Obtaining 501(c)(3) tax-exempt status with the IRS is beneficial for three principal reasons:
Once your 501(c)(3) application is approved by the IRS, your tax-exempt nonprofit organization enjoys several federal, state income, sales, property, and other tax exemptions.
Your tax-exempt status increases your opportunity to receive numerous public and private grants, along with donations from individuals because contributions are tax-deductible to donors. Tax deductions inevitably encourage more individuals, corporations, and foundations to donate to your charitable cause, allowing your nonprofit tax-exempt organization to expand and further develop your activities. A number of corporations and foundations are typically required by their operating rules to only donate their funds to 501(c)(3) tax-exempt organizations, so obtaining tax-exempt status is key to receiving donations.
Additionally, tax-exempt status opens doors to low cost mailing, advertising, and purchasing rates, along with other discounts and preferences.