A 501(c)(3) nonprofit corporation is a type of charitable organization that the Internal Revenue Service recognizes as tax exempt. This type of corporation does not pay income tax on its earnings or on the donations it receives.
Also, any time a taxpayer makes a donation to a 501(c)(3) nonprofit, they can reduce their taxable income by the amount of their donation if they itemize their deductions on their federal income tax return. This incentive encourages private charity and makes it easier for nonprofits to raise money.
If you've ever wanted to raise money for a cause on your own terms, you might want to start a 501(c)(3). My Investopedia article, 5 Steps To Forming A Tax-Exempt Nonprofit Corporation, describes what you should consider before you decide to pursue your goals through this method and tells you how to get started if you decide to move forward.
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