Raising money is an ongoing challenge for horse rescues and other small charities, especially if the organization is not recognized as tax-exempt by the Internal Revenue Service. Designation as a 501(c)(3) charity by the IRS allows donors to take a charitable deduction on their income tax returns and is a requirement for donations from many foundations.
IRS recognition also confers an air of legitimacy to a charity that can be a valuable asset for fund raising.
Unfortunately, applying for 501(c)(3) status can be complicated, time-consuming and expensive, legitimate concerns that put tax-exempt status out of reach for many cash-strapped horse rescues.
The IRS recently streamlined the 501(c)(3) application process for the majority of charities in an effort to reduce the agency’s current backlog of more than 60,000 applications. Many of those applications have been pending for more than nine months, creating frustrating delays for both applicants and the IRS.
Organizations with annual gross receipts of $50,000 or less and assets of $250,000 or less, a category that likely includes many small horse rescues, now are eligible to use the new Form 1023-EZ. The application is three pages rather than the 26-page standard Form 1023, requires little supporting documentation, and must be filed electronically. The filing fee for the Form 1023-EZ application is $400.
The revamped form (www.irs.gov/pub/irs-pdf/f1023ez.pdf)asks for basic information about the charity and its officers and directors, organizational structure, activities and classification as either a private foundation or public charity.
Instructions for the simplified application (www.irs.gov/pub/irs-pdf/i1023ez.pdf)include a comprehensive worksheet that must be completed (but not filed with the IRS) to help applicants determine the eligibility of their charities.
Form 1023-EZ is relatively simple, at least by IRS standards, and should make 501(c)(3) status a more realistic option for many small horse rescues. Check it out if you operate a rescue, or pass the information along if you provide services to a rescue.