A foundation is a non-profit organisation that makes charitable donations on behalf of a philanthropic cause. Organizations that qualify for tax-exempt 501(c)(3) foundation status are eligible for tax deductions and other tax provisions as determined by state law. To qualify for foundation status, an organisation must file the appropriate documentation with the Internal Revenue Service (IRS). You can file online or visit a local IRS office.
Name your board of directors, which will include three to five people who will run the foundation.
Establish an area of interest for the money generated by the foundation. Understand how the money within the foundation will be endowed or reserved in a trust fund.
Agree to the tax provisions and requirements set for by the IRS and your state government. As of June 2010, the Internal Revenue Service (IRS) requires that a foundation contribute at least 5 per cent of its average net worth to a tax exempt 501(c)(3) non-profit organisation. This contribution must be made each fiscal year.
Apply for tax-exempt 501(c)(3) foundation status by going to the Internal Revenue Service (IRS) website and completing IRS Form-1023. You can also obtain the form by visiting your local IRS office.
Join a foundation database such as the Foundation Center. The Foundation centre has five libraries and publishes an annual catalogue called the Catalog of Nonprofit literature. Search the centre database and make information about your foundation available to other charitable organisations as well as the public.
Things you need
- IRS Form-1023