is edited
or subject to editing by a third party when
posted. To date, the IRS hasn’t approved
any third party websites for posting.
See Pub. 557 for additional guidance
on public inspection.

Foreign Organizations in
General

Foreign organizations are those that were
created in countries other than the United
States, its territories, or its possessions.
Foreign organizations may apply for
tax-exempt status on income earned in the
United States in the same way that
domestic organizations apply for exempt
status. See Language and currency
requirements, above.
A foreign organization applying for
exempt status should complete all
required parts of Form 1023. There are,
however, special rules below for some
Canadian organizations.
Contributions by U.S. residents to

TIP foreign organizations generally

aren’t deductible. Tax treaties
between the U.S. and certain foreign
countries provide specific limited
exceptions.

Annual returns for foreign organizations. A foreign organization that obtains
exemption as a public charity must file an
information return annually (Form 990 or
Form 990-EZ). A foreign organization that
is a private foundation must file Form
990-PF annually. However, a foreign

organization, other than a private
foundation, may be relieved from filing
Form 990 or Form 990-EZ in any year in
which it has gross receipts from U.S.
source income of $50,000 or less and
hasn’t conducted significant activity in the
United States. See the Instructions for
Form 990 and Form 990-EZ, and the
Instructions for Form 990-PF for further
information. A foreign organization that is
subject to unrelated business income tax
must file Form 990-T.

Canadian Organizations

Canadian organizations that have
received a Notification of Registration from
the Canada Customs and Revenue
Agency (formerly, Revenue Canada), and
whose registrations haven’t been revoked
(“Canadian registered charities”), are
automatically recognized as section
501(c)(3) organizations and aren’t
required to file Form 1023. Canadian
registered charities are also presumed to
be private foundations. A Canadian
registered charity may complete certain
portions of the Form 1023 in order to be
listed as a section 501(c)(3) organization
on the IRS website at IRS.gov/Pub78, or
to request classification as a public
charity, rather than a private foundation. A
Canadian registered charity should only
complete and submit the following
documents.
Copy of its Notification of Registration.
Part I of Form 1023.
Part X of Form 1023 (if requesting
public charity classification).
Signature in Part XI of Form 1023.
Form 8833, Treaty-Based Return
Position Disclosure Under Section 6114 or
7701(b).

Organizations Created in
United States Territories and
Possessions

Organizations created in possessions and
territories of the United States are
generally treated as domestic
organizations. These organizations
complete all required parts of Form 1023
to apply for exempt status under section
501(c)(3). Special rules, discussed below,
apply to some Virgin Islands
organizations.
Charitable contributions to
organizations created in United States
possessions and territories are deductible
by the donors if the organization qualifies
for exempt status under section 501(c)(3).

Virgin Islands Organizations

The United States Virgin Islands, Bureau
of Internal Revenue (BIR) may request an
information only letter concerning the
exempt status under section 501(c)(3) of
an organization formed in the Virgin
Islands. The organization itself doesn’t
seek U.S. recognition of exempt status.
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The information only procedure requires
the BIR to complete Form 1023 and
supporting documents for the
organization, but doesn’t require a user
fee payment. The application and
supporting documents aren’t open for
public inspection (see Public Inspection,
above for more information).
All other Virgin Islands organizations
that seek U.S. recognition of exempt
status under section 501(c)(3) must follow
the normal application process.

Specific Instructions
Part I. Identification of
Applicant
Line 1. Full name of organization.
Enter your complete name exactly as it
appears in your organizing document,
including amendments.
Line 2. c/o Name. If you have an “in care
of” name, enter it here.
Line 3. Mailing address. Enter your
complete address where all
correspondence will be sent. If mail isn’t
delivered to the street address and you
have a P.O. Box, show the box number
instead of the street address.
For a foreign address, enter the
information in the following order: city,
province or state, and country. Follow the
country's practice in placing the postal
code in the address. Don’t abbreviate the
country name.
Line 4. Employer Identification Number (EIN). All organizations must have an
EIN. Enter the nine-digit EIN the IRS
assigned to the organization. If the
organization doesn't have an EIN, it must
apply for one. An EIN can be applied for
by visiting the IRS website at IRS.gov/EIN.
The organization may also apply for an
EIN by faxing or mailing Form SS-4 to the
IRS. The Form SS-4 and its separate
instructions can be downloaded from
IRS.gov. Organizations outside the United
States or U.S. possessions may also
apply for an EIN by calling 267-941-1099
(toll call). Don't apply for an EIN more than
once.
If the organization has more than one
EIN and hasn't been advised which to use,
notify the:
Department of the Treasury
Internal Revenue Service Center
Ogden, UT 84201-0027
State what EINs the organization has,
the name and address to which each
number was assigned, and the address of
the organization's principal office. The IRS
will advise the organization which number
to use.
Instructions for Form 1023

Line 5. Month the annual accounting
period ends (01-12). Enter the month
that your annual accounting period ends,
using a two-digit number format. For
example, if your annual accounting period
ends in December, enter “12.” Your
annual accounting period is the 12-month
period on which your annual financial
records are based. Your first tax year
could be less than 12 months.
Check your bylaws or other rules of
operation for consistency with the annual
accounting period entered in line 5.
Line 6a. Primary contact. Your primary
contact person may be an officer, director,
trustee, or other individual who is
permitted to speak with us according to
your bylaws or other rules of operation.
Your primary contact person may also be
an “authorized representative,” such as an
attorney or certified public accountant for
whom you have submitted a completed
Form 2848 with the Form 1023.
Line 7. If you wish to be represented by
an authorized representative, a completed
Form 2848 must be attached to the Form
1023.
Line 8. Provide information about
persons, other than your officers,
directors, trustees, employees, or
authorized representative(s), whom you
paid, or promised to pay, to assist you in
establishing your organization, developing
programs to solicit funds, or otherwise
advising you about organizational,
financial, or tax matters.
For example, provide information about
a paid consultant who advised you about
obtaining tax exemption.
Line 9a. Organization's website. Enter
your complete website address if you
have one. Also, list any websites
maintained on your behalf. The
information on your website should be
consistent with the information in your
Form 1023.
Line 9b. Email (optional). Enter your
email address to receive educational
information from us in the future. Because
of security concerns, we can’t send or
respond to confidential information via
email.
Line 10. Certain organizations aren’t
required to file an information return (Form
990 or Form 990-EZ) or notice (Form
990-N). Generally, organizations not
required to file Form 990, or Form 990-EZ,
or Form 990-N include churches, certain
church affiliated organizations, and certain
affiliates of a governmental unit. Note that
organizations that are exempt from filing
Form 990 or Form 990-EZ because of
gross receipts are generally required to
submit Form 990-N if they choose not to
file Form 990 or Form 990-EZ. For more
information, see the Instructions for Form
Instructions for Form 1023

990 and Form 990-EZ. See IRS.gov for
more information.
Private foundations must file Form

TIP 990-PF regardless of the amount
of their gross receipts.

Line 11. List the date you were legally
created by month, day, and year (for
example, 02/01/2018). The date should be
consistent with your organizing document
described in Part II.
Line 12. For purposes of completing this
application, you are formed under the laws
of a foreign country if you aren’t formed
under the laws of the United States, its
territories and possessions; federally
recognized Indian tribal or Alaska Native
governments; or the District of Columbia.

Part II. Organizational
Structure

Only trusts, unincorporated associations,
or corporations (including limited liability
companies) are eligible for tax-exempt
status under section 501(c)(3). Sole
proprietorships, partnerships, or loosely
affiliated groups of individuals aren’t
eligible.
To qualify for tax-exempt status, you
must check “Yes” on either line 1, 2, 3, or
4 and submit a copy of your organizing
document.

Line 1. A “corporation” is an entity
organized under a Federal or state statute,
or a statute of a federally recognized
Indian tribal or Alaskan native
government. A corporation's organizing
document is its “articles of incorporation.”
Certification of filing. If formed under
state statute, your articles of incorporation
must show certification of filing. This
means your articles show evidence that on
a specific date they were filed with and
approved by an appropriate state
authority. The document must be an exact
copy of what is on file with your state.
Substitute Articles of Incorporation.
If you don’t have a copy of your articles of
incorporation showing evidence of having
been filed and approved by an appropriate
state official, you may submit a substitute
copy of your articles of incorporation. This
substitute copy may be handwritten,
typed, printed, or otherwise reproduced. It
must be accompanied by a declaration,
signed by an officer authorized to sign for
you, that it is a complete and correct copy
of the articles of incorporation and that it
contains all the powers, principles,
purposes, functions, and other provisions
by which you currently govern yourself.
Line 2. A “limited liability company” (LLC)
that files its own exemption application is
treated as a corporation rather than a
partnership. Instead of articles of
incorporation, an LLC's organizing
-7-

document is its state-approved “articles of
organization.” If it has adopted an
“operating agreement,” then this
document is also part of its organizing
document.
An LLC shouldn’t file an exemption
application if it wants to be treated as a
disregarded entity by its tax-exempt
member.
Line 3. An “unincorporated association”
formed under state law must have at least
two members who have signed a written
document for a specifically defined
purpose.
The articles of organization of an
unincorporated association must include
the name of your organization, your
purpose, the date the document was
adopted, and the signatures of at least two
individuals. If your copy doesn’t contain
the proper signatures and date of
adoption, you may submit a written
declaration that states your copy is a
complete and accurate copy of the signed
and dated original. Your declaration
should clearly indicate the original date of
adoption.
Bylaws may be considered an

TIP organizing document only if they

are properly structured (includes
name, purpose, signatures, and intent to
form an organization).
Line 4a. A trust may be formed by a trust
agreement or declaration of trust. A trust
may also be formed through a will.
If your trust agreement copy doesn’t
contain the proper signatures, you may
submit a written declaration that states
your copy is a complete and accurate
copy of the signed and dated original.
Your declaration should clearly indicate
the original date that it was signed.
Trust created by a will. For trusts
created by a will, include a copy of the
death certificate or a statement indicating
the date of death, and a copy of the
relevant portions of the will.
Trust agreement and non-charitable
interests. If your trust agreement
provided for distributions for
non-charitable interests, indicate the date
on which these interests expired. If your
trust agreement continues to provide for
these interests, you will not qualify for
tax-exempt status.
Line 4b. Generally, a trust must be
funded with property, such as money, real
estate, or personal property to be legally
created.
Line 5. “Bylaws” are generally the internal
rules and regulations of an organization. If
you have bylaws, you should submit a
current copy.

Bylaws don’t need to be signed unless
they are the organizing document as
described in line 3 above.

Part III. Required
Provisions in Your
Organizing Document
Line 1. Purpose clause. Your organizing
document must limit your purposes to
those described in section 501(c)(3).
Those purposes are: charitable, religious,
educational, scientific, literary, testing for
public safety, fostering national or
international amateur sports competition,
and preventing cruelty to children or
animals.
The generally accepted legal definition
of “charitable” includes relief of the poor,
the distressed, or the underprivileged;
advancement of religion; advancement of
education or science; erecting or
maintaining public buildings, monuments,
or works; lessening the burdens of
government; lessening neighborhood
tensions; eliminating prejudice and
discrimination; defending human and civil
rights secured by law; and combating
community deterioration and juvenile
delinquency. Therefore, the phrase “relief
of the poor” in your organizing document
properly limits your purposes.
If your purposes are limited in some
way by referring to section 501(c)(3), your
organizing document also properly limits
your purposes. For example, the phrase
“relief of the elderly within the meaning of
section 501(c)(3)” in your organizing
document also properly limits your
purposes.
However, if the purposes listed in your
organizing document are broader than
those listed in section 501(c)(3), you
should amend your organizing document
before applying. A reference to section
501(c)(3) will not ensure that your
purposes are limited to those described in
section 501(c)(3). All of the language in
your organizing document must be
considered. The following is an example
of an acceptable purpose clause:
The organization is organized
exclusively for charitable,
religious, educational, and
scientific purposes under
section 501(c)(3) of the Internal
Revenue Code, or
corresponding section of any
future federal tax code.
See Pub. 557 for further information
and examples of how to limit your
purposes.
Any amendment to your articles of
organization you submit should show

evidence that it was signed, dated, and
certified as described in Part II.
Line 2a. Dissolution clause. Your
organizing document must permanently
dedicate your assets for a section 501(c)
(3) purpose. This means that if you
dissolve your organization in the future,
your 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.
If your organizing document states that
your assets would be distributed to
members or private individuals or for any
purpose other than those provided in
section 501(c)(3), you must amend your
organizing document to remove such
statements.
If multiple amendments are required,
they may be done at the same time. For
example, if you are a corporation and are
required to amend both your purpose and
dissolution clauses, you may file a single
amending document with your appropriate
government authority.
The following is an example of an
acceptable dissolution clause:
Upon the dissolution of this
organization, assets shall be
distributed for one or more
exempt purposes within the
meaning of section 501(c)(3) of
the Internal Revenue Code, or
corresponding section of any
future federal tax code, or shall
be distributed to the federal
government, or to a state or
local government, for a public
purpose.
Naming a specific organization to
receive your assets upon dissolution will
only be acceptable if your articles state
that the specific organization must be
exempt under section 501(c)(3) at the time
your dissolution takes place and your
articles provide for an acceptable
alternative if the specific organization isn’t
exempt. See Pub. 557 for further
information and examples of acceptable
language for dedication of assets in your
organizing document.
Line 2c. Operation of state law. A
501(c)(3) organization must permanently
dedicate its assets to 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. In
certain states, reliance may be placed
upon state law to establish the permanent
dedication of assets for exempt purposes.
This is based on Rev. Proc. 82-2, 1982-1
C.B. 367. For additional information,
search "Operation of state law" at IRS.gov.
-8-

Foreign organizations. Foreign
organizations may be able to rely upon the
applicable laws of their jurisdiction in a
similar manner. You must provide a copy
of the applicable law with an English
translation.

Part IV. Narrative
Description of Your
Activities

Describe completely and in detail your
past, present, and planned activities. Don’t
refer to or repeat the purposes in your
organizing document. You may refer to
other parts of the application rather than
repeat information provided elsewhere.
For each past, present, or planned
activity, include information that answers
the following questions.
What is the activity?
Who conducts the activity?
When is the activity conducted?
Where is the activity conducted (for
example: Los Angeles and San Francisco,
California)?
How does the activity further your
exempt purposes?
What percentage of your total time is
allocated to the activity?
How is the activity funded? (This should
agree with the financial data in Part IX.)
List any alternate names under which
you operate, including any “aka” (also
known as) or “dba” (doing business as)
names.
If you have a website, you may attach a
paper copy to support your narrative
description of activities.

Part V. Compensation and
Other Financial
Arrangements With Your
Officers, Directors,
Trustees, Employees, and
Independent Contractors
Compensation. For purposes of Part V,
compensation includes,
Salary or wages;
Deferred compensation;
Retirement benefits, whether in the
form of a qualified or non-qualified
employee plan (pensions or annuities);
Fringe benefits (personal vehicle,
meals, lodging, personal and family
educational benefits, low interest loans,
payment of personal travel, entertainment,
or other expenses, athletic or country club
membership, and personal use of your
property); and bonuses.
Example. Assume an organization
compensates its director as follows.

Instructions for Form 1023

Wages
Director Compensation
Salary as Chief Executive
Officer
Deferred retirement
Health insurance policy
Use of a vehicle
Total Compensation

$ 2,500
40,000
2,000
5,000
5,000
$ 54,500

Information in Part V must be consistent
with the information provided in Part IX.
Financial Data.
Line 1a. For each person listed, state
their total annual compensation, or
proposed compensation, for all services to
the organization, whether as an officer,
employee, or other position. Use actual
figures, if available. Officers, directors,
and trustees may use the organization's
address for mailing.
Line 1b. Employees may use the
organization's address for mailing. Report
total compensation. For employees who
are also officers, directors, or trustees,
their compensation as employees and for
all other services should be reported in
line 1a.
Line 1c. “Independent contractors” are
persons who aren’t treated as employees
for employment tax purposes. For
information on determining if an individual
is an employee or an independent
contractor, see Pub. 15-A, Employer's
Supplemental Tax Guide.
Line 2a. Describe family or business
relationships between your officers,
directors, or trustees. “Related” refers to
both family and business relationships.
“Family relationships” include the
individual's spouse, ancestors, children,
grandchildren, great-grandchildren,
siblings (whether by whole or half blood),
and the spouses of children,
grandchildren, great-grandchildren, and
siblings.
“Business relationships” include
employment and contractual relationships,
and common ownership of a business
where any officers, directors, or trustees,
individually or together, possess more
than a 35% ownership interest in common.
“Ownership” means voting power in a
corporation, profits interest in a
partnership, or beneficial interest in a trust.
Line 2b. Describe family or business
relationships between you and any of your
officers, directors, or trustees other than
their position with you as an officer,
director, or trustee.
Line 2c. Describe family or business
relationships between your officers,
directors, or trustees and your five highest
compensated employees or five highest
Instructions for Form 1023

compensated independent contractors
who will receive more than $100,000 in
taxable or non-taxable compensation per
year.
Line 3b. “Common control” means that
you and one or more other organizations
have (1) a majority of your governing
boards or officers appointed or elected by
the same organization(s), or (2) a majority
of your governing boards or officers
consist of the same individuals. Common
control also occurs when you and one or
more commonly controlled organizations
have a majority ownership interest in a
corporation, partnership, or trust. See the
instructions for line 2a, above, for a
definition of ownership.
Line 4. By adopting these recommended
compensation-setting practices, such as
by resolution of your governing board, you
will be establishing procedures aimed at
helping to prevent your top officials from
receiving excess compensation benefits.
Line 4e. “Similarly situated organizations”
means tax-exempt or taxable
organizations of a comparable size,
purpose, and resources. Adjustments due
to geographic area, and other specific
conditions are appropriate, but should be
documented. The source(s) of
comparable compensation data, both
taxable and non-taxable, should be
documented and copies retained in your
permanent records.
Line 4g. “Reasonable compensation” is
the amount that would ordinarily be paid
for like services by like organizations
under like circumstances as of the date
the compensation arrangement is made.
Establishing and documenting reasonable
compensation is important because
excessive compensation may result in
excise taxes on both the individual and the
organization. In addition, this may
jeopardize the organization's tax
exemption.
Line 5a. A “conflict of interest” arises
when a person in a position of authority
over an organization, such as a director,
officer, or manager, may benefit
personally from a decision he or she could
make. A Sample Conflict of Interest Policy
is included as Appendix A. This sample
conflict of interest policy doesn't prescribe
any specific requirements. Therefore,
organizations should use a conflict of
interest policy that best fits their
organization.
Adoption of a conflict of interest policy
isn’t required to obtain tax-exempt status.
However, by adopting the sample policy or
a similar policy, you will be choosing to put
in place procedures that will help you
avoid the possibility that those in positions
of authority over you may receive an
inappropriate benefit.
-9-

Line 6a. A “fixed payment” means a
payment that is either a set dollar amount
or fixed through a specific formula where
the amount doesn’t depend on discretion.
For example, a base salary of $200,000
that is adjusted annually based on the
increase in the Consumer Price Index is a
fixed payment.
A “non-fixed payment” means a
payment that depends on discretion. For
example, a bonus of up to $100,000 that is
based on an evaluation of performance by
the governing board is a non-fixed
payment because the governing body has
discretion over whether the bonus is paid
and the amount of the bonus.
Line 7a. Don’t include purchases of
goods and services in your normal course
of operations that are available to the
general public under similar terms and
conditions.
Arm's length. An arm's length
standard exists where the parties have an
adverse (or opposing) interest. For
example, a seller wants to sell his goods
at the highest possible price, while a buyer
wants to buy at the lowest possible price.
These are adverse interests.
In negotiating with a person, an
adverse interest is assumed if that person
is otherwise unrelated to you in the sense
of not being in a position to exercise
substantial influence over you or your
affairs. If the person is in a position to
exercise substantial influence over your
affairs, then an arm's length standard
requires additional precautions to
eliminate the effect of the relationship.
Using a conflict of interest policy,
information about comparable
transactions between unrelated parties,
and reliable methods for evaluating the
transaction, are examples of precautions
that would help make the negotiation
process equivalent to one between
unrelated persons.
Fair market value. This is the price at
which property or the right to use property
would change hands between a willing
buyer and a willing seller, neither being
under any compulsion to buy, sell, or
transfer property or the right to use
property, and both having reasonable
knowledge of relevant facts.
Line 7b. Don’t include sales of goods and
services in your normal course of
operations that are available to the
general public under similar terms and
conditions.
Line 9a. Answer “Yes” if any of your
officers, directors, or trustees:
Is an officer, director, or trustee in
another organization (other than a section
501(c)(3) organization) that has a lease,
contract, loan, or other agreement with
you, or

Possess more than a 35% ownership
interest in any organization that has a
lease, contract, loan, or other agreement
with you. For example, you would answer
“Yes” if one of your directors were an
officer for a section 501(c)(4) organization
with whom you had a lease for office
space. You would also answer “Yes” if one
of your directors owns more than 35% of
the voting stock of a corporation to which
you made a loan.

Part VI. Your Members and
Other Individuals and
Organizations That
Receive Benefits From
You
Line 1a. Benefits to individuals.
Describe any programs where you provide
goods, services, or funds to individuals.
For example, describe programs by which
you provide food to the homeless,
employment counseling to senior citizens,
or grants to victims of a disaster.
Line 1b. Benefits to organizations.
Describe any programs where you provide
goods, services, or funds to organizations.
For example, programs where you provide
equipment, accounting assistance, or
grants to other organizations.
Line 2. For programs that are available
only for members, include a sample
membership application and a schedule of
membership dues. Also, describe any
different membership levels and the
benefits each membership level receives.
Line 3. Describe any business or family
relationship between individuals who
receive goods, services, or funds through
your programs with any officer, director,
trustee, or with any of the five-highest
compensated employees or independent
contractors listed in Part V, line 1a, 1b, or
1c.

Part VII. Your History
Line 1. You are a “successor” if you
have:
Substantially taken over all of the
assets or activities of another
organization,
Been converted or merged from
another organization, or
Installed the same officers, directors, or
trustees as another organization that no
longer exists and that had purpose(s)
similar to your purpose(s).
The predecessor organization
TIP may be or may not have been a
tax-exempt or non-exempt
organization.

Part VIII. Your Specific
Activities
Line 1. You participate in a political
campaign if you promote or oppose the
candidacy of an individual for public office.
Your explanation should include
representative copies of your political
literature, brochures, pamphlets, etc.
Candidate debates and nonpartisan voter
education are permitted.
Organizations described in

TIP section 501(c)(3) are prohibited

from supporting or opposing
candidates for public office in any political
campaign. If you answer “Yes,” you aren’t
qualified for tax exemption under section
501(c)(3) and should reconsider whether
the filing of application Form 1023 is
appropriate for your organization. See
Pub. 557 for a description of other Internal
Revenue Code sections under which you
may qualify.
Line 2a. You are attempting to “influence
legislation” if you directly contact or urge
the public to contact members of a
legislative body for the purpose of
proposing, supporting, or opposing
legislation. You are also attempting to
influence legislation if you advocate the
adoption or rejection of legislation. If you
answer “Yes,” your explanation should
include the percentage of your total time
and total funds spent on such legislative
activities. Also, submit representative
copies of your legislative literature,
brochures, pamphlets, etc.
Organizations described in section
501(c)(3) are prohibited from engaging in
a substantial amount of legislative
activities. Whether you are engaged in
substantial legislative activities depends
on all of the facts and circumstances.
Line 2b. By filing Form 5768 your
legislative activities will be measured
solely by expenditure limits under section
501(h) rather than by whether legislative
activity is considered substantial. Form
5768 describes the types of organizations
that are eligible to make an election. For a
discussion of the requirements of section
501(h), see Pub. 557. If you are an
organization that elects to use expenditure
limits in influencing legislation:
Attach a copy of Form 5768 that has
already been separately filed with us, or
Provide a completed Form 5768 with
your exemption application.

!

CAUTION

Churches and private foundations
aren’t eligible to make this
election.

Line 3a. For purposes of this application,
“bingo” is a game of chance played with
cards that are generally printed with 5
rows of 5 squares each on which
participants place markers to form a
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preselected pattern to win the game.
Other gaming activities include pull-tabs,
raffles, keno, split-the-pot, and other
games of chance.
Describe these activities, including how
often your bingo or other gaming activities
are conducted, where they are conducted,
and who conducts them. Also describe
whether your workers are compensated. If
workers are compensated, describe who
receives compensation and how the
amount is determined.
Revenue associated with these
activities means gross revenue amounts.
Expenses associated with these
activities means direct and indirect
expenses. The dollar value of prizes
should be included in expenses.
Gaming may be subject to

TIP unrelated business income tax.

See Pub. 3079 for further
information about gaming.

Line 3c. Local jurisdictions include cities,
counties, towns, municipalities, and
similar government jurisdictions within a
state. A local jurisdiction also includes an
Indian Reservation.
Line 4a. “Fundraising” includes efforts to
raise funds through appeals for financial
support. Fundraising may be conducted
by your employees or volunteers, through
an agent, or through an independent
contractor. If you answer “Yes,” check all
the boxes that apply and complete lines
4b through 4e.
Line 4d. Local jurisdictions include cities,
counties, towns, municipalities, and
similar government jurisdictions within a
state. A local jurisdiction also includes an
Indian Reservation.
Line 4e. This is intended to obtain
information from you regarding
donor-advised funds that you may
maintain. A “donor-advised fund” is
maintained if you establish separate
accounts for a donor whereby the donor
may exercise a right to make a
recommendation on either uses of the
account, such as providing advice about
how to invest, or distributions from the
account, such as providing advice about
how to make expenditures.
Line 5. You are “affiliated” with a
governmental unit if you were created by,
controlled by, or closely related to a
governmental unit. Identify each
governmental unit and describe your
relationship with it. Include details of any
financial reports or audits required by the
governmental unit. Also, describe any
power or authority given to you by the
governmental unit.
For purposes of this question, a
“governmental unit” includes a State, a
possession of the United States, or any
Instructions for Form 1023

political subdivision of a State or a
possession of the United States, or the
United States, or the District of Columbia.
A governmental unit would generally
not qualify for exemption under section
501(c)(3). Also, if you can exercise certain
sovereign powers, such as the power to
tax or police powers, you would generally
not qualify for exemption under section
501(c)(3).
Line 6a. “Economic development”
organizations are generally formed to
combat community deterioration by
assisting businesses located in a
particular geographic area whose
economy is economically depressed or
deteriorating. Their varieties of activities
include grants, loans, provision of
information and expertise, or creation of
industrial parks. Economic development
organizations may also be formed to
eliminate prejudice and discrimination or
lessen the burdens of government through
involvement with business development.
If your exempt purpose is to combat
community deterioration, describe
whether the area or areas in which you will
operate have been declared blighted or
economically depressed by a government
finding. If the area hasn’t been declared
blighted or economically depressed, a
more suitable exemption may be under
sections 501(c)(4) or 501(c)(6). See Pub.
557 for more information.
If your exempt purpose is to eliminate
prejudice and discrimination, describe
how your activities further this purpose.
If your exempt purpose is to lessen the
burdens of government, describe whether
the government has recognized your
activities as those for which it would
otherwise be responsible, and any
involvement you have with governmental
entities that demonstrates that you are
actually lessening governmental burdens.
Line 7a. “Develop” means the planning,
financing, construction, or provision of
similar services involved in the acquisition
of real property, such as land or a building.
For example, you should provide
information regarding the services of a
consultant who puts together an
arrangement for you to acquire a nursing
home through the issuance of tax-exempt
bonds.
Line 7b. “Manage” means to direct or
administer. For example, you would
provide information about an organization
hired to administer a museum gift shop.
See the instructions for Part V, line 2a, for
a description of the term business or
family relationships.
Line 7c. See the instructions for Part V,
line 2a, for a description of the term
business or family relationships. See the

Instructions for Form 1023

instructions for Part V, line 7a, for a
description of the term arm's length.
Line 8. A “joint venture” is a legal
agreement in which the persons jointly
undertake a transaction for mutual profit.
Generally, each person contributes assets
and shares risks. Like a partnership, joint
ventures can involve any type of business
transaction and the persons involved can
be individuals, groups of individuals,
companies, or corporations.
Line 9a. Childcare services provide care
for children away from their homes. An
organization providing childcare services
may qualify for tax-exempt status as either
a school under section 170(b)(1)(A)(ii) or
childcare organization under section
501(k). Refer to the instructions for Part
VIII, line 19, to determine if you qualify as
a school.
A childcare organization qualifies under
section 501(k) if it provides care for
children away from their homes,
substantially all of the childcare enables
individuals to be gainfully employed, and
the services provided by the organization
are available to the general public.
Line 9b. “Gainfully employed” includes
enabling individuals to work or to seek
work.
Line 9c. Section 501(k) states that to
qualify as a childcare organization,
substantially all of the care you provide
should be to permit individuals to be
gainfully employed. If less than 85% of
your services are for children of working
parents or caretakers:
Describe the percentage of the children
for whom you provide services to permit
parents or caretakers to work, and
Describe any efforts you are taking to
increase the percentage of the children for
whom you provide services to permit
parents or caretakers to work.
Line 9d. Describe any eligibility
requirements, such as employment with a
particular employer.
Line 10. “ Intellectual property” includes
the following.
Patents (for inventions).
Copyrights (for literary and artistic
works such as novels, poems, plays, films,
musical works, drawings, paintings,
photographs, sculptures, architectural
designs, performances, recordings, film,
and radio or television programs).
Trade names, trade marks, and service
marks (for symbols, names, images, and
designs).
Formulas, know-how, and trade
secrets.
Line 12a. A “foreign country” is a country
other than the United States, its territories
and possessions, and the District of
Columbia.
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Line 13d. A “relationship” between you
and the recipient organization includes the
following situations.
You control the recipient organization or
it controls you through common officers,
directors, or trustees, or through authority
to approve budgets or expenditures.
You and the recipient organization were
created at approximately the same time
and by the same persons.
You and the recipient organization
operate in a coordinated manner with
respect to facilities, programs, employees,
or other activities.
Persons who exercise substantial
influence over you also exercise
substantial influence over the other
organization.
Line 14a. Answer “Yes” if you make
grants, loans, or other distributions (such
as goods) to a foreign organization. For
purposes of completing this application, a
domestic organization is one that is
formed under the laws of the United
States, its territories and possessions,
federally recognized Indian Tribal and
Alaska Native governments (including
political subdivisions), or the District of
Columbia. A “foreign organization” is one
that isn’t a domestic organization.
A list of federally recognized Indian
tribes is provided in Federal Register Doc.
2016-01769 at http://
www.federalregister.gov/documents/2017/
01/17/2017-00912/indian-entitiesrecognized-and-eligible-to-receiveservices-from-the-united-states-bureauof-indian. A list of entities that are treated
as political subdivisions of Indian tribal
governments is provided in Rev. Proc.
86-17, 1986-1 C.B. 550 and Rev. Proc.
84-36, 1984-1 C.B. 510.
Line 15. A “close connection” between
you and another organization includes the
following situations.
You control the organization or it
controls you through common officers,
directors, or trustees; or through authority
to approve budgets or expenditures.
You and the organization were created
at approximately the same time and by the
same persons. For example, you were
formed within months of the time that a
social welfare organization and a political
action committee were established by the
same persons who were instrumental in
your formation.
You and the organization operate in a
coordinated manner with respect to
facilities, programs, employees, or other
activities. For example, you share rental
expenses for office space and employees
with a for-profit corporation.
Persons who exercise substantial
influence over you also exercise
substantial influence over the other
organization and (1) you either conduct
activities in common or (2) have a financial

relationship. For example, a voting
member of your governing body is also a
voting member of the governing body of a
business league with which you intend to
cooperate in planning an advertising
campaign that will inform the public about
the benefits of a particular program. For
example, a voting member of your
governing body is also a voting member of
the governing body of a business league
that has made a loan to you.
Line 16. A “cooperative hospital service
organization” described in section 501(e)
is organized and operated on a
cooperative basis to provide its section
501(c)(3) hospital members one or more
of the following.
• Data processing.
• Purchasing (including purchasing
insurance on a group basis).
• Warehousing.
• Billing and collection (including
purchasing patron accounts
receivable on a recourse basis).
• Food services.
• Clinical.
• Industrial engineering.
• Laboratory.
• Printing.
• Communications.
• Record center.
• Personnel (including selecting,
testing, training, and educating
personnel) services.
A cooperative hospital service
organization must also meet certain other
requirements specified in section 501(e).
For additional information, see Pub 557.
Line 17. A cooperative service
organization of operating educational
organizations described in section 501(f)
is organized and operated to provide
investment services to its members.
Those members must be organizations
described in section 170(b)(1)(A)(ii) or (iv),
and either tax exempt under section
501(a) or whose income is excluded from
taxation under section 115(a).
See Pub. 557 for additional
information.
Line 18. A “charitable risk pool”
described in section 501(n) is organized
and operated to pool insurable risks of its
section 501(c)(3) members (other than
risks related to medical malpractice). A
section 501(n) organization must be
organized under state law provisions
authorizing risk pooling arrangements for
charitable organizations and also meet
certain other requirements provided by
section 501(n).
See Pub. 557 for additional
information.
Line 19. “A school” is an educational
organization whose primary function is the
presentation of formal instruction and

which normally maintains a regular faculty
and curriculum and normally has a
regularly enrolled body of pupils or
students in attendance at the place where
its educational activities are regularly
carried on. A school may include a the
following.
Primary, secondary, preparatory, or
high school.
College or university.
Trade or technical school.
Nursery or pre-school.
School that you operate as an activity,
such as a school that is operated as an
activity of a museum, historical society, or
church.
If you are a nursery or pre-school that
meets the description of a school, you
would answer “Yes” to line 19 and
complete Schedule B. You would also
answer “No” to Part VIII, line 9a.
If you are a nursery or pre-school that
doesn’t meet the description of a school,
you would answer “No” to line 19. You
would answer “Yes” to Part VIII, line 9a, if
you are applying for exemption as a
childcare organization.
See Pub. 557 for additional
information.

Travel, study, or other similar purposes
include payments made to enhance a
literary, artistic, musical, scientific,
teaching or other similar capacity, skill, or
talent of the individual recipient. For
example amounts paid to:
Vocational high school students to be
used to purchase basic tools,
Teachers to induce them to teach in an
economically depressed, public school
system, and
A scientific researcher to underwrite
that individual's research project.
Educational grants don’t include
amounts you pay to an individual as
compensation, such as payments made to
a consultant for personal services or to
produce a report for you.
Educational grants don’t include
amounts paid to another organization that
distributes your funds as a scholarship to
an individual if you have no role in the
selection process.
If you are a “private foundation” as
described in Part X, you can request
advance approval of your grant-making
procedures by completing Schedule H
and avoid the possible imposition of
excise taxes under section 4945.

Line 20. “Hospital or medical care”
includes the treatment of any physical or
mental disability or condition, whether as
an inpatient or outpatient. A hospital
includes the following.
Hospitals and rehabilitation institutions,
outpatient clinics, or community mental
health or drug treatment centers if the
principal purpose or function is the
providing of medical or hospital care or
medical education or research.
Medical research organizations, if the
principal purpose or function is the
continuous active conduct of medical
research in conjunction with a hospital.
See Pub. 557 for additional
information.

Part IX. Financial Data

Line 21. “Low-income housing” refers to
rental or ownership housing provided to
persons based on financial need. “Elderly
housing” refers to rental or ownership
housing provided to persons based on
age, including retirement, assisted-living,
independent living, continuous care, and
life care arrangements. “Handicapped
housing” refers to rental or ownership
housing provided to persons based on
physical or mental disabilities, including
nursing homes.
If you are a skilled nursing facility, you
should also complete Schedule C.
Line 22. Answer “Yes” if you pay money
to an individual as a scholarship,
fellowship, or educational loan, for travel,
study, or other similar purposes. Also
answer “Yes” if you pay such amounts on
behalf of an individual to a school or a
tuition or educational savings program.
-12-

A. Statement of Revenues and
Expenses
Existed 5 years or more. If you have
been in existence for 5 years or more,
complete the A. Statement of Revenues
and Expenses for your most recently
completed year and each of the three
years immediately before it. Place
financial information for your most recently
completed year in the column marked
Current tax year. For the fifth year, enter
the required information on a separate
statement and attach it to Form 1023. The
information on the Statement of Revenues
and Expenses and on the separate
statement will contain a total of five years
of financial information.

!

CAUTION

We may request financial
information for more than five
years if necessary.

Existed more than one year, less
than 5 years. If you have been in
existence for more than 1 year and less
than 5 years, provide your actual income
and expenses for each completed year
you have existed and projections of your
likely income and expenses based on a
reasonable and good faith estimate of
your future finances for your current year
and each year you haven’t existed for a
total of 4 years of financial information.
Place financial information for the year you
are filing this application in the column
marked Current tax year.
Instructions for Form 1023

Existed less than 1 year. If you have
existed for less than 1 year, you must
provide projections of your likely income
and expenses for your current year and
projections of your likely income and
expenses for the next 2 years based on a
reasonable and good faith estimate of
your future finances for a total of 3 years of
financial information. Place financial
information for the year you are filing this
application in the column marked Current
tax year.
Preparing the statement. Prepare the
statements using the method of
accounting you use in keeping your books
and records. If you use a method other
than the cash receipts and disbursements
method, attach a statement explaining the
method used. For example, state whether
you used the accrual method of
accounting to prepare the financial
statements included with this application.
Prepare the statements using the
accounting period entered on Part I, line 5.
Financial information should reflect
projected activities reported elsewhere in
this application.
Line 1. Include funds or other items of
value that you receive as gifts, grants, or
contributions. For example, if one of your
activities is a food drive, the value of the
donated food must be included on this
line. Also include on this line payments a
governmental unit makes to enable you to
both accomplish your exempt purpose(s)
and to provide a service or facility directly
to the general public.
See the instructions to line 9 if you are
uncertain whether revenue should be
included as a grant in line 1 or as gross
receipts in line 9. Unusual grants aren’t
included on this line, but are included on
line 12.
Examples
1. A city pays the symphony orchestra
to provide free music programs in the
public schools. The programs are open to
the public. This income received from a
governmental unit accomplishes the
orchestra's exempt purpose and directly
provides a service to the general public.
The income is a grant to the symphony
orchestra that should be listed on line 1.
2. The symphony orchestra sells
tickets to the public for its fall season.
Such income is gross receipts received
from the general public in performance of
the orchestra's exempt function and
should be listed on line 9.
3. The public school system pays the
symphony orchestra to create several
musical pieces suitable for the school
system's elementary music curriculum.
This payment by a governmental unit for
the music compositions is primarily for its
(the school system's) own use, not for the
direct benefit of the public. Therefore, this
Instructions for Form 1023

income is gross receipts received from a
governmental unit in performance of the
orchestra's exempt function that should be
listed on Line 9.
Line 2. Include amounts received from
members to provide support to the
organization. Don’t include payments from
members or on behalf of members to
purchase admissions, merchandise,
services, or use of facilities.
Line 3. Include gross income from
dividends, interest, payments received on
securities, loans, rents, and royalties that
are held for investment purposes.
Line 4. Net income from unrelated
business activities generally includes
income from any trade or business activity
that is regularly carried on, not conducted
with substantially all (at least 85%)
volunteer labor, and not related to your
exempt purposes. (This amount can be
taken from Form 990-T, if filed.)
Report on line 9 income from activities
that aren’t related to the accomplishment
of your exempt purposes, but aren’t
considered unrelated business activities.
For example, income from the sale of
merchandise by volunteers that isn’t
treated as an unrelated trade or business
is reported on line 9.
See Pub. 598 for additional information
regarding unrelated business income.
Line 5. Include the amount collected by
any local tax authority from the public on
your behalf.
Line 6. To determine the value of
services or facilities furnished by a
governmental unit, use the fair market
value of the services or facilities furnished
to you. Don’t include the value of services
or facilities generally provided to the public
without charge.
Line 7. Enter the total income from all
sources not reported on lines 1 through 6,
or lines 9, 11, and 12. Submit an itemized
list showing each type and amount of
income included. Also, briefly describe
each type of income.
Line 8. Add lines 1 through 7 and enter
the amount.
Line 9. “Gross receipts” is income from
activities that you conduct to further your
exempt purposes (excluding amounts
listed on other lines). It includes payments
by a governmental unit that may be called
a “grant,” but that is actually payment for a
service or facility for the use of the
government payer, rather than for the
direct benefit of the public.
Example. The state government gives
a conservation group a grant to study the
consequences to an ecologically
significant woodland area of a new
sewage treatment plan. Although the
-13-

payment is called a grant, it is actually
gross receipts that should be included on
line 9. The payment is by a governmental
unit (state) for a study for its own use, not
for the direct benefit of the general public.
The study could have been done by a
for-profit consulting company rather than
by the tax-exempt conservation group.
Submit an itemized list of payments by
any governmental units showing:
Payer (governmental unit or bureau),
Purpose of payment, and
Amount.
Include as gross receipts the income
from activity conducted:
Intermittently (not regularly carried on),
such as an occasional auction.
With substantially all (at least 85%)
volunteer labor, such as a car wash.
For the convenience of members,
students, patients, officers, or employees,
such as a parking lot for a school's
students and employees.
With substantially all contributed
merchandise, such as a thrift store.
See Pub. 598 for additional information
regarding income that isn’t from an
unrelated trade or business.
Line 10. Add lines 8 and 9 and enter the
amount.
Line 11. Attach a schedule with total
amounts entered (rather than each
individual transaction) for each category
using the format in Figure 2.
Line 12. “Unusual grants” generally are
substantial contributions and bequests
from disinterested persons that by their
size adversely affect classification as a
public charity. They are unusual,
unexpected, and received from an
unrelated party.
You must fully describe your unusual
grants in Part X, line 7. For additional
information about unusual grants and a
description of public charity classification
see Pub. 557.
Line 13. Add lines 10 through 12 and
enter the amount.
Line 14. Fundraising expenses include
the total expenses incurred by you for
soliciting gifts, grants, and contributions
included on line 1. Where you allocate a
portion of your other expenses to
fundraising, submit an itemized list
describing the amounts allocated. Include
fees paid to professional fundraisers for
soliciting gifts, grants, and contributions.
Line 15. If distributions have been made,
submit an itemized list showing the name
of each recipient, a brief description of the
purposes or conditions of payment, and
the amount paid.
Colleges, universities, and other
educational institutions and agencies
subject to the Family Educational Rights

Figure 2. Part IX–A. Statement of Revenues and Expenses
Line 11. Net Gain or (Loss)
Categories
(A) Real Estate

(B) Securities

(C) Other

Line 6. Enter the total amount of loans
(personal and mortgage loans) receivable.
Submit an itemized list that shows each
borrower's name, purpose of loan,
repayment terms, interest rate, and
original amount of loan. Report each loan
separately, even if more than one loan
was made to the same person.

1. Gross sales price of
assets (other than
inventory) by category.
2. Less: Cost or other
basis and sales
expenses.
3. Gain or (loss). Subtract
line 2 from line 1.
4. Net gain or (loss) – Add line 3 of columns (A), (B), and (C). Enter here and
on Form 1023, Part IX - A. Statement of Revenues and Expenses, line 11.

and Privacy Act (20 U.S.C. 1232g) need
not list the names of individuals who were
provided scholarships or other financial
assistance where such disclosure would
violate the privacy provisions of the law.
Instead, such organizations should group
each type of financial aid provided,
indicate the number of individuals who
received the aid, and specify the
aggregate dollar amount.
Line 16. If payments have been made,
submit an itemized list showing the name
of each recipient, a brief description of the
purposes or condition of payment, and
amount paid. Don’t include any amounts
on line 15.
Line 17. Enter the total amount of
compensation. Be consistent with
information provided in Part V, lines 1a,
1b, and 1c.

expense for which a separate line isn’t
provided.
Line 24. Add lines 14 through 23 and
enter the amount on line 24.

B. Balance Sheet

Complete the following for your most
recently completed tax year. If you haven’t
completed a full tax year, use the most
current information available. Be sure to
enter the year-end date for the information
provided and not the date the form is
prepared.
Line 1. Enter the total cash in checking
and savings accounts, temporary cash
investments (money market funds, CDs,
treasury bills, or other obligations that
mature in less than one year), and petty
cash funds.

Line 18. Enter the total amount of
employees' salaries and wages not
reported on line 17.

Line 2. Enter the total accounts
receivable that arose from the sale of
goods and/or performance of services,
less any reserve for bad debt.

Line 19. Enter the total interest expense
for the year, excluding mortgage interest
treated as an occupancy expense on
line 20.

Line 3. Enter the amount of materials,
goods, and supplies you purchased or
manufactured and held to be sold or used
in some future period.

Line 20. Enter the amount paid for the
use of office space or other facilities, heat,
light, power, and other utilities, outside
janitorial services, mortgage interest, real
estate taxes, and similar expenses.

Line 4. Enter the total amount of bonds or
notes that you issued that will be repaid to
you. Submit an itemized list that shows the
name of each borrower, a brief description
of the obligation, the rate of return, the due
date, and the amount due.

Line 21. If you record depreciation,
depletion, and similar expenses, enter the
total amount.
Line 22. Professional fees are those
charged by individuals and entities that
aren’t your employees. They include fees
for professional fundraisers (other than
fees listed on line 14, above), accounting
services, legal counsel, consulting
services, contract management, or any
independent contractors.
Line 23. Submit an itemized list showing
the type and amount of each significant

the counter, the statement should show
the name of the corporation, a description
of the stock and the principal exchange on
which it is traded, the number of shares
held, and their value as carried on your
books and their fair market value.

Line 5. Enter the total fair market value
(FMV) of corporate stocks you hold.
Submit an itemized list of your corporate
stock holdings. For stock of closely held
corporations, the statement should show
the name of the corporation, a brief
summary of the corporation's capital
structure, the number of shares held, and
their value as carried on your books. If
such valuation doesn’t reflect current fair
market value, also include fair market
value.
For stock traded on an organized
exchange or in substantial quantities over
-14-

Line 7. Enter the total book value of other
investments. Include the total book value
of government securities (federal, state,
and municipal), and buildings and
equipment held for investment purposes.
Submit an itemized list identifying and
reporting the book value of each building/
item of equipment held for investment
purposes.
Line 8. Enter the total book value of
buildings and equipment not held for
investment. This includes facilities you
own and equipment you use in conducting
your exempt activities. Submit an itemized
list of these assets held at the end of the
current tax year/period, including the cost
or other basis.
Line 9. Enter the total book value of land
not held for investment.
Line 10. Enter the total book value of any
other category of assets not reported on
lines 1 through 9. For example, you would
include patents, copyrights, or other
intangible assets. Submit an itemized list
of each asset.
Line 11. Add lines 1 through 10 and enter
the amount.
Line 12. Enter the total amount of
accounts payable to suppliers and others,
such as salaries payable, accrued payroll
taxes, and interest payable.
Line 13. Enter the total unpaid portion of
grants and contributions you have
committed to pay to other organizations or
individuals.
Line 14. Enter the total of mortgages and
other notes payable outstanding at the
end of the current tax year/period. Submit
an itemized list that shows each note
separately, including the lender's name,
purpose of loan, repayment terms, interest
rate, and original amount.
Line 15. Enter the total amount of any
other liabilities not reported on lines 12
through 14. Submit an itemized list of
these liabilities, including the amounts
owed.
Line 16. Add lines 12 through 15 and
enter the amount.

Instructions for Form 1023

Line 17. Under fund accounting, an
organization segregates its assets,
liabilities, and net assets into separate
funds according to restrictions on the use
of certain assets. Each fund is like a
separate entity in that it has a
self-balancing set of accounts showing
assets, liabilities, equity (fund balance),
income, and expenses. If you don’t use
fund accounting, report only the “net
assets” account balances, which include
capital stock, paid-in capital, retained
earnings or accumulated income, and
endowment funds.
Line 18. Add lines 16 and 17 and enter
the amount.
Line 19. If you answer “Yes,” describe the
change and explain what caused it.

Part X. Public Charity
Status
Line 1a. Organizations that are exempt
under section 501(c)(3) are private
foundations unless they are:
Churches, schools, hospitals,
governmental units, entities that undertake
testing for public safety, organizations that
have broad financial support from the
general public; or
Organizations that support one or more
other organization(s) that are themselves
classified as public charities.
Section 501(c)(3) organizations
excepted from private foundation status
are public charities. See the instructions
for Part X, lines 5a through 5j for a more
detailed description of public charities.
Unless you meet one of the exceptions
above, you are a private foundation and
must answer, “Yes,” on line 1a.
Line 1b. Section 508(e) provides that a
private foundation isn’t tax exempt unless
its organizing document contains specific
provisions. These specific provisions
require that you operate to avoid liability
for excise taxes under sections 4941(d),
4942, 4943(c), 4944, and 4945(d). You
can also meet these provisions by reliance
on state law.
See Pub. 557, Chapter 3, Section
501(c)(3) Organizations, Private
Foundations and Public Charities,
Governing instrument for samples of
provisions that will meet section 508(e).
Also, see Appendix B for a list of states
that have enacted statutory provisions that
satisfy the requirements of section 508(e),
subject to notations. Appendix B is based
on Rev. Rul. 75-38, 1975-1 C.B. 161.
Line 2. Some private foundations are
private operating foundations. These are
types of private foundations that lack
general public support, but make
qualifying distributions directly for the
active conduct of their educational,
Instructions for Form 1023

charitable, and religious purposes.
“Directly for the active conduct” means
that the distributions are used by the
foundation itself to carry out the programs
for which it is organized and operated.
Grants made to assist other organizations
or individuals are normally considered
indirect.
For additional information about private
operating foundations, go to http://
www.irs.gov/charities-non-profits/privatefoundations/private-operating-foundationsupport-test.
Line 3. If you have existed for one year or
more, you must provide financial
information that demonstrates you meet
the requirements to be classified as a
private operating foundation.
Line 4. If you have existed for less than
one year, you must ordinarily provide an
affidavit or opinion of counsel that sets
forth facts concerning your operations and
projected support to demonstrate that you
are likely to satisfy the requirements to be
classified as a private operating
foundation. If you haven’t provided an
affidavit or opinion of counsel, you may
provide a narrative statement that
provides sufficient information to
demonstrate that you are likely to satisfy
the requirements to be classified as a
private operating foundation.
Line 5a. Check this box if your primary
purpose is operating a church or a
convention or association of churches.
The term “church” includes mosques,
temples, synagogues, etc. If you select
this box, complete and submit
Schedule A.
Line 5b. Check this box if your primary
purpose is operating a school. If you
select this box, complete and submit
Schedule B.
If you operate a school but it isn’t your
primary purpose, don’t check this box.
However, you must still complete and
submit Schedule B.
Be sure your response is consistent
with Part VIII, line 19.
Line 5c. Check this box if your primary
purpose is providing medical or hospital
care, or medical education or research
(performed in association with a hospital).
If you select this box, complete and submit
Schedule C.
A hospital includes a rehabilitation
institution, outpatient clinic, community
mental health clinic, drug treatment
center, or skilled nursing facility.
A hospital doesn’t include
convalescent homes, homes for children
or the aged, or institutions whose principal
purpose or function is to train
handicapped individuals to pursue some
vocation.
-15-

Cooperative hospital service
organizations described in section 501(e)
should also check this box, but don’t
complete Schedule C.
Line 5d. Check this box if you are
organized and operated to support
organizations described in lines 5a
through 5c, 5f, 5h, or 5i, or an organization
that is tax exempt under section 501(c)(4),
(5), or (6). If you select this box, complete
and submit Schedule D.
The organization(s) you support should
have a significant influence over your
operations.
Line 5e. Check this box if your primary
purpose is to test products to determine
their acceptability for use by the general
public.
Contributions to organizations of this
type aren’t deductible under section
170(c). Also, organizations that primarily
test for specific manufacturers don’t
qualify for exemption under section 501(c)
(3).
Line 5f. Check this box if you are
organized and operated exclusively to
benefit a college or university owned or
operated by a governmental unit. You
must also normally receive a substantial
part of your support from a governmental
unit or from contributions from the general
public.
Organizations that qualify under this
category would generally also qualify
under section 509(a)(3), line 5d, which
would be an easier public charity status to
maintain.
Line 5g. Check the box if you are an
agricultural research organization
described in section 170(b)(1)(A)(ix)
operated in conjunction with a land grant
college or university or a non-land grant
college of agriculture.
Attach to your application additional
information detailing your agricultural
research program and how contributions
to such program will be spent. This
information should include the following.
A description of how you are engaged
in the continuous active conduct of
agricultural research (as defined in section
1404 of the Agricultural Research,
Extension, and Teaching Policy Act of
1977).
Information showing that you are
operated in conjunction with a land grant
college or university or a non-land grant
college of agriculture (as defined in
section 1404 of the Agricultural Research,
Extension, and Teaching Policy Act of
1977).
Information discussing the timing of
when you will spend contributions for
research.
Line 5h. Check this box if you normally
receive a substantial part of your support

from grants from governmental units or
from contributions from the general public,
or a combination of these sources.
Typically, a substantial part of your income
would be shown on Part IX-A. Statement
of Revenues and Expenses, lines 1 and 2.
Under this public charity status, you
must meet the one-third public support
test or the 10% facts and circumstances
test.
Public support test. An organization
must receive either (1) at least one-third of
its total support from governmental
agencies, contributions from the general
public, and contributions or grants from
other public charities; or (2) at least 10%
of its total support from governmental
agencies, contributions from the general
public, and contributions or grants from
other public charities and also satisfy a
facts and circumstances test.
Facts and circumstances test. Facts
and circumstances include (1) the amount
of support you received from the general
public, governmental units, or public
charities; (2) whether you have a
continuous and bona fide program for
solicitation of funds from the general
public, governmental units, or public
charities; and (3) all other facts and
circumstances, including the public nature
of your governing board, the extent to
which your facilities or programs are
publicly available, the extent to which your
dues encourage membership, and
whether your activities are likely to appeal
to persons having a broad common
interest or purpose. For additional
information about the 10% facts and
circumstances test, see Pub. 557 and
Reg. section 1.170A-9(e)(3).
Line 5i Check this box if you normally
receive more than one-third of your
support from contributions, membership
fees, and gross receipts from activities
related to your exempt functions, or a
combination of these sources, and not
more than one-third of your support from
gross investment income and net
unrelated business income. Typically, a
substantial part of your income would be
shown on Part IX-A. Statement of
Revenues and Expenses, lines 1, 2, and
9.
Under this public charity status, you
must meet both the “one-third public
support test” and the
“not-more-than-one-third investment
income and net unrelated business
income test”. Before checking this box,
consider the types of income you listed on
Part IX-A. Statement of Revenues and
Expenses, lines 1 through 13. See Pub.
557 for additional information about these
tests.
Line 5j. Check this box if you are unsure
whether you are better described in boxes

5h or 5i. By checking this box, you agree
to let us choose the best public charity
status for you.
Line 6. Confirmation of public support
status. If you have been in existence for
more than 5 years, and you checked
box 5h, 5i, or 5j; then you must confirm
your public support status.
This determination must be based on
your public support computed on the cash
method of accounting. Therefore, if you
use the accrual method of accounting,
please use a worksheet to convert your
revenue accounts from the accrual to the
cash basis. Such a worksheet is provided
in Instructions for Schedule A (Form 990
or 990-EZ), Public Charity Status and
Public Support, Part IV. Supporting
Organizations, Section A. All Supporting
Organizations.
To show that you meet one of the
required public charity support tests,
complete lines 6a and/or 6b.
Line 6a(i). From Part IX-A. Statement
of Revenues and Expenses, add the line 8
amounts from completed tax years only.
Multiply the total by 2% (0.02) and enter
the amount in the space provided.
Line 6a(ii). Attach a list showing the
name and amount contributed by each
person, company, or organization whose
gifts totaled more than the 2% amount. If
no gifts totaled more than the 2% amount,
state this on an attachment.
Line 6b(i). For each year amounts are
included in lines 1, 2, and 9 of Part IX-A,
attach a list showing the name and
amount received from each disqualified
person. If no such amounts are included
on lines 1, 2, and 9 of Part IX-A, state this
on an attachment.
Line 6b(ii). The required list for this
line should include the name of and
amounts paid by each individual or
organization included on line 9, Part IX-A.
Statement of Revenues and Expenses,
that were greater than the larger of 1% of
line 10, of the Part IX-A. Statement of
Revenues and Expenses or $5,000 for
any completed tax year. Your list for each
payer must show a year-by-year
breakdown of the amounts reported for
completed tax years on Part IX-A.
Statement of Revenues and Expenses,
line 9. If no such payments were made,
state this on an attachment.

!

CAUTION

Don’t include disqualified persons
in this list. Disqualified persons
should be listed in line 6b(i).

For purposes of this application, a
“disqualified person” is any individual or
organization that is any of the following.
1. A "substantial contributor" to you
(defined below).
-16-

2. An officer, director, trustee, or any
other individual who has similar powers or
responsibilities.
3. An individual who owns more than
20% of the total combined voting power of
a corporation that is a substantial
contributor.
4. An individual who owns more than
20% of the profits interest of a partnership
that is a substantial contributor.
5. An individual who owns more than
20% of the beneficial interest of a trust or
estate that is a substantial contributor.
6. A member of the family of any
individual described in 1, 2, 3, 4, or 5
above.
7. A corporation in which any
individuals described in 1, 2, 3, 4, 5, or 6
above, hold more than 35% of the total
combined voting power.
8. A trust or estate in which any
individuals described in 1, 2, 3, 4, 5, or 6
above, hold more than 35% of the
beneficial interests.
9. A partnership in which any
individuals described in 1, 2, 3, 4, 5, or 6
above, hold more than 35% of the profits
interest.
Substantial contributor. A
“substantial contributor” is any individual
or organization that gave more than
$5,000 to you from the date you were
formed or other date that your exemption
would be effective, to the end of the year
in which the contributions were received.
This total amount contributed must also be
more than 2% of all the contributions you
received. A creator of a trust is treated as
a substantial contributor regardless of the
amount contributed.
For more information regarding
substantial contributors, go to IRS.gov/
SubstantialContributor.
Family members. A “member of the
family” includes the spouse, ancestors,
children, grandchildren,
great-grandchildren, and their spouses.
For additional information concerning
members of the family, go to IRS.gov/
FamilyMembers.
Further information about disqualified
persons, can be obtained at IRS.gov/
DisqualifiedPerson.
Line 7. “Unusual grants” generally are
substantial contributions and bequests
from disinterested persons that by reason
of their size adversely affect classification
as a public charity. They are unusual,
unexpected, and received from an
unrelated party. If you answer “Yes” to
line 7, submit a statement for each grant.
The statement should include the name of
the contributor, the date and amount of the
grant, a brief description of the grant, and
an explanation of why it is unusual. You
Instructions for Form 1023

should include details of any additional
funds you expect to receive from the
contributors listed. If they qualify for
unusual grant treatment, these amounts
should be reported on Part IX-A.
Statement of Revenues and Expenses,
line 12.
See Pub. 557 for additional information
about unusual grants.

Part XI. User Fee
Information

!

CAUTION

Your application will not be
processed without payment of the
proper user fee.

Your user fee may be paid by a
personal or certified check, bank check, or
cashier's check. Your check should be
made payable to the United States
Treasury. For the current user fee
amounts, go to www.irs.gov/charities-nonprofits/form-1023-amount-of-user-fee. You
can also call 877-829-5500.

Schedule A. Churches
There is no single definition of the word
“church” for tax purposes. When
determining whether a section 501(c)(3)
religious organization is also a church, we
will consider characteristics generally
attributed to churches and the facts and
circumstances of each organization
applying for public charity status as a
church.
The characteristics generally attributed to
churches are as follows.
A distinct legal existence.
A recognized creed and form of
worship.
A definite and distinct ecclesiastical
government.
A formal code of doctrine and
discipline.
A distinct religious history.
A membership not associated with any
other church or denomination.
Ordained ministers ministering to the
congregation.
Ordained ministers selected after
completing prescribed courses of study.
A literature of its own.
Established places of worship.
Regular congregations.
Regular religious services.
Sunday schools for the religious
instruction of the young.
Schools for the preparation of ministers.
Although it isn’t necessary that each of the
above criteria be met, a congregation or
other religious membership group is
generally required. A church includes
mosques, temples, synagogues, and
other forms of religious organizations. For
more information, see Pub. 1828.

illegal or contrary to clearly defined public
policy.

Specific Line Items
Line 1a. Provide a copy of your written
creed, statement of faith, or summary of
beliefs.
Line 1b. A “form of worship” refers to
religious practices that express your
devotion to your creed, faith, or beliefs.
Line 2a. A “code of doctrine and
discipline” refers to a body of laws or rules
that govern behavior.
Line 2b. Your “religious history” includes
the story of your establishment and major
events in your past.
Line 2c. Your literature includes any
writings about your beliefs, rules, or
history.
Line 3. A “religious hierarchy or
ecclesiastical government” refers to
people or institutions that exercise
significant influence or authority over you.
Line 4a. Indicate the regular days and
times of your religious services. Describe
the order of events during your regular
worship service and explain how the
activities conducted as part of your
services further your religious purposes.
Also include sample copies of church
bulletins, pamphlets, or flyers that are
distributed to your members or the general
public.
Line 4b. Enter on the space provided, the
average number of members and
non-members who attend your regularly
scheduled religious services.
Line 5a. An “established place of
worship” is a place where you hold
regularly scheduled religious services. It
may be a place that you own, rent, or
which is provided freely for your use. If you
answer “Yes,” go to line 5b. If you answer
“No,” describe where you meet to hold
regularly scheduled religious services.
Line 6. An “established congregation” or
“other religious membership group”
includes individuals who regularly attend
and take part in the religious services of
your organization at an established
location. An established congregation
generally doesn’t include members of only
one family. If you answer “No” because
you don’t have an established
congregation or other religious
membership, you may be a religious
organization that doesn’t qualify as a
church. If you don’t qualify as a church,
you will need to go back to Part X, line 5,
to reconsider your public charity status.

The practices and rituals associated with
your religious beliefs or creed must not be
-17-

You may request classification as

TIP a church at a later date after you

establish a congregation or other
religious membership group. For
information about this option, contact our
customer account service representatives
at 877-829-5500 (toll-free).
Line 7. Enter the total number of your
current members in the provided. If you
have no members, enter zero.
Line 8a. Answer “Yes” if you have a
prescribed way to become a member.
Answer “Yes” even if you just keep
records of who is currently a member.
Describe any actions required for
individuals to become members. Submit
copies of any application forms used.
Line 8b. Describe any rights and benefits
of members. You should include details of
any levels of membership and the rights
and/or benefits associated with each level.
Line 8c. If your members may be
associated with another denomination or
church, describe the circumstances in
which your members would be members
of your church and another church.
Line 8d. See Glossary, Appendix C, for a
description of the word “family.”
Line 9. Answer “Yes” if you conduct
baptisms, weddings, funerals, or other
religious rites.
Line 10. A school for the religious
instruction of the young refers to any
regularly scheduled religious, educational
activities for youth, such as “Sunday
school.”
Line 11a. A “prescribed course of study”
refers to formal or informal training. It
doesn’t include self-ordination or paying a
fee for an ordination certificate without
completing a course of study. Describe
the course of study completed by your
religious leader.
L:ine 12. Answer “Yes” if your religious
leader is listed in Part V, line 1a.
Line 14. Answer “Yes” if you are part of a
group of churches with similar beliefs and
structures, such as a convention,
association, or union of churches.
Line 16. If you answer “Yes,” submit a
copy of your church charter. Identify the
organization that issued the charter and
describe the requirements you met to
receive it. Don’t describe organizational
charters you received from your state's
Secretary of State, Franchise Tax Board,
or similar administrative office.
Line 17. Attach any additional information
you would like us to consider that would
help us classify you as a church.

An organization is a school if it:
Presents formal instruction as its
primary function.
Has a regularly scheduled curriculum.
Has a regular faculty of qualified
teachers.
Has a regularly enrolled student body.
Has a place where educational
activities are regularly carried on.
The term “school” includes primary,
secondary, preparatory, high schools,
colleges, and universities. It doesn’t
include organizations engaged in both
educational and non-educational
activities, unless the latter are merely
incidental to the educational activities.
Non-traditional schools such as an
outdoor survival school or a yoga school
may qualify.
The term “school” doesn’t include
home schools.

Section I. Operational Information
Line 1a. Answer “Yes” if you have a
regularly scheduled curriculum, a regular
faculty of qualified teachers, a regularly
enrolled student body, and facilities where
your educational activities are regularly
carried on. Submit evidence establishing
that you meet these factors, as described
below.
Evidence that you have a regularly
scheduled curriculum includes a list of
required courses of study, dates and times
courses are offered, and other information
about how to complete required courses.
Evidence that you have a regular faculty
of qualified teachers includes certifications
by the appropriate state authority or
successful completion of required training.
Evidence of a regularly enrolled student
body includes records of regular
attendance by students at your facility.
Evidence of a place where your
exclusively educational activities are
regularly carried on includes a lease
agreement or deed for your facility.
If you answer “No,” don’t complete
Schedule B. You don’t meet the
requirements of a school and you will
need to go back to Part X, line 5, to
reconsider your public charity status.
Line 1b. Answer “Yes” if your primary
function is the presentation of formal
instruction. If you answer “No,” don’t
complete Schedule B. You don’t meet the
requirements of a school and you will
need to go back to Part X, line 5, to
reconsider your public charity status.

“Yes,” don’t complete the remainder of
Schedule B.

The M school admits students
of any race, color, national
origin, and ethnic origin to all the
rights, privileges, programs, and
activities generally accorded or
made available to students at
the school. It doesn't
discriminate on the basis of
race, color, national origin, and
ethnic origin in administration of
its educational policies,
admission policies, scholarship
and loan programs, and athletic
and other school-administered
programs.

Line 2b. Answer “Yes” if you have a
signed contract or agreement with a state
or local government under which you
operate and receive funding. Submit a
signed and dated copy of your contract or
agreement. If you answer “Yes,” don’t
complete the remainder of Schedule B.
Line 3. Enter the name of the public
school district and county where you
operate.
Line 4. Answer “Yes” if you were formed
or substantially expanded during a period
of time when public schools in your district
or county were desegregated by court
order.

!

CAUTION

If you are unsure whether to
answer “Yes,” contact an
appropriate public school official.

Line 5. Answer “Yes” if a state or federal
administrative agency or judicial body ever
determined your organization to be racially
discriminatory. Identify the parties involved
and the forum in which the case was
presented. Explain the reason for the
action, the decision reached, and provide
legal citations (if any) for the decision.
Also, explain in detail any changes made
in response to the action against your
organization or the decision reached.
Line 7. In responding to this line, you may
reference information previously provided
in response to Part VIII, lines 7a, 7b, or 7c,
along with any additional information to
fully respond.
Line 8. Answer “Yes” if you manage or
intend to manage your programs through
your own employees or by using
volunteers. Answer “No” if you engage or
intend to engage a separate organization
or independent contractor. Make sure your
answer is consistent with the information
provided in Part VIII, line 7b. In responding
to this line, you may reference information
previously provided in response to Part
VIII, line 7a, 7b, or 7c, along with any
additional information to fully respond.

Section II. Establishment of
Racially Nondiscriminatory Policy
A section 501(c)(3) organization that is a
school must publish a notice of its racially
nondiscriminatory policy as to students as
follows.

Every private school is subject to the
provisions of Revenue Procedure 75-50,
1975-2 C.B. 587. See Pub. 557, which
sets forth the requirements of Rev. Proc.
75-50 under the section for Private
Schools.
A private school must also certify
annually that it meets the requirements of
Rev. Proc. 75-50. This can be
accomplished by filing Schedule A (Form
990, Form 990-EZ) Organization Exempt
Under Section 501(c)(3).
Schools that don’t file Form 990 or
990-EZ must file Form 5578, Annual
Certification of Racial Nondiscrimination
for a Private School Exempt From Federal
Income Tax.
Line 1. Answer “Yes” if your organizing
document or bylaws contain a
nondiscriminatory statement as to
students similar to the one shown above.
Answer “No” if the nondiscrimination
statement isn’t included. If the statement
isn’t included in your organizing document
or bylaws, you may submit a copy of your
signed and dated resolution that was
adopted according to your internal rules or
regulations. Your resolution should
approve a nondiscriminatory policy similar
to the one shown above.
Line 2. Answer “Yes” if your brochures,
application forms, advertisements, and
catalogues dealing with student
admissions, programs, and scholarships
contain a statement similar to the
following.
.

Schedule B. Schools,
Colleges, and Universities

The M school admits students of any
race, color, and national or ethnic
origin.

Submit representative copies of each
document.
If you answer “No,” to line 2, but
checked the box on line 2b, you are
agreeing that all future printed materials,
including Internet content, will contain a

Line 2a. Answer “Yes” if you are a public
school. Submit documentation of your
status as a public school. If you answer

-18-

statement of nondiscriminatory policy as
to students similar to the one provided
above.
Line 3. You must demonstrate that you
have made your nondiscriminatory policy
known to all segments of the general
community served by the school. One way
of meeting this requirement is to publish
the school's nondiscriminatory policy
annually. If you have already published
your notice, submit the actual page of the
newspaper on which the notice appears.
We can’t accept a photocopy, other
electronic reproduction, or partial page of
the newspaper.
Answer “No,” if you haven’t attached
your notice and describe how you meet
the publicity requirement of Rev. Proc.
75-50.
See Pub. 557 or Rev. Proc. 75-50 for
guidance on the format and content of the
required notice and whether any
exceptions may apply to you.
A notice published in the legal

TIP notices section or classified

advertisements of your local
newspaper is generally not acceptable.
Line 5. Enter the racial composition of
your student body, faculty, and
administrative staff in the spaces
provided. Enter actual numbers, rather
than percentages, for the current year and
projected numbers for the next academic
year. If the number is zero, then enter “0.”

!

Don’t identify students, faculty,
and staff by name.

CAUTION

If you are completing the table based
on estimates, submit documentation that
supports how you arrived at the estimated
numbers. For example, if your estimates
are based on the racial composition of the
community in which you operate, submit
current census data of the racial
composition for the area. If your numbers
and the census numbers differ greatly,
explain why.
Line 6. Enter the racial composition of
students to whom you award loans and
scholarships in the spaces provided. Enter
actual numbers, rather than percentages,
for the current year and projected
numbers for the next academic year. If the
number is zero, then enter “0.”

!

Don’t identify students by name.

CAUTION

Line 7a. Submit a list that identifies each
individual or organization by name. Your
list must include your incorporators,
founders, board members, donors of land,
and donors of buildings.
Line 7b. Answer “Yes” if any individuals
or organizations on your list have an

objective to keep public or private school
education segregated by race. Explain
how these individuals or organizations
promote segregation in public or private
schools.
Line 8. Answer “Yes” if on a continuing
basis, you will maintain for a minimum
period of three years the following
records.
Your racial composition (similar to the
information requested in Schedule B,
Section II, line 5).
Evidence that your scholarships and
loans are awarded on a racially
nondiscriminatory basis (similar to the
information requested in Schedule B,
Section II, line 6).
Copies of all materials used by you or
on your behalf to solicit contributions.
Copies of brochures, application forms,
advertisements, and catalogues dealing
with student admissions, programs, and
financial aid.
Answer “No” if you don’t maintain
records and explain how you meet the
recordkeeping requirements under Rev.
Proc. 75-50.
Failure to maintain these records
or produce them upon the proper
CAUTION request will create a presumption
that you haven’t complied with the
requirements of Rev. Proc. 75-50.

!

Schedule C. Hospitals and
Medical Research
Organizations
An organization qualifies as a hospital if it
is one of the following.
Hospital.
Cooperative hospital service
organization (Schedule C not required).
Medical research organization operated
in conjunction with a hospital.
Hospital. An organization is a “hospital” if
its principal purpose or function is
providing medical or hospital care or
medical education or research. Medical
care includes treatment of any physical or
mental disability or condition, on an
inpatient or outpatient basis. Thus, if an
organization is a rehabilitation institution,
outpatient clinic, or community mental
health or drug treatment center, it is a
hospital if its principal function is providing
treatment services as described above.
A hospital doesn’t include
convalescent homes, homes for children
or the aged, or institutions whose principal
purpose or function is to train
handicapped individuals to pursue a
vocation.
Medical research organization. An
organization is a “medical research
organization” if its principal purpose or
function is the direct, continuous, and
active conduct of medical research in
-19-

conjunction with a hospital. The hospital
with which the organization is affiliated
must be described in section 501(c)(3), a
federal hospital, or an instrumentality of a
governmental unit, such as a municipal
hospital.
“Medical research” means
investigations, experiments, and studies
to discover, develop, or verify knowledge
relating to the causes, diagnosis,
treatment, prevention, or control of human
physical or mental diseases and
impairments. For more information, see
Reg. section 1.170A-9(c)(2).
If you are a hospital, check the first box
on Schedule C and complete Section I.
If you are a medical research
organization, check the second box on
Schedule C and complete Section II.

Section I. Hospitals
Line 1. Answer “Yes” if all doctors in your
community are eligible for staff privileges
at your facility. You may answer “Yes” if
staff privileges at your facility are limited
by capacity.
Answer “No” if all doctors in your
community aren’t eligible for staff
privileges at your facility.
If you answer “No,” describe in detail
how you limit eligibility for staff privileges
at your facility. Include details of your
eligibility criteria and selection procedures
for your courtesy staff of doctors.
Line 2a. Answer “Yes” if you admit all
patients in your community who can pay
for themselves or through private health
insurance.
Answer “No” if you limit admission for
these individuals in any way. If you answer
“No,” describe your admission policy in
detail. You should explain how and why
you restrict patient admission.
Line 2b. Answer “Yes” if you admit all
patients in your community who
participate in Medicare.
Answer “No” if you limit admission in
any way for these individuals. If you
answer “No,” describe your admission
policy in detail. You should explain how
and why you restrict patient admission to
exclude persons who participate in
Medicare.
Line 2c. Answer “Yes” if you admit all
patients in your community who
participate in Medicaid.
Answer “No” if you limit admission in
any way for these individuals. If you
answer “No,” describe your admission
policy in detail. You should explain how
and why you restrict patient admission to
exclude persons who participate in
Medicaid.

Line 3a. Answer “Yes” if you require a
deposit from Medicare and/or Medicaid
patients before admission. If you answer
“Yes,” describe in detail how you
determined the amount required and
explain why a deposit is needed.
Line 3b. Answer “Yes” if you require a
deposit for other patients before
admission and the requirement is the
same as for Medicare and/or Medicaid
patients.
Answer “No” if you require a deposit,
but deposits for Medicare/Medicaid
patients and other patients differ as to: (1)
the way the amount is determined, or (2)
the reason for the deposit. If you answer
“No,” describe the differences in detail.
Line 4a. Answer “Yes” if you offer
emergency medical or hospital care at
your facility on a 24-hour basis, seven
days a week. If “No,” explain why you
don’t offer an emergency room. For
example, emergency care may be
inappropriate for the type of services you
provide. Also, describe any emergency
services that you provide.
Line 4b. Answer “Yes” if you have a
specific written plan or policy to accept all
patients in need of emergency care
without considering their ability to pay.
If you answer “Yes,” submit a copy of
your plan or policy.
Line 4c. Answer “Yes” if you have
specific arrangements with any police, fire,
or ambulance service providers to bring
emergency cases to your facility.
If you answer “Yes,” describe each
specific agreement. For written
agreements, you may submit a copy of
each agreement. If it is oral, explain fully
the agreement. For any oral agreements,
include details of how and when the
agreement was arranged.
Line 5a. Answer “Yes” if you provide free
or low cost medical or hospital care
services to the poor. If you answer “Yes,”
answer lines 5b through 5e. Don’t answer
lines 5b through 5e if you answer “No.”
Line 5b. Submit a copy of your written
policy or explain fully the understanding
under which you operate regarding the
admission and/or treatment of charity
cases. Explain how you distinguish
between charity care and bad debts.
Include details of how you inform

TIP the general public about your

policy. Submit copies of any
documents or agreements you require
charity patients to sign before being
admitted and/or treated.
Line 5c. Submit information that shows
the amounts you spend for treating charity
care patients and the types of services
you provide. Include an explanation that

distinguishes charity care patient
expenditures from uncollected bad debts.
Line 5d. Submit copies of any written
agreements you have with municipalities
or government agencies to subsidize the
cost of admitting or treating charity
patients.
Line 5e. A sliding fee scale establishes
payments depending on financial ability to
pay.
Line 6a. Answer “Yes” if you have a
formal program of medical training and
research. If you answer “Yes,” describe
your program in detail, including its length
and criteria for acceptance into your
program.
Line 6b. Answer “Yes” if you have a
formal program of community educational
programs. If you answer “Yes,” describe
your program in detail.
Line 7. Answer “Yes” if you provide office
space to physicians conducting their own
medical practices.
Line 8. Answer “Yes” if you have a board
of directors that is representative of the
community you serve. Include a list of
each board member with the individual's
name and employment affiliation. Also, for
each board member, describe how that
individual represents the community.
Generally, hospital employees and staff
physicians aren’t individuals considered to
be community representatives.
Answer “Yes” if an organization

TIP described in section 501(c)(3)

with a community board exercises
rights or powers over you, such as the
right to appoint members to your
governing board of directors and the
power to approve certain transactions.
Describe these rights and powers. In
addition, describe how each of that
organization's board of directors
represents the community.
Answer “Yes” if you are subject to a
state corporate practice of medicine law
that requires your governing board to be
composed solely of physicians licensed to
practice medicine in the state. If you
answer “Yes” on this basis, also provide
the following information.
Describe whether a hospital described
in section 501(c)(3) exercises any rights or
powers over you.
Identify the corporate practice of
medicine law under which you operate.
Explain how the section 501(c)(3)
hospital exercises any rights or powers
over you, such as the right to appoint
members to your governing board of
directors and the right to approve certain
transactions.
Explain what services you provide to
the section 501(c)(3) hospital.

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Line 10. Answer “Yes” if you manage or
intend to manage your programs through
your own employees or by using
volunteers. Answer “No” if you engage or
intend to engage a separate organization
or independent contractor. Make sure your
answer is consistent with the information
provided in Part VIII, line 7b.
Line 11. Recruitment incentives may be
offered to attract or retain physicians as
employees or to serve the community in
which the hospital is located. Such
incentives are generally offered when
there is an acute shortage of such
physicians in your hospital or within the
community.
Line 12. Physicians who have a financial
or professional relationship with you
include physicians with whom you have a
business relationship, such as employees,
staff physicians, participants in joint
ventures, or physicians with whom you
contract for services.
Line 13. A business relationship includes
employment, contractual relationship, or
status as a member of your board of
directors.
Line 14. Answer “Yes” if you have
adopted a conflict of interest policy
consistent with the sample conflict of
interest policy provided in these
instructions or you are subject to similar
conflict of interest policies under state law.
Provide copies of the policies to which you
are subject. Although a conflict of interest
policy isn’t required as a matter of tax law,
we encourage adoption of a substantive
conflict of interest policy because it makes
it more likely that you will operate for the
benefit of the community and not for
private interests. This sample conflict of
interest policy doesn't prescribe any
specific requirements. Therefore,
organizations should use a conflict of
interest policy that best fits their
organization.
An example of a substantive conflict of
interest policy is available in Appendix A in
these instructions. The sample conflict of
interest policy does not prescribe any
specific requirements. Therefore,
organizations should use a conflict of
interest policy that best fits their
organization.
Answer “No” if you haven’t adopted a
conflict of interest policy or you aren’t
subject to conflict of interest policies under
state law.

Section II. Medical Research
Organizations
Line 1. Attach a list of hospitals with
which you have relationships relating to
the conduct of medical research. Describe
in detail the relationship you have with
Instructions for Form 1023

each hospital. Submit copies of any
written agreements.
Line 2. Describe in detail all activities that
directly accomplish your conduct of
medical research.
Making grants to other organizations
doesn’t directly accomplish the conduct of
medical research.
Line 3. Your schedule should explain
how you determine the fair market value of
your assets.

Schedule D. Section
509(a)(3) Supporting
Organizations
A section 509(a)(3) organization is
commonly referred to as a “supporting
organization.” An organization that a
supporting organization benefits is
commonly referred to as a “supported
organization.” A supporting organization
may support more than one supported
organization.
An organization qualifies for public charity
status as a supporting organization under
section 509(a)(3) if:
It is organized and at all times thereafter
is operated exclusively for the benefit of,
to perform the functions of, or to carry out
the purposes of one or more public
charities described in section 509(a)(1) or
509(a)(2);
It meets one of three required
relationship tests with the supported
organization(s); and
It isn’t controlled directly or indirectly by
“disqualified persons.” See specific
instructions for Part X, line 6b(ii), for a
definition of a “disqualified persons.”
A supporting organization can also
support the charitable purposes of
organizations that are exempt under
sections 501(c)(4), (5), or (6).

Section I. Identifying Information
About Supported Organization(s)
Line 1. Enter the name, address, and EIN
of each organization you support.
Line 2. Answer “Yes” if each supported
organization has received a letter from the
IRS recognizing it as a public charity under
section 509(a)(1) or 509(a)(2). Then, go to
Section II, line 1.
Answer “No” if any supported
organization hasn’t received a letter from
us recognizing it as a public charity under
section 509(a)(1) or 509(a)(2). Then, go to
line 3.
Line 3. Answer “Yes” if any supported
organization you listed in line 1 received a
letter from us stating that it is exempt
under section 501(c)(4), (5), or (6). Also,
to show how the organization meets the

public support test, submit the amounts
and sources of revenue for the last four
completed tax years for the supported
organization(s). You should provide the
requested financial data in the format
shown on Part IX-A. Statement of
Revenues and Expenses, for each
supported organization. You must then
submit the lists requested by Part X,
line 6b(ii), which is applicable to the public
support test under section 509(a)(2).
Answer “No” if no supported
organization listed in line 1 has been
recognized as tax-exempt under section
501(c)(4), (5), or (6).
If any organization you intend to
support hasn't received a letter
CAUTION from us recognizing it as a public
charity under section 509(a)(1) or 509(a)
(2), or hasn’t received a determination
recognizing that it is tax-exempt under
section 501(c)(4), (5), or (6), you must
demonstrate, in writing, that each
organization you support is described in
section 509(a)(1) or 509(a)(2). For
example, if you support a church or
foreign organization, you should describe
how this organization qualifies as a public
charity under section 509(a)(1) or 509(a)
(2).

!

Section II. Relationship with
Supported Organization(s) – Three
Tests
To qualify under section 509(a)(3), you
must show that you meet one of three
relationship tests with the supported
organization(s);
Test I. Operated, supervised, or
controlled by (comparable to a
parent-subsidiary relationship);
Test 2. Supervised or controlled in
connection with (comparable to a
brother-sister relationship); or
Test 3. Operated in connection with
(responsive to the needs or demands of,
and having significant involvement in the
affairs of, the supported organization(s)).
Line 1. Answer “Yes” if your governing
document, bylaws, or other internal rules
and regulations show that the majority of
your governing board or officers is elected
or appointed by the supported
organization(s). Then, go to Section III.
Answer “No” if your governing
document, bylaws, or other internal rules
and regulations don’t show that the
majority of your governing board or
officers is elected or appointed by the
supported organization(s). If you answer
“No” but still believe you satisfy this test,
explain and go to Section III. Otherwise,
go to line 2 because you don’t meet the
“operated, supervised, or controlled by”
relationship test.

-21-

Line 2. Answer “Yes” if your governing
document, bylaws, or other internal rules
and regulations show that a majority of
your governing board consists of
individuals who also serve on the
governing board of the supported
organization(s). Then, go to Section III.
Answer “No” if your governing
document, bylaws, or other internal rules
and regulations don’t show that a majority
of your governing board consists of
individuals who also serve on the
governing board of the supported
organization(s). If you answer “No” but still
believe you satisfy this test, explain and
go to Section III. Otherwise, go to line 3
because you don’t meet the “supervised
or controlled in connection with”
relationship test.
Line 3. Answer “Yes” if you are a
charitable trust under state law, you name
each specified publicly supported
organization as a beneficiary in your trust
agreement, and each beneficiary
organization has the power to enforce the
trust and compel an accounting under
state law. Then go to Section II, line 5.
Line 4a. Answer “Yes” if the officers,
directors, trustees, or members of the
supported organization(s) elect or appoint
any of your officers, directors, or trustees.
If your governing document, bylaws, or
other internal rules and regulations don’t
provide for this, explain how your officers,
directors, or trustees are elected or
appointed. Then go to line 4d.
Line 4b. Answer “Yes” if any members of
the governing body of the supported
organization(s) also serve as your officers,
directors, trustees, or hold another
important office for your organization.
Describe the position held and whether
the position is ongoing. Then go to line 4d.
Line 4c. Answer “Yes” if your officers,
directors, or trustees maintain a close and
continuous working relationship with the
officers, directors, or trustees of the
supported organization(s). Explain the
continuous relationship in detail. Then go
to line 4d.
If you answer “No,” on line 4c and

TIP your answers to lines 3, 4a, and

4b were “No,” you don’t meet the
“operated in connection with” relationship
test. You must establish a different
relationship with the supported
organization or go back to Part X to
reconsider your public charity status.
Line 4d. Answer “Yes” if the supported
organization has a significant involvement
in your investment policies, making and
timing of grants, and directing the use of
your income and assets. Explain how the
supported organization is involved in
these matters.

Line 5. An applicant for tax exemption as
a supporting organization under the
“operated in connection with” relationship
must satisfy either the integral part test or
the alternative integral part test. If you are
requesting supporting organization status
by meeting the “operated in connection
with” relationship, you must satisfy either
the integral part test or the alternative
integral part test. If you satisfy the integral
part test described in line 5, then you don’t
have to complete line 6.
Answer “Yes” if you conduct activities
that the supported organization would
otherwise conduct. Describe the activities
that you conduct, other than distributing
funds. Then go to Section III.

organizing document unless there has
been an historic and continuing
relationship between you and the
supported organization(s).

Line 6a. To satisfy the alternative integral
part test as a supporting organization, you
must distribute at least 85% of your annual
net income to the organization(s) you
support. See the Glossary for a
description of “net income” to be used in
calculating whether you meet the 85%
distribution threshold.
Answer “Yes” if you distribute at least
85% of your net income to the supported
organization(s). For purposes of this
schedule, “net income” has the same
meaning as the term “adjusted net
income,” which is applicable to private
operating foundations.
In general, “adjusted net income” is the
excess of gross income, including gross
income from any unrelated trade or
business, determined with certain
modifications, reduced by total
deductions. Gross income doesn’t include
gifts, grants, or contributions.
If you answer line 6a “No,” and your
answer to line 5 was “No,” unless you
establish that the supported
organization(s) will be attentive to your
operations, you don’t meet the “operated
in connection with” relationship test. Go
back to Part X to reconsider your public
charity status.

Section III. Organizational Test

Line 6b. Submit a list that shows the total
amount distributed annually to each
supported organization. Also, indicate how
each amount will vary from year to year.
Line 6c. Submit a list that shows the total
annual income for each supported
organization.
Line 6d. Answer “Yes” if your funds are
“earmarked” for a particular program or
activity.
If you distribute your income to, or for
the use of, a particular department or
program of an organization, list the total
annual revenue of the supported
department or program in line 6c.
Line 7a. The “operated in connection
with” test requires that you specify the
supported organization(s) by name in your

Line 7b. An historic and continuing
relationship depends on all the facts and
circumstances that would demonstrate a
substantial identity of interests between
you and the supported organization.
If you answer “No” to lines 7a and 7b,
you may consider amending your
organizing document to specify the
supported organization(s) by name so you
can answer “Yes” to line 7a. Otherwise,
you will need to go back to Part X to
reconsider your public charity status.

Line 1a. If you answered “No” to line 1a,
you must amend your organizing
document to specify the supported
organization(s) by name, purpose, or
class. Otherwise, you will not meet the
operational test under section 509(a)(3)
and you will need to go back to Part X to
reconsider your public charity status.
Line 1b. If you answered “No” to line 1b,
you must amend your organizing
document to specify the supported
organization(s) by name. Otherwise you
will not meet the operational test under
section 509(a)(3) and you will need to go
back to Part X to reconsider your public
charity status.

Section IV. Disqualified Person
Test
Control. As a section 509(a)(3)
supporting organization, you may not be
controlled directly or indirectly by
disqualified persons. You are controlled if
disqualified persons can exercise 50% or
more of the total voting power of your
governing body. You are also controlled if
disqualified persons have authority to
affect significant decisions, such as power
over your investment decisions, or power
over your charitable disbursement
decisions. You are also controlled if
disqualified persons can exercise veto
power. Although control is generally
demonstrated where disqualified persons
have the authority over your governing
body to require you to take an action or
refrain from taking an action, indirect
control by disqualified persons will also
disqualify you as a supporting
organization.
See the instructions for Part X,
line 6b(ii) for a description of the term
“disqualified person.”
A public charity isn’t a disqualified
person.
A “foundation manager” means your:
Officers, directors, or trustees; or
-22-

An individual having powers or
responsibilities similar to those of your
officers, directors, or trustees.
Line 1b. See the instructions for Part V,
line 2a, for a description of the terms
“family or business relationship.”

Schedule E. Organizations
Not Filing Form 1023
Within 27 Months of
Formation

The questions in this schedule will help us
determine the effective date of exemption
for an organization that filed its application
more than 27 months after the end of the
month in which it was legally formed.
If you meet exceptions for late filing, your
exemption under section 501(c)(3) will be
effective from the date you were legally
formed.
If you don’t meet any exceptions, your
exemption under section 501(c)(3) will be
effective from the date you filed your
application.
Line 1. Answer “Yes” if you are a church
or an association of churches. You should
have also checked Part X, line 5a, and
completed Schedule A. If you qualify as a
church or an association of churches, your
exemption will be effective from the date
of your legal formation.
Answer “Yes” if you are an integrated
auxiliary of a church. If you qualify as an
integrated auxiliary of a church, your
exemption will be effective from the date
of your legal formation.
An “integrated auxiliary of a church”
refers to a class of organizations that are
related to a church or convention or
association of churches, but aren’t such
organizations themselves. In general, you
must:
Be described as both tax exempt under
section 501(c)(3) and a public charity
described in sections 509(a)(1), (2), or (3);
and
Receive financial support primarily from
internal church sources as opposed to
public or governmental sources.
Men's and women's organizations,
seminaries, mission societies, and youth
groups that satisfy the above referenced
sections 501(c)(3) and 509(a)(1), (2), or
(3) requirements are considered
integrated auxiliaries whether or not they
meet the internal support requirements.
More guidance as to the types of
organizations that qualify as integrated
auxiliaries can be found in Regs. section
1.6033-2(h).
Line 2a. Answer “Yes” if you are a public
charity and your annual gross receipts are
normally $5,000 or less. For information
about whether your annual gross receipts
are normally $5,000 or less, see Pub. 557.

If you qualify as an organization with
annual gross receipts of normally $5,000
or less, your exemption would be effective
from the date of your legal formation.
Answer “No” if you are a private
foundation, regardless of your gross
receipts.
Line 2b. Answer “Yes” if:
Your gross receipts were normally less
than $5,000 for years before your last
completed tax year,
Your gross receipts normally exceeded
$5,000 for your last completed tax year,
and
You filed this application within 90 days
from the end of your last completed tax
year.
Line 3. Lines 3a, 3b, and 3c are
applicable to subordinates included in a
group exemption application. See Pub.
557 for information regarding group
exemptions. If you were a subordinate of a
group exemption that was timely filed and
you are filing for exemption within 27
months from the date you were notified by
the organization holding the group
exemption letter that either (1) you are no
longer covered by the group exemption
letter, or (2) the group exemption request
was denied, answer “Yes” and don’t
complete the remainder of this schedule.
Line 4. Answer “Yes” if you were formed
on or before October 9, 1969. If you are a
corporation, your formation date is the
date your articles of incorporation were
filed with and approved by your state
officials. If you are an association, your
formation date is the date you adopted
your organizing document. If you are a
trust, your formation date is generally the
date your trust was both adopted and
funded.
If you answer “Yes,” don’t
complete the rest of this schedule.
CAUTION As an organization formed on or
before October 9, 1969, your exemption
would be effective from the date of your
legal formation. Answer “No” if you were
formed after October 9, 1969.

!

Line 5. You may receive an extension of
time to file Form 1023 beyond the
27-month period if you can establish that
you acted reasonably and in good faith,
and that granting an extension will not
prejudice the interests of the government.
For example, consider the following
provisions.
You filed Form 1023 before we
discovered your failure to file.
You failed to file because of intervening
events beyond your control.
You exercised reasonable diligence but
you were not aware of the filing
requirements. (The complexity of your
filing and experience in these matters is
taken into consideration.)

You reasonably relied on written advice
from us.
You reasonably relied on the advice of
a qualified tax professional who failed to
file or advise you to file Form 1023.
Answer “Yes” if you wish to request an
extension of time to file under these
provisions. If you answer “Yes,” describe
in detail the reasons for filing late based
on the factors listed above. Don’t
complete the rest of this schedule.
Answer “No” if you don't wish to
request an extension under these
provisions and go to line 6a.
Line 6a. By checking “Yes,” and
completing Part X, line 6a and/or line 6b,
you are eligible for a ruling to be classified
as a public charity from the postmark date
of your application.
Line 6b. If you anticipate significant
changes in your sources of support in the
future, answer “Yes,” and we will base
your qualification for a ruling on the
financial information you provide in line 7.
If you check “Yes,” complete the financial
information requested in line 7 of
Schedule E.
If you answer “No,” we will base your
qualification for a ruling on the financial
information you provided in Part IX. If you
answer “No,” don’t complete line 7 of
Schedule E.
Line 7. Complete projected budgets of
income for the first two full tax years after
the date you mailed your Form 1023. See
the specific instructions for Part IX-A.
Statement of Revenues and Expenses
lines 1 through 13, if you need guidance
on what to include in the various
categories.

Schedule F. Homes for the
Elderly or Handicapped
and Low-Income Housing
Homes for the elderly or handicapped are
eligible for tax exemption as charitable
organizations only if they meet the special
needs of the elderly or handicapped for
residential facilities designed to meet their
physical, social, recreation, health care,
and transportation needs. Homes for the
elderly or handicapped must also be
within the financial reach of a significant
segment of the elderly or handicapped in
the community. Once admitted to the
elderly or handicapped housing facility,
the organization must have an established
policy to maintain them as residents, to
the extent possible, even if the residents
subsequently become unable to pay the
monthly charges.
Low-income housing must provide
affordable housing for a significant
segment of individuals in your community
with low incomes. Your housing may serve
-23-

a combination of purposes, such as for
poor, frail, and elderly persons.

Section I. General Information
about Your Housing
Line 1. The type of housing you provide
should include both a description of the
type of facility provided, such as
apartment complex, condominium,
cooperative, or private residence, and the
nature of your facility, such as
assisted-living facility, continuing-care
facility, nursing home, low-income facility,
etc.
Line 7. See the instructions for Part V,
line 7a, for a description of the terms arm's
length and fair market value.
Line 8. Answer “Yes” if you manage or
intend to manage your programs through
your own employees or by using
volunteers. Answer “No” if you engage or
intend to engage a separate organization
or independent contractor. Make sure your
answer is consistent with the information
provided in Part VIII, line 7b.
Line 9. Government programs include
federal, state, or local government
programs.

Section II. Homes for the Elderly or
Handicapped
Line 2a. Answer “Yes” if you charge a
one-time fee for admission to your facility.
Line 2b. Answer “Yes” if you charge
daily, weekly, monthly, or annual fees or
maintenance charges.
Line 2c. A “community” refers to the area
that will be served by your facility. For
example, a community may be a local
area or a region.
Line 3a. Describe what happens to
individuals if they become unable to pay
your regular charges. For example, you
may have a policy whereby you have a
reserve fund for maintaining residents who
are having trouble in paying their regular
charges. You may also have a policy of
keeping residents who are having trouble
in paying their regular charges in place for
a period of time to permit them to find
alternative housing. Include a copy of any
printed materials that informs the public
about your policy.
Line 3b. Describe any arrangements you
have or expect to have with welfare
agencies, sponsoring organizations, or
others to assist residents who become
unable to afford to remain residents.
Line 4. Describe how you provide for the
health care needs of residents, including
the services provided. This can include
providing for the activities of daily living of
residents at your facilities and transporting

residents to other facilities for medical
services.

demonstrate how these distributions
further your exempt purposes.

Line 5. Describe how living units and
common areas are designed to meet the
physical needs of residents (such as grab
bars in bathrooms, wide doorways and
hallways, design of kitchens and
bathrooms, etc.). Also, include information
about facilities and programs designed to
meet some combination of physical,
emotional, recreational, social, religious,
and similar needs of residents.

Generally, distributions made to
individuals may advance educational
purposes if selection is made:
In a non-discriminatory fashion in terms
of racial preference,
Based on need and/or merit, and
To a charitable class in terms of being
available to an open-ended group, rather
than to pre-selected individuals.

Section III. Low-Income Housing
Line 2. Answer “Yes” if you charge daily,
weekly, monthly, or annual fees or
maintenance charges.

Schedule G. Successors
to Other Organizations
You should complete this schedule as a
successor organization if any of the
following situations pertain to you.
You have taken or will take over the
activities that were previously conducted
by another.
You have taken or will take over 25% or
more of the fair market value of the net
assets of another organization.
You were established upon the
conversion of an organization from
for-profit to non-profit status.
The other organization is the predecessor
organization. You should complete this
schedule regardless of whether the
predecessor (other organization) was
exempt or not exempt from federal income
tax.
Line 1a. For purposes of this schedule, a
“for-profit” organization is one in which
persons are permitted to have an
ownership or partnership interest, such as
corporate stock. It includes sole
proprietorships, corporations, and other
entities that provide for ownership
interests.

Schedule H. Organizations
Providing Scholarships,
Fellowships, Educational
Loans, or Other
Educational Grants to
Individuals and Private
Foundations Requesting
Advance Approval of
Individual Grant
Procedures
Complete this schedule if you provide
scholarships, fellowships, grants, loans, or
other distributions to individuals for
educational purposes. When answering
the questions on this schedule, you should

A scholarship or fellowship is tax free to
the recipient only if he or she is a
candidate for a degree at an eligible
educational institution and uses the
scholarship or fellowship to pay qualified
education expenses.
Qualified education expenses include
tuition and fees; and course-related
expenses such as books, supplies, and
equipment. Room and board, travel,
research, clerical help, and non-required
equipment aren’t qualified education
expenses. See Pub. 970, Tax Benefits for
Education, for additional information.
Selection of individuals using a lottery
system generally hasn’t been approved by
the IRS.

Section I
Line 1b. If you have different grant
programs, describe the purpose and
amount of each program.
Line 1c. If you award educational loans,
describe the terms of the loan (for
example, interest rate, duration,
forgiveness provision, etc.). Also, describe
how any other loan institutions are
involved in your program.
Line 1d. Explain how you will publicize
your program and whether you publicize to
the general public or to another group of
possible recipients. Include specific
information about the geographic area in
which your program will be publicized and
the means you will use, such as through
newspaper advertisements, school district
announcements, or community groups.
Line 1e. Submit sample copies of your
solicitation material for applicants or
materials announcing the awards. If
solicitation is done orally through school
counselors or others, explain fully.
Line 2. Organizations that make grants to
individuals must maintain adequate
records and case histories showing the
name and address of each recipient
pursuant to Revenue Ruling 56-304,
1956-2 C.B. 306. If you answer “No,”
explain how you will be able to
demonstrate that your distributions serve
exempt purposes.

-24-

Section II
Line 1a. Only complete lines 1a through
4 if you are a private foundation based on
your answers to Part X, line 1a. Answer
“Yes” if you are a private foundation and
you are requesting advance approval of
your grant-making procedures under
section 4945(g). Answer “No” if you are a
private foundation but don’t wish to
request advance approval of your
grant-making procedures under section
4945(g). If you answer “No,” the amounts
you distribute as educational grants
provided to individuals may be considered
taxable expenditures under section 4945.
Answer “N/A” if you are requesting
public charity status in Part X.
For more information about advance
approval of grant-making procedures of a
private foundation, go to IRS.gov/
Advance-Approval-of-Grant-MakingProcedures.
Line 1b. Check the box for section
“4945(g)(1)” if your award qualifies as a
scholarship or fellowship grant that is
awarded on an objective and
nondiscriminatory basis and is used for
study at a school (see the Schedule B for
what is considered a school).
Check the box for section “4945(g)(3)”
if the purpose of your award is to achieve
a specific objective, produce a report or
other similar product, or improve or
enhance a literary, artistic, musical,
scientific, teaching, or other similar
capacity, skill, or talent of the recipient.
Include your educational loan program
under this section. You may check more
than one box.
If your award qualifies as a prize or
award that is subject to the provisions of
section 74(b) and your recipient is
selected from the general public, you don’t
have to request advance approval of your
grant-making procedures since a prize or
award isn’t subject to the advance
approval procedure requirements because
it isn’t a grant for travel, study, or other
similar purposes. See Revenue Rulings
77-380, 1977-2 C.B. 419; 76-460, 1976-2
C.B. 371 and 75-393, 1975-2 C.B. 451.
Line 4. For additional information
regarding private foundations requesting
advance approval of individual grant
procedures, go to IRS.gov/AdvanceApproval-Of-Grant-Making-Procedures .
Line 4a Answer “Yes” if you award
scholarships on a preferential basis
because you require, as an initial
qualification, that the individual be an
employee or be related to an employee of
a particular employer.
Line 4c. Answer “N/A” if you don’t
provide scholarships, fellowships, or
educational loans to employees of a
particular employer.

Line 4d. Answer “N/A” if you don’t
provide scholarships, fellowships, or
educational loans to children of
employees of a particular employer.

Line 4e. Answer “N/A” if your answer to
line 4d is “N/A.”

For purposes of this schedule, a

TIP program for children of employees

of a particular employer includes
children and family members of
employees.

Paperwork Reduction Act Notice. We ask for the information on this form to carry out the Internal Revenue laws of the United
States. If you want your organization to be recognized as tax exempt by the IRS, you are required to give us this information. We need
it to determine whether the organization meets the legal requirements for tax-exempt status.
The organization isn’t required to provide the information requested on a form that is subject to the Paperwork Reduction Act unless
the form displays a valid OMB control number. Books or records relating to a form or its instructions must be retained as long as their
contents may become material in the administration of any Internal Revenue law. The rules governing the confidentiality of the Form
1023 application are covered in Code section 6104.
The time needed to complete and file these forms will vary depending on individual circumstances. The estimated average times
are:
Recordkeeping

Learning about the
law or the form

Preparing the form

Copying, assembling, and
sending the form to the IRS

Parts I to XI

89 hrs. 26 mins.

5 hrs. 10 mins.

9 hrs. 39 mins.

48 mins.

1023 Sch. A

10 hrs. 2 mins.

6 mins.

16 mins.

—

1023 Sch. B

15 hrs. 18 mins.

12 mins.

27 mins.

—

1023 Sch. C

11 hrs. 14 mins.

12 mins.

23 mins.

—

1023 Sch. D

9 hrs. 48 mins.

42 mins.

53 mins.

—

1023 Sch. E

14 hrs. 35 mins.

1 hrs. 9 mins.

2 hrs. 22 mins.

16 mins.

1023 Sch. F

11 hrs. 28 mins.

12 mins.

23 mins.

—

1023 Sch. G

6 hrs. 42 mins.

6 mins.

12 mins.

—

1023 Sch. H

7 hrs. 53 mins.

42 mins.

51 mins.

—

Comments and suggestions. If you have comments concerning the accuracy of these time estimates or suggestions for making
this form simpler, we would be happy to hear from you. You can send us comments from IRS.gov/FormComments. Or you can write to
the:
Internal Revenue Service
Tax Forms and Publications Division
1111 Constitution Ave. NW, IR-6526
Washington, DC 20224
Don’t send the form to this address. Instead, see Where to File earlier.

Instructions for Form 1023

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Appendix A: Sample Conflict of Interest Policy
Note. This Sample Conflict of Interest Policy is intended to provide an example of a conflict of interest policy for organizations. The
sample conflict of interest policy does not prescribe any specific requirements. Therefore, organizations should use a conflict of
interest policy that best fits their organization.
Note. Items marked Hospital insert – for hospitals that complete Schedule C are intended to be adopted by hospitals.
Article I
Purpose
The purpose of the conflict of interest policy is to protect this tax-exempt organization's (Organization) interest when it is
contemplating entering into a transaction or arrangement that might benefit the private interest of an officer or director of the
Organization or might result in a possible excess benefit transaction. This policy is intended to supplement but not replace any
applicable state and federal laws governing conflict of interest applicable to nonprofit and charitable organizations.
Article II
Definitions
1. Interested Person
Any director, principal officer, or member of a committee with governing board delegated powers, who has a direct or indirect
financial interest, as defined below, is an interested person.
[Hospital Insert – for hospitals that complete Schedule C
If a person is an interested person with respect to any entity in the health care system of which the organization is a part, he or she
is an interested person with respect to all entities in the health care system.]
2. Financial Interest
A person has a financial interest if the person has, directly or indirectly, through business, investment, or family:
a. An ownership or investment interest in any entity with which the Organization has a transaction or arrangement,
b. A compensation arrangement with the Organization or with any entity or individual with which the Organization has a
transaction or arrangement, or
c. A potential ownership or investment interest in, or compensation arrangement with, any entity or individual with which the
Organization is negotiating a transaction or arrangement.
Compensation includes direct and indirect remuneration as well as gifts or favors that aren’t insubstantial.
A financial interest isn’t necessarily a conflict of interest. Under Article III, Section 2, a person who has a financial interest may have
a conflict of interest only if the appropriate governing board or committee decides that a conflict of interest exists.
Article III
Procedures
1. Duty to Disclose
In connection with any actual or possible conflict of interest, an interested person must disclose the existence of the financial
interest and be given the opportunity to disclose all material facts to the directors and members of committees with governing board
delegated powers considering the proposed transaction or arrangement.
2. Determining Whether a Conflict of Interest Exists
After disclosure of the financial interest and all material facts, and after any discussion with the interested person, he/she shall leave
the governing board or committee meeting while the determination of a conflict of interest is discussed and voted upon. The
remaining board or committee members shall decide if a conflict of interest exists.
3. Procedures for Addressing the Conflict of Interest
a. An interested person may make a presentation at the governing board or committee meeting, but after the presentation, he/
she shall leave the meeting during the discussion of, and the vote on, the transaction or arrangement involving the possible
conflict of interest.
b. The chairperson of the governing board or committee shall, if appropriate, appoint a disinterested person or committee to
investigate alternatives to the proposed transaction or arrangement.
c. After exercising due diligence, the governing board or committee shall determine whether the Organization can obtain with
reasonable efforts a more advantageous transaction or arrangement from a person or entity that would not give rise to a conflict
of interest.
d. If a more advantageous transaction or arrangement isn’t reasonably possible under circumstances not producing a conflict of
interest, the governing board or committee shall determine by a majority vote of the disinterested directors whether the
transaction or arrangement is in the Organization's best interest, for its own benefit, and whether it is fair and reasonable. In
conformity with the above determination it shall make its decision as to whether to enter into the transaction or arrangement.
4. Violations of the Conflicts of Interest Policy
a. If the governing board or committee has reasonable cause to believe a member has failed to disclose actual or possible
conflicts of interest, it shall inform the member of the basis for such belief and afford the member an opportunity to explain the
alleged failure to disclose.
b. If, after hearing the member's response and after making further investigation as warranted by the circumstances, the
governing board or committee determines the member has failed to disclose an actual or possible conflict of interest, it shall
take appropriate disciplinary and corrective action.

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Article IV
Records of Proceedings
The minutes of the governing board and all committees with board delegated powers shall contain:
a. The names of the persons who disclosed or otherwise were found to have a financial interest in connection with an actual or
possible conflict of interest, the nature of the financial interest, any action taken to determine whether a conflict of interest was
present, and the governing board's or committee's decision as to whether a conflict of interest in fact existed.
b. The names of the persons who were present for discussions and votes relating to the transaction or arrangement, the
content of the discussion, including any alternatives to the proposed transaction or arrangement, and a record of any votes
taken in connection with the proceedings.
Article V
Compensation
a. A voting member of the governing board who receives compensation, directly or indirectly, from the Organization for services
is precluded from voting on matters pertaining to that member's compensation.
b. A voting member of any committee whose jurisdiction includes compensation matters and who receives compensation,
directly or indirectly, from the Organization for services is precluded from voting on matters pertaining to that member's
compensation.
c. No voting member of the governing board or any committee whose jurisdiction includes compensation matters and who
receives compensation, directly or indirectly, from the Organization, either individually or collectively, is prohibited from
providing information to any committee regarding compensation.
[Hospital Insert – for hospitals that complete Schedule C
d. Physicians who receive compensation from the Organization, whether directly or indirectly or as employees or independent
contractors, are precluded from membership on any committee whose jurisdiction includes compensation matters. No
physician, either individually or collectively, is prohibited from providing information to any committee regarding physician
compensation.]
Article VI
Annual Statements
Each director, principal officer and member of a committee with governing board delegated powers shall annually sign a statement
which affirms such person:
a. Has received a copy of the conflicts of interest policy,
b. Has read and understands the policy,
c. Has agreed to comply with the policy, and
d. Understands the Organization is charitable and in order to maintain its federal tax exemption it must engage primarily in
activities which accomplish one or more of its tax-exempt purposes.
Article VII
Periodic Reviews
To ensure the Organization operates in a manner consistent with charitable purposes and doesn't engage in activities that could
jeopardize its tax-exempt status, periodic reviews shall be conducted. The periodic reviews shall, at a minimum, include the
following subjects:
a. Whether compensation arrangements and benefits are reasonable, based on competent survey information, and the result of
arm's length bargaining.
b. Whether partnerships, joint ventures, and arrangements with management organizations conform to the Organization's
written policies, are properly recorded, reflect reasonable investment or payments for goods and services, further charitable
purposes and don't result in inurement, impermissible private benefit, or in an excess benefit transaction.
Article VIII
Use of Outside Experts
When conducting the periodic reviews as provided for in Article VII, the Organization may, but need not, use outside advisors. If
outside experts are used, their use shall not relieve the governing board of its responsibility for ensuring periodic reviews are
conducted.

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Appendix B: States with Statutory Provisions Satisfying the Requirements of
Internal Revenue Code Section 508(e)
The following states have adopted legislation satisfying the requirements of section 508(e) relating to
private foundation governing instruments. Information derived from Revenue Ruling 75-38, 1975-1
C.B. 161.
ALABAMA — except where otherwise provided by a decree of a court of competent jurisdiction or by a provision in the
private foundation's governing instrument which in either case has been entered or made after October 1, 1971, and
expressly limits the applicability of State law.
ALASKA — except for such private foundations which expressly provide in their governing instruments that the applicable
sections of Alaska law don't apply to them.
ARKANSAS — except for such private foundations which expressly provide in their governing instruments that the
applicable sections of Arkansas law don't apply to them and except in the case of trusts where otherwise provided by decree
of a court of competent jurisdiction.
CALIFORNIA — except where otherwise provided by a court of competent jurisdiction.
COLORADO — with respect to trusts that are private foundations except where otherwise provided by a court of competent
jurisdiction.
CONNECTICUT — except where otherwise provided by a court of competent jurisdiction.
DELAWARE — except for such private foundations which expressly provide in their governing instruments that the
applicable sections of Delaware law don't apply to them.
DISTRICT OF COLUMBIA — except for such corporations which expressly provide in their governing instruments that the
applicable sections of District of Columbia law don't apply to them and except in the case of trusts where otherwise provided
by a court of competent jurisdiction. (For purposes of this statute, corporations include corporations organized under any Act
of Congress applicable to the District of Columbia as well as corporations organized under the laws of the District of
Columbia.)
FLORIDA — except for such trusts which file a proper election not to be subject to the applicable provisions of Florida law
and for such corporations as to which a court of competent jurisdiction has otherwise determined.
GEORGIA — except for such private foundations which file a proper election not to be subject to such law.
HAWAII — no exceptions.
IDAHO — except for such private foundations which expressly provide in their governing instruments that the applicable
sections of Idaho law don't apply to them.
ILLINOIS — except for such corporations which have express provisions to the contrary in their articles of incorporation and
except for trusts where it is otherwise provided by a court of competent jurisdiction.
INDIANA — except where otherwise determined by a court of competent jurisdiction with respect to private foundations
organized before January 1, 1970.
IOWA — except for such private foundations which expressly provide in their governing instruments that the applicable
sections of Iowa law don't apply to them.
KANSAS — except where otherwise provided by a court of competent jurisdiction.
KENTUCKY — except, with respect to corporations in existence on July 1, 1972, to the extent that such a corporation
provides to the contrary by amendment to its articles of incorporation adopted after July 1, 1972, and, with respect to trusts in
existence on July 1, 1972, where action is properly commenced on or before December 31, 1972, in a court of competent
jurisdiction to excuse the trust from compliance with the requirements of section 508(e) of the Code.
LOUISIANA — except for such private foundations which expressly provide in their governing instruments that the applicable
sections of Louisiana law don't apply to them.
MAINE — except where otherwise provided by a court of competent jurisdiction.
MARYLAND — except where otherwise provided by a court of competent jurisdiction.
MASSACHUSETTS — except where otherwise provided by a court of competent jurisdiction.
MICHIGAN — with respect to trusts that are private foundations except for such private foundations which file a notice of
inconsistency under Michigan law.

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MINNESOTA — except for private foundations that have been held by a court of competent jurisdiction not to be affected by
such State statute.
MISSISSIPPI — except where otherwise provided by a court of competent jurisdiction.
MISSOURI — except for private foundations that have been held by a court of competent jurisdiction not to be affected by
such State statute.
MONTANA — except in the case of trusts where otherwise provided by court decree entered after March 28, 1974, and
except in the case of a corporation which has an express provision to the contrary in its articles of incorporation.
NEBRASKA — except for such trusts which effectively elect to be excluded from the applicable sections of Nebraska law, for
such corporations which have governing instruments expressly providing to the contrary, and except as a court of competent
jurisdiction has otherwise determined in any given case.
NEVADA — no exceptions.
NEW HAMPSHIRE — except where it is otherwise provided by a court of competent jurisdiction.
NEW JERSEY — except for such private foundations which expressly provide in their governing instruments that the
applicable sections of New Jersey law don't apply to them.
NEW YORK — except where such law conflicts with any mandatory direction of an instrument by which assets were
transferred prior to June 1, 1971, and such conflicting direction hasn’t been removed legally.
NORTH CAROLINA — except for such private foundations which expressly provide in their governing instruments that the
applicable sections of North Carolina law don't apply to them and except for trusts that have their governing instruments
reformed by a decree of the Superior Court of North Carolina.
NORTH DAKOTA — with respect to trusts that are private foundations except where otherwise provided by a court of
competent jurisdiction.
OHIO — except in the case of trusts where it is provided otherwise by a court of competent jurisdiction and except in the
case of corporations in existence on September 17, 1971, which expressly adopt contrary provisions in their governing
instruments after September 17, 1971.
OKLAHOMA — except for such private foundations which file a proper election not to be subject to such law.
OREGON — no exceptions.
PENNSYLVANIA — except where otherwise provided by a court of competent jurisdiction.
RHODE ISLAND — except where otherwise provided by a court of competent jurisdiction.
SOUTH CAROLINA — except for private foundations which expressly provide in their governing instruments that the
applicable sections of South Carolina law don't apply to them.
SOUTH DAKOTA — except where otherwise provided by a court of competent jurisdiction.
TENNESSEE — except where otherwise provided by a court of competent jurisdiction.
TEXAS — except for such private foundations which file a proper election not to be subject to such law.
UTAH — with respect to trusts that are private foundations except where otherwise provided by a court of competent
jurisdiction.
VERMONT — except where otherwise provided by a court of competent jurisdiction.
VIRGINIA — except for private foundations whose governing instruments contain express provisions to the contrary or which
have filed a proper election not to be subject to such law.
WASHINGTON — except for such private foundations which expressly provide in their governing instruments that the
applicable sections of Washington law don't apply to them.
WEST VIRGINIA — with respect to trusts that are private foundations except for such trusts which provide in their governing
instruments that the applicable sections of West Virginia law don't apply to them.
WISCONSIN — except as may otherwise be provided by decree of a court of competent jurisdiction.
WYOMING — except where otherwise provided by a court of competent jurisdiction.

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Appendix C: Glossary of Terms
Adjusted net income (for Schedule D)

Adjusted net income includes: gross income from any unrelated trade or
business; gross income from functionally related businesses; interest
payments received on loans; amounts received or accrued as repayments
of amounts taken as qualifying distributions for any tax year; amounts
received or accrued from the sale or other disposition of property to the
extent acquisition of the property was treated as a qualifying distribution
for any tax year; any amounts set aside for a specific project to the extent
the full set aside was not necessary for the project; interest on government
obligations normally excluded under section 103 of the Code; net
short-term capital gains on sale or other disposition of property; and
income received from an estate if the estate is considered terminated for
income tax purposes because of a prolonged administration period.
It doesn't include: gifts, grants, and contributions received; long-term
capital gains or losses; net section 1231 gains; capital gain dividends; the
excess of fair market value over adjusted basis of property distributed to
the U.S. or a possession or political subdivision, a State or its political
subdivision, a charitable trust, or corporation for public purposes; or
income received from an estate during the administration period.
In computing adjusted net income, deduct the following: ordinary and
necessary expenses paid or incurred for the production or collection of
gross income, or for the management, conservation, or collection of gross
income (includes operating expenses such as compensation of officers,
employee wages and salaries, interest, rent, and taxes); straight-line
depreciation and depletion (not percentage depletion); and expenses and
interest paid or incurred to carry tax-exempt obligations. Don't deduct net
short-term capital losses for the year in which they occur (these losses
cannot be carried back or carried over to earlier or later tax years); the
excess of expenses for property used for exempt purposes over the
income received from the property; charitable contributions made by you;
net operating losses; and special deductions for corporations.

Affiliated

Created by, controlled by, or closely related to a governmental unit,
including a State, a possession of the United States, or any political
subdivision of a State or a possession of the United States, or the United
States, or the District of Columbia.

Arm's length

A transaction between parties having adverse (or opposing) interests;
where none of the participants are in a position to exercise substantial
influence over the transaction because of business or family
relationship(s) with more than one of the parties.

Authorized representative

By submitting Form 2848, an attorney or certified public accountant who is
permitted to represent you before us regarding your application for
tax-exempt status.

Bingo

A game of chance played with cards that are generally printed with 5 rows
of 5 squares each, on which participants place markers to form a
pre-selected pattern to win the game. Bingo is gambling.

Business relationships

Employment and contractual relationships, and common ownership of a
business where any officers, directors, or trustees, individually or together,
possess more than a 35% ownership interest in common. Ownership
means voting power in a corporation, profits interest in a partnership, or
beneficial interest in a trust.

Bylaws

The internal rules and regulations of an organization.

Certification of filing

Articles of incorporation for your organization showing evidence that on a
specific date they were filed with and approved by an appropriate state
authority.

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Charitable risk pool

An organization described in section 501(n), which is organized and
operated to pool insurable risks (other than medical malpractice) of its
section 501(c)(3) members.

Close connection

A relationship between organizations that may include control of one
organization by another through common governance or through authority
to approve budgets or expenditures; coordination of operations as to
facilities, programs, employees, or other activities; or common persons
exercising substantial influence over all of the organizations.

Common control

You and one or more other organizations have (1) a majority of your
governing boards or officers appointed or elected by the same
organization(s), or (2) a majority of your governing boards or officers
consist of the same individuals. Common control also occurs when you
and one or more commonly controlled organizations have a majority
ownership interest in a corporation, partnership, or trust. Ownership
means voting power in a corporation, profits interest in a partnership, or
beneficial interest in a trust.

Community

The local or regional geographic area to be served by an organization.

Compensation

All forms of income from working, including salary or wages; deferred
compensation; retirement benefits, whether in the form of a qualified or
non-qualified employee plan (for example: pensions or annuities); fringe
benefits (for example: personal vehicle, meals, lodging, personal and
family educational benefits, low interest loans, payment of personal travel,
entertainment, or other expenses, athletic or country club membership,
and personal use of your property); and bonuses.

Conflict of interest policy

A conflict of interest arises when a person in a position of authority over an
organization, such as a director, officer, or manager, may benefit
personally from a decision he or she could make. A conflict of interest
policy consists of a set of procedures to follow to avoid the possibility that
those in positions of authority over an organization may receive an
inappropriate benefit.

Controlled by disqualified persons

As a section 509(a)(3) supporting organization, you may not be controlled
directly or indirectly by disqualified persons. You are controlled if
disqualified persons can exercise 50% or more of the total voting power of
your governing body. You are also controlled if disqualified persons have
authority to affect significant decisions, such as power over your
investment decisions, or power over your charitable disbursement
decisions. You are also controlled if disqualified persons can exercise
veto power. Although control is generally demonstrated where disqualified
persons have the authority over your governing body to require you to take
an action or refrain from taking an action, indirect control by disqualified
persons will also disqualify you as a supporting organization.

Cooperative hospital service
organization

An organization described in section 501(e) is organized and operated on
a cooperative basis to provide its section 501(c)(3) hospital members one
or more of the following activities: data processing, purchasing (including
purchasing insurance on a group basis), warehousing, billing and
collection (including purchasing patron accounts receivable on a recourse
basis), food, clinical, industrial engineering, laboratory, printing,
communications, record center, and personnel (including selecting,
testing, training, and educating personnel) services.

Cooperative service organization of
operating educational organizations

An organization described in section 501(f) is organized and operated to
provide investment services to its members. Those members must be
organizations described in section 170(b)(1)(A)(ii) or (iv), and either tax
exempt under section 501(a) or whose income is excluded from taxation
under section 115(a).

Corporation

An entity organized under a Federal or state statute, or a statute of a
federally recognized Indian tribal or Alaskan native government.

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Develop

Develop means the planning, financing, construction, or provision of
similar services involved in the acquisition of real property, such as land or
a building.

Disqualified person

Any individual or organization that is any of the following.
a. A substantial contributor to you (see Substantial contributor).
b. An officer, director, trustee, or any other individual who has similar
powers or responsibilities.
c. An individual who owns more than 20% of the total combined voting
power of a corporation that is a substantial contributor to you.
d. An individual who owns more than 20% of the profits interest of a
partnership that is a substantial contributor to you.
e. An individual who owns more than 20% of the beneficial interest of a
trust or estate that is a substantial contributor to you.
f. A member of the family of any individual described in a, b, c, d, or e
above.
g. A corporation in which any individuals described in a, b, c, d, e, or f
above hold more than 35% of the total combined voting power.
h. A trust or estate in which any individuals described in a, b, c, d, e, or
f above hold more than 35% of the beneficial interests.
i. A partnership in which any individuals described a, b, c, d, e, or f
above hold more than 35% of the profits interest.

Earmark

Donations or other contributions given to you to assist particular
individuals or specific identified groups.

Economic development

Organizations formed to combat community deterioration by assisting
businesses located in a particular geographic area whose economy is
economically depressed or deteriorating. Economic development
activities include grants, loans, provision of information and expertise, or
creation of industrial parks. Economic development organizations may
also be formed to eliminate prejudice and discrimination or lessen the
burdens of government through involvement with business development.

Elderly housing

Generally, the primary beneficiaries of the tax-exempt housing are age 62
and older. The elderly are treated as appropriate charitable beneficiaries
for certain purposes regardless of socio-economic status because, as a
group, they face many barriers to their basic needs as they age. The
elderly, as a class, face forms of distress other than financial, such as the
need for suitable housing; physical and mental health care; civic, cultural,
and recreational activities; and an overall environment conducive to
dignity and independence.

Expenses

Financial burdens or outlays, costs (of doing business), and business
outlays chargeable against revenues. For purposes of this form, expenses
mean direct and indirect expenses.

Fair market value

The price at which property or the right to use property would change
hands between a willing buyer and a willing seller, neither being under any
compulsion to buy, sell, or transfer property or the right to use property,
and both having reasonable knowledge of relevant facts.

Family

Includes an individual's spouse, ancestors, children, grandchildren, great–
grandchildren, siblings (whether by whole or half blood), and the spouses
of children, grandchildren, great-grandchildren, and siblings.

Foreign country

A country other than the United States, its territories and possessions, and
the District of Columbia.

For-profit

A business entity whose activities are conducted or maintained to make a
profit (e.g. revenues greater than expenses).

Foundation manager

Officers, directors, or trustees, or an individual having powers or
responsibilities similar to those of a foundation's officers, directors, or
trustees.

Fundraising

The organized activity of raising funds, whether by volunteers, employees,
or paid independent contractors.

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Gainfully employed

Employed or actively looking for work.

Gaming

The term gaming includes activities such as Bingo, Beano, lotteries,
pull-tabs, pari-mutuel betting, Calcutta wagering, pickle jars, punch
boards, tip boards, tip jars, certain video games, 21, raffles, keno,
split-the-pot, and other games of chance.

Gross investment income

As defined in section 509, gross investment income means the gross
amount of income from interest, dividends, payments with respect to
securities loans, rents, and royalties; but not including any such income to
the extent included in computing the tax imposed by section 511.

Gross receipts

For purposes of Part IX-A. Statement of Revenues and Expenses, gross
receipts includes monies earned from activities related to your charitable
or other section 501(c)(3) activities, such as selling admissions or
merchandise, performing services, or furnishing facilities.

Handicapped

Persons with physical or mental disabilities with special needs for suitable
housing; physical and mental health care; civic, cultural, and recreational
activities; transportation; and an overall environment conducive to dignity
and independence.

Hospital

Hospital or medical care includes the treatment of any physical or mental
disability or condition, whether on an inpatient or outpatient basis. A
hospital includes the following.
a. Hospitals and rehabilitation institutions, outpatient clinics, or
community mental health or drug treatment centers if the principal
purpose or function is the providing of medical or hospital care or
medical education or research.
b. Medical research organizations, if the principal purpose or function
is the continuous active conduct of medical research in conjunction
with a hospital.

Independent contractors

Persons who aren’t treated as employees for employment tax purposes.

Influence legislation

The act of directly contacting or urging the public to contact members of a
legislative body for the purpose of proposing, supporting, or opposing
legislation. You are also attempting to influence legislation if you advocate
the adoption or rejection of legislation.

Intellectual property

A type of property (distinct from real or personal property) including the
following.
a. Patents (for inventions).
b. Copyrights (for literary and artistic works such as novels, poems,
plays, films, musical works, drawings, paintings, photographs,
sculptures, architectural designs, performances, recordings, film, and
radio or television programs).
c. Trade names, trade marks, and service marks (for symbols, names,
images, and designs).
d. Formulas, know-how, and trade secrets.
A legal agreement in which the parties jointly undertake a transaction for
mutual profit. Generally, each person contributes assets and shares risks.
Like a partnership, joint ventures can involve any type of business
transaction and the “persons” involved can be individuals, groups of
individuals, companies, or corporations.

Joint ventures

Limited liability company

A limited liability company (LLC) is a business entity organized in the
United States under state law. Generally, an LLC may be classified for
federal income tax purposes as a partnership, corporation, or an entity
disregarded as separate from its owner by applying the rules in
Regulations section 301.7701-3. However, an LLC that has been
determined to be, or claims to be, exempt from taxation under section
501(a) is treated as having made an election to be classified as a
corporation under Regulations section 301.7701-3(c)(1)(v).

Low-income housing

Rental or ownership housing provided to persons based on financial need.

Mailing address

Address where you wish all correspondence to be sent.

Manage

Manage means to direct or administer.

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Medical care

The treatment of any physical or mental disability or condition, whether on
an inpatient or outpatient basis.

Medical research organization

An organization whose principal purpose or function is the continuous
active conduct of medical research in conjunction with a hospital.

Net income (for Schedule D)

See Adjusted net income.

Non-fixed payments

A non-fixed payment means a payment that depends on discretion. For
example, a bonus of up to $100,000 that is based on an evaluation of
performance by the governing board is a non-fixed payment because the
governing body has discretion over whether the bonus is paid and the
amount of the bonus.

Organizing document

The organizing document depends on the form of the organization. For a
corporation, the document is the articles of incorporation. For an LLC the
document is the articles of organization. For an unincorporated
association, the document is the articles of association or constitution. The
organizing document of a trust is the trust agreement.

Political

You participate in a political campaign if you promote or oppose, through
political literature, brochures, pamphlets, hosting or participating in events,
etc., the candidacy of an individual for public office. Debates and
nonpartisan voter education aren’t considered political.

Predecessor

An organization whose activities or assets were taken over by another
organization.

Private foundations

Organizations that are exempt under section 501(c)(3) are private
foundations unless they are churches, schools, hospitals, governmental
units, entities that undertake testing for public safety, organizations that
have broad financial support from the general public, or organizations that
support one or more other organizations that are themselves classified as
public charities.

Private operating foundation

A type of private foundation that lacks general public support, but makes
qualifying distributions directly for the active conduct of its educational,
charitable, and religious purposes. “Directly for the active conduct” means
that the distributions are used by the foundation itself to carry out the
programs for which it is organized and operated. Grants made to assist
other organizations or individuals are normally considered indirect.

Public charity

Organizations that are exempt under section 501(c)(3) and aren’t private
foundations because they are churches, schools, hospitals, governmental
units, entities that undertake testing for public safety, organizations that
have broad financial support from the general public, or organizations that
support one or more other organizations that are themselves classified as
public charities. Public charity status is a more favorable tax status than
private foundation status.

Reasonable compensation

Reasonable compensation is the amount that would ordinarily be paid for
like services by like organizations under like circumstances as of the date
the compensation arrangement is made. Reasonable compensation is
important because excessive benefits in the form of compensation to
disqualified persons may result in the imposition of excise taxes and
jeopardize the organization's tax-exempt status.

Related

The family or business relationships between persons.

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Relationship

A relationship between you and the recipient organization includes the
following situations.
a. You control the organization or it controls you through common
officers, directors, or trustees, or through authority to approve budgets
or expenditures.
b. You and the organization were created at approximately the same
time and by the same persons.
c. You and the organization operate in a coordinated manner with
respect to facilities, programs, employees, or other activities.
d. Persons who exercise substantial influence over you also exercise
substantial influence over the other organization.

Revenue

Revenue means gross revenue amounts.

Revenue Procedure

An official statement of a procedure published in the IRS Cumulative
Bulletin that either affects the rights or duties of taxpayers or other
members of the public under the Internal Revenue Code and related
statutes, treaties, and regulations or, although not necessarily affecting the
rights and duties of the public, should be a matter of public knowledge.

Revenue Ruling

An official interpretation by the IRS of the Internal Revenue laws and
related statutes, treaties, and regulations, that has been published in the
Cumulative Bulletin. Revenue Rulings are issued only by the National
Office and are published for the information and guidance of taxpayers,
IRS officials, and others concerned.

SS-4

Application for Employer Identification Number.

School

A school is an educational organization whose primary function is the
presentation of formal instruction and which normally maintains a regular
faculty and curriculum and normally has a regularly enrolled body of pupils
or students in attendance at the place where its educational activities are
regularly carried on. A school may include the following.
a. Primary, secondary, preparatory, or high school.
b. College or university.
c. Trade or technical school.
d. Nursery or preschool.
e. School that you operate as an activity, such as school that is
operated as an activity of a museum, historical society, or church.
Similarly situated organizations means tax-exempt or taxable
organizations of a comparable size, purpose, and resources.

Similarly situated
Substantial contributor

Any individual or organization that gave more than $5,000 to you from the
date you were formed or other date that your exemption would be
effective, to the end of the year in which the contributions were received.
This total amount contributed must also be more than 2% of all the
contributions you received. A creator of a trust is treated as a substantial
contributor regardless of the amount contributed.

Successor

An organization that took over:
a. More than a negligible amount of the activities that were previously
conducted by another organization,
b. 25% or more of the fair market value of the net assets of another
organization, or
c. Was established upon the conversion of an organization from
for-profit to non-profit status.

Trust

A trust is an entity that may be formed by a trust agreement or declaration
of trust. A trust may also be formed through a will.

Unincorporated association

An unincorporated association formed under state law must have at least
two members who have signed a written document for a specifically
defined purpose.

Unusual grants

Substantial contributions and bequests from disinterested persons that by
their size adversely affect classification as a public charity. They are:
a. Unusual,
b. Unexpected, and
c. Received from an unrelated party.

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Index
A
Adjusted net income 22
Affiliated 10
Annual filing requirements 5
Annual returns for foreign
organizations 6
Answers 3
Appendix:
Glossary of terms 30
Sample conflict of interest
policy 26
States with statutory
provisions satisfying the
requirements of section
508(e) 28
Application for exemption:
Expedite requests 3
Group exemption 3
Language and currency
requirements 3
Leaving a group
exemption 3
Past, present and planned
activities 3
Purpose 3
User fee 3
Application package
assembly 4
Arm's length 9
Articles of incorporation 7
Articles of organization 7
Assistance 4
Attachments 4
Authorized representative 7
B
Business relationships 9
Bylaws 7
C
Canadian organizations 6
Certification of filing 7
Charitable risk pool 12
Church 17
Prescribed course of
study 17
Common control 9
Ownership 9
Compensation:
Definition 8
Conflict of interest 9
Conflict of interest policy 9
Cooperative hospital service
organization 12
Corporation:
Articles of incorporation 7
Certification of filing 7
D
Definitions:
Adjusted net income 22
Affiliated 10
Arm's length 9
Authorized
representative 7
Bingo 10
Business relationships 9

Bylaws 7
Charitable 8
Church 15, 17
Common control 9
Compensation 8
Conflict of interest 9
Cooperative hospital
service organization 12
Corporation 7
Directly for the active
conduct 15
Disqualified person 16
Elderly housing 12
Fair market value 9
Family relationships 9
Fixed payment 9
Foreign county 11
For-profit organization 24
Foundation manager 22
Fundraising 10
Handicapped housing 12
Hospital 19
Hospital or medical care 12
Influence legislation 10
Intellectual property 11
Joint venture 11
Legislation 2
Low-income housing 12
Medical research 19
Medical research
organization 19
Non-fixed payment 9
Reasonable
compensation 9
School 12, 18
Similarly situated 9
Substantial contributor 16
Successor 10
Unusual grants 13
Disqualified person 16
Dissolution clause:
Testamentary charitable
trust 8
Distribution of assets at
dissolution 8
State laws 8
E
Economic development 11
EIN (See Employer
identification number)
Elderly housing 12
Employer identification
number 6
Expedite requests 3
F
Facts and circumstances
test 16
Fair market value 9
Family relationships 9
Filing assistance 4
Fixed payment 9
Foreign country 11
Foreign organizations 6, 11
Annual returns 6
Canadian organizations 6
General 6

United States territories and
possessions
organizations 6
Virgin Island
organizations 6
Form 2848 4
Form 5768 10
Form 8821 5
For-profit organization 24
Foundation manager 22
Fundraising 10
G
Gainfully employed 11
Gaming activities 10
Glossary of terms 30
Group exemption 3
Leaving a group
exemption 3
H
Handicapped housing 12
Homes for the elderly or
handicapped 23
Community 23
Hospital 19
Conflict of interest
policy 20
Hospital or medical care 12
How to answer 3
I
Independent contractors 9
Influence legislation 10
Integrated auxiliary of a
church 22
Intellectual property 11
J
Joint venture 11
L
Language and currency
requirements 3
Leaving a group exemption 3
Legislation 2
Definition 2
Form 5768 2
Legislative activity 2
Election to influence
legislation 2
Limited liability company 7
LLC (See Limited liability
company)
Low-income housing 12, 23
M
Mailing address 6
Medical research 19
Medical research
organization 19
Month and annual accounting
period 7

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N
NASCO 2
Non-fixed payment 9
O
Operated 2
Qualification 2
Operating document 7
Organization's website 7
Organizational structure 7
Organized 2
Influence legislation 2
Legislative activity 2
Qualification 2
Organizing document 2
Dissolution clause 8
Purpose clause 8
Required provisions 8
Substitute articles of
incorporation 7
Unincorporated
association 7
P
Past, present and planned
activities 3
Political campaign
intervention 2
Predecessor 24
Primary contact person 7
Private foundations 2, 12, 15
Private operating
foundations 15
Public charities 2
Public charities and private
foundations 2
Public inspection 5
Public support test 16
Purpose clause:
Charitable 8
Q
Qualification:
Operated 2
Organized 2
Political campaign
intervention 2
Qualifications 2
R
Reasonable compensation 9
Related 9
Representation 4
Form 2848 4
Form 8821 5
S
Sample conflict of interest
policy 26
Scholarships, fellowships,
grants, loans 24
School 12, 18
Operational information 18
Racially nondiscriminatory
policy 18

Section 501(c)(3) organization:
Eligibility 1
Private foundations 2
Public charities 2
Public charities and private
foundations 2
Qualifications 2
Section 509(a)(3)
organization 21
Signature 4
Similarly situated
organizations 9
Statement of revenue and
expenses 12

State registration:
NASCO 2
States with section 508(e)
provisions 28
States with statutory provisions
satisfying the requirements
of section 508(e) 28
Substantial contributor 16
Successor 10, 24
Supporting organization 21

T
Tax-exempt status:
Form 1023 3
Trust 7
Non-charitable interests 7
Will 7
U
Unincorporated association 7
United States territories and
possessions 6
Unusual grants 13, 16

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User fee 3, 17
V
Virgin Island organizations 6
W
What to file:
Required schedules 4
When to file 4
Where to file 4