What Does 501(c)(3) Actually Mean?
The term “501(c)(3)” refers to a specific section of the U.S. Internal Revenue Code. It’s the part of federal tax law that defines organizations that are exempt from paying federal income tax because they serve the public good.
In short: A 501(c)(3) organization is a nonprofit that exists for charitable, educational, religious, scientific, or literary purposes — and has been officially recognized by the IRS as tax-exempt.
At the Solon Area Community Foundation (SACF), that designation allows us to focus all our energy and resources on strengthening the Solon community — not on paying taxes.
Why It Matters for Donors
One of the most powerful benefits of 501(c)(3) status is that donations are tax-deductible for the person or business making the contribution.
That’s right — when you give to a qualified 501(c)(3), you may be able to deduct that gift from your taxable income. This incentivizes charitable giving and provides a win-win:
- You get a tax break
- We get to invest more directly in community projects
Always consult your tax professional for details, but know that supporting a registered nonprofit like SACF comes with perks.
Accountability and Transparency
Being a 501(c)(3) also comes with responsibilities.
Nonprofits must:
- File an annual IRS Form 990 that details finances and operations
- Refrain from political campaigning or lobbying for legislation
- Operate exclusively for their stated mission
This ensures organizations are accountable, transparent, and mission-focused.
Public Benefit Comes First
Unlike for-profit businesses that serve shareholders or owners, nonprofits serve the public. That’s the whole point.
Our mission isn’t to generate profit — it’s to create positive impact. Everything we do, from evaluating grant applications to launching new initiatives, is filtered through that lens: How will this benefit the Solon community as a whole?
How Does an Organization Become a 501(c)(3)?
It’s not automatic. Organizations must apply to the IRS and:
- Define a qualifying mission
- Form a board of directors
- Create bylaws
- Incorporate as a nonprofit in their state
- Submit IRS Form 1023 or 1023-EZ
Once approved, the IRS issues a determination letter confirming 501(c)(3) status — and that’s the green light to begin operating as a federally recognized nonprofit.
Supporting Local Nonprofits Like SACF
So the next time you see a nonprofit labeled “501(c)(3),” you’ll know that it’s:
- Tax-exempt
- Mission-driven
- Accountable to the public
- Eligible to receive tax-deductible donations
And if you’re looking to support one close to home, you’re already in the right place. The Solon Area Community Foundation is proud to be a 501(c)(3) working right here in Solon, Iowa — making our community a better place for all.
Want to get involved or learn more? Visit our About Us or Contact pages. We’d love to hear from you!