Qualified Charity
A “qualified charity” or “qualified charitable organization” refers to a nonprofit organization that has been recognized by the Internal Revenue Service (IRS) under section 501(c)(3) of the Internal Revenue Code. Donations made to these organizations can typically be deducted from the donor’s taxable income, providing a financial incentive for individuals and corporations to contribute.
Examples of Qualified Charities
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American Red Cross: The American Red Cross provides emergency assistance, disaster relief, and education in the United States. It is recognized as a qualified charity and donations to it are tax-deductible.
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United Way: United Way is an international network of over 1,800 local nonprofit fundraising affiliates that work to improve education, income stability, and health worldwide.
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Feeding America: Feeding America is a hunger-relief organization that operates a nationwide network of food banks and engages in efforts to end hunger in communities across the United States.
Frequently Asked Questions
What qualifies an organization as a ‘qualified charity’?
A qualified charity must be organized and operated exclusively for religious, charitable, scientific, literary, or educational purposes. It must also refrain from participating in any political campaigns and limit its lobbying activities.
How can I verify if an organization is a qualified charity?
The IRS provides a searchable database called the Exempt Organizations Select Check where you can verify the status of a charity. Additionally, many third-party organizations, such as GuideStar and Charity Navigator, offer information about various charities.
Are donations to international charities tax-deductible?
Donations to foreign charities are generally not deductible, but there are certain exceptions. It’s best to consult the IRS’s guidelines or a tax professional for specific circumstances.
What documentation is required to claim a deduction for a donation?
For donations less than $250, a bank record or receipt from the charity is sufficient. For contributions of $250 or more, a written acknowledgment from the charitable organization is required.
Related Terms
- 501(c)(3): The section of the U.S. Internal Revenue Code that outlines the criteria for tax-exempt charitable organizations.
- Nonprofit Organization: An entity that exists for educational or charitable reasons, which reinvests surplus revenues in the organization’s mission instead of distributing them as profit.
- Tax Deduction: A reduction of income that is able to be taxed, which reduces overall taxable income.
Online Resources
- IRS Charities and Nonprofits: https://www.irs.gov/charities-and-nonprofits
- Exempt Organizations Select Check: https://www.irs.gov/charities-non-profits/exempt-organizations-select-check
- Charity Navigator: https://www.charitynavigator.org/
Suggested Books for Further Studies
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“Nonprofit Management: Principles and Practice” by Michael J. Worth: This book provides a comprehensive overview of the nonprofit sector, including governance, leadership, and management practices.
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“Tax-Exempt Organizations: Cases and Materials” by Columbo and Hall: A textbook focused on legal frameworks surrounding tax-exempt organizations, this book is useful for understanding the complexities of nonprofit law.
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“The Nonprofit Handbook: Everything You Need to Know to Start and Run Your Nonprofit Organization” by Gary M. Grobman: An indispensable guide that covers all the essentials of starting and managing a nonprofit organization effectively.
Fundamentals of Qualified Charity: Taxation and Philanthropy Basics Quiz
Thank you for embarking on this journey through our comprehensive charitable lexicon and tackling our challenging sample exam quiz questions. Keep striving for excellence in your philanthropic endeavors!
