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2 - Part III - Required Provisions
Federal tax law requires specific wording, which limits an organiza-
tion’s purposes and disposition of assets, to be included in the
governing instrument of all 501(c)(3) organizations.
For incorporated organizations, this wording must appear in the
Articles of Incorporation. Unincorporated
entities may include the
wording in the Constitution, Articles of Association, or other pri-
mary organizing document.
Wording in the Bylaws will not meet this
requirement unless the IRS considers your Bylaws to be your group's
primary
governing document.
If an organization fails to include the required wording in its
original articles, the
IRS will ordinarily accept an amendment.
For corporations, the IRS will want a copy of the amendment
which has
been stamped by state authorities
SAMPLE WORDINGThis corporation* is organized exclusively for
religious,
charitable, scientific, literary or educational purposes within
the meaning of section
501(c)(3) of the Internal Revenue Code,
including, for such purposes, the making of distributions to
organizations
that qualify as exempt organizations under sec-
tion 501(c)(3) of the Internal Revenue Code or the correspond-
ing
section of any future United States Internal Revenue law.
Upon the winding up and dissolution of the corporation,*
after
paying or adequately providing for the debts and obligations of
the corporation,* the remaining assets
shall be distributed for
one or more exempt purposes within the meaning of section
501(c)(3) of the Internal Revenue
Code, or the corresponding
section of any future federal tax code. (*Unincorporated associations
may use "association," "society,"
"club," or some similar word in place of "corporation."
The under-
lined words are from section 501(c)(3). Use one or more of these.)
Form 1023 only asks for
these two provisions. In the past, however,
many IRS agents have asked applicants to include the following para-
graphs, which appear in IRS Publication 557.No part of the net earnings of the corporation* shall inure
to
the benefit of, or be distributable to, any of its members,
trustees, officers or other private persons, except
that the
corporation* shall be authorized to pay reasonable compensation
for services rendered and to make
payments and distributions in
furtherance of the exempt purposes.
No substantial part of the activities
of the corporation* shall
be the carrying on of propaganda, or otherwise attempting to
influence legislation,
and the corporation* shall not partici-
pate in, or intervene in (including the publishing or distribu-
tion
of statements) any political campaign on behalf of or in
opposition to any candidate for public office.
Notwithstanding
any other provision of these articles, the cor-
poration* shall not carry on any other activities not permitted
to be carried on (a) by a corporation exempt from federal in-
come tax under section 501(c)(3) of the Internal Revenue
Code,
or the corresponding section of any future federal tax code, or
(b) by a corporation, contributions to which
are deductible
under section 170(c)(2) of the Internal Revenue Code, or the
corresponding section of any future
federal tax code.
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