501(c)(3) Animal Rescue Requirements

If you want to create your own rescue or shelter or do some other large, organized effort to help animals, you’ll want to consider forming a 501(c)(3) animal rescue organization. This will help you get donations and could save you money on other aspects of your work. 

But it is an expensive and arduous process to get recognized as a 501(c)(3). You won’t get approved as a  501(c)(3) animal rescue until you have been incorporated for at least 3 years.

Read here about what a 501(c)(3) animal rescue is and the 501(c)(3) animal rescue requirements. 

What is 501(c)(3)?

Photo by Nataliya Vaitkevich: https://www.pexels.com/photo/tax-documents-on-the-table-6863183/

This is a U.S. federal designation for tax purporses. If an organization is trying to do good and will invest any profits back into doing good, the government will support those efforts be eliminating or lowering tax burdens to the organization and encourage donors by reducing their personal taxes. 

There are many different types of organizations that qualify to be 501(c)(3) - churches, universities, hospitals, social welfare organizations, and groups to prevent cruelty to children or animals. 

Once an organization is 501(c)(3), it always will be one untilss it disbands or is revoked by the irs. It has to remain true to its purpose. If you start out to prevent animal cruely and then switch to low income housing for humans, your 501(c)(3) status could be revoked because you did not stay true to your original purpose.

 

Why Create A 501(c)(3) Animal Rescue

I’ve just said that there are lots of 501(c)(3) animal rescue requirements and expenses So why do it?  There are many advantages to creating a 501(c)(3) animal rescue.

• You don't pay federal taxes and many state taxes
• Donors can claim deductions  on their own taxes for their donations
• You become eligible for many government and private grants
• You are protected from personal liability for things that go wrong at your 501(c)(3) animal rescue
• You can still pay employees (including yourself) fairly. You have to deduct federal tax from employees paychecks and pay SSI and medicare, but not unemployment taxes
• You can receive discounts of social media marketing tools, customer relationship manager tools, shipping, web design and hosting, fundraising software, and other needed goods and services. Zoom offers discounted premium accounts to some nonprofits. Many nonprofits will give each other discounts as well.

Disadvantages Of A 501(c)(3) Animal Rescue

• There are a multitude of 501(c)(3) animal rescue requirements. There is lots of paperwork and government oversight and expenses to create and maintain the  501(c)(3) status.
• A 501(c)(3) animal welfare organization can not do political lobbying or endorse a political candidate. The organization can not be seen as trying to influence legislation about animal welfare or any other topic.
• The animal rescue can not benefit the individuals or board members involved with it. Fair payment for work is allowed, but people should not use their connection with the organisation to get personal or business benefits.
• All assets of the organization are permanently charitable. If the nonprofit closes, the assets have to be donated to another charity.
• Lots of regulations. Have I said that before? It’s true There are many. 501(c)(3) animal rescue requirements. You have to follow rules so it is not your baby anymore.

What Kind Of 501(c)(3) Will You Create?

Most 501(c)(3) are corporations as defined by the IRS. That doesn’t mean you are a “big corporation”. It just means that you went through certain steps and are organized in a certain way. Having your animal rescue be a corporation is a benefit because it makes the organization almost like another person under the law. So if something happenes that is bad, the corporation is on the hook for it, not you. To become a corporation you have to go through a few step like file Articles of Incorporation in a state of the U.S.

Some 501(3)(c) organizations are LLCs - Limited Liability Company. This is only when an already existing 501(3)(c) corporation partners with other nonprofits to form a new group, or LLC. So you already have to be a 501(3)(c) corporation if you want to make a new LLC group. The process for applying for 501(3)(c) status is more complicated for an LLC that a corporation.

You can become a nonprofit association by getting together with a group of people to do charitable work. Many people have formed nonprofit associations without even realizing it, through common law regulations! An unincorporated group has no ability to employ anybody or enter into contracts - only individuals within the group can do that. So there is a lot of personal liability. 

To get 501(3)(c) status as an association, you just need to file an Articles of Association and have that document signed by two people. The IRS has suggestions on how to word these articles on their website. It’s easier than becoming a corporation, but it doesn’t provide all the benefits and you are still liable for the group. It might be good to start out as an association and, after three years you can then incorporate.

Classifications Of 501(c)(3) Organizations

The IRS recognizes three different classifications of nonprofits.

• Private foundations. These can be public trusts or community chests. They give money to others, often through grants. Their money can come from just a few people. Their governance can be closely held. In other words, close family or business associates can be a public foundation. There are limits to how much individual donors can deduct from their taxes
• Public charities. This is what you would probably be as an animal welfare or rescue organization.  Public charities have active programs. At least ⅓ of the money they receive has to come from donations from a variety of people and entities. Public charities must maintain a governing body, or board, that is mostly made up of independent, unrelated individuals.
• Private operating foundations. Kind of a cross between the oher two. They have active programs but may also have a close close governance. Tax deductions are similar to public charities.

Steps To Create A 501(c)(3) Nonprofit

Choose a name for your organization and write up documents about how your nonprofit will run. This could be by-laws, policies and procedures, and articles of organization to start. Each state has different requirements of what should be included in the by-laws.

Create a board and have meetings. The IRS like it if you have at least 3-5 board members.

Get any permits or licenses that you need to do your work.  Do your good work on behalf of animals. You can apply for 501(3)(c) status in your state, and at the federal level as an association.

Once you are close to being an association for three years, you can start the process of incorporation. You first incorporate as a nonprofit in the state you are in by filing Articles of Incorporation. You can get an Employee Identification Number (EIN) from the federal government and file a 1023 to be recognized as a 501(3)(c).

The 1023 form is very long and complicated. The IRS uses this information to be sure that here are no conflicts of interest or benefits to insiders.

Some states require you to file their own tax exemption forms as a corporation. You may also need to register as a nonprofit corporation in your state with the attorney general or other appropriate person if you haven’t already done so.

To keep your nonprofit 501(3)(c) status, you need to keep true to your purpose and file a 990 for every year with the federal government and file whatever forms your particular state requires. All of your financial information becomes part of the public record.

Conclusion

The 501(c)(3) animal rescue requirements are pretty intense and the process for applying for tax exemption is long and complicated. There are lots of money-saving benefits for creating a 501(c)(3) animal rescue. I interviewed Stephanie Summers-Mayer and she partnered with an already existing nonprofit, saving herself all the time and money of creating a 501(c)(3) animal rescue herself.

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