501(c)(13) nonprofit cemetery companies are for the private use of their members. Still, the IRS calls these organizations mutual cemetery companies and, like other nonprofits, they must benefit from a more extensive members base and provide a service to the community. The following article breaks down what a 501(c)(13) nonprofit cemetery is as well as provides examples and shares how to apply to become one.
The Internal Revenue Service (IRS) has a definition and process for nonprofits of all types. 501(c)(13) nonprofit cemetery companies are for the private use of their members, but they operate like a nonprofit in many ways, too.
These organizations must bury and care for the bodies of their members, and all revenue goes toward the grounds and crematoriums. The following article will break down what a 501(c)(13) nonprofit cemetery is, provide examples, and share how the IRS determines whether it is a public or private venture.
A 501(c)(13) nonprofit cemetery’s purpose is to dispose of human bodies by burial or cremation. Many of these cemeteries have a long history and provide an option for groups like fraternities and other organizations looking for places to bury their members. These cemeteries differ from private companies because everyone who buys a plot from one of these cemeteries is automatically a member of the organization. These organizations are created for the personal use of only these members.
While private burial companies are money-making businesses, 501(c)(13) nonprofit cemeteries are limited in the ways they can use any revenue they collect. 501(c)(13) cemeteries can only use funds to operate, maintain, and improve their cemetery grounds or crematoriums. They can purchase more cemetery property and create a fund to continue supporting this property, but funds must be used for ordinary and necessary purposes.
This IRS guide will give you in-depth knowledge on how it defines a 501(c)(13) nonprofit cemetery organization.
Most pauper or church cemeteries already qualify as nonprofits under the 501(c)(3) status, so what makes organizations like the above nonprofits? The IRS has answered that question with two separate eligibilities.
Nonprofit mutual cemetery organizations are owned and operated to benefit lot owners who reside after death and are not available for resale. Most of these organizations cannot be limited to a single family. The plot owners here are the members of the organization.
If a particular mutual cemetery company offers membership to only members of a particular family, its status as mutual will not be affected as long as all the other requirements are met.
Nonprofit 501(c)(13) cemeteries must operate only to bury or cremate members. There can be no other benefit to members outside of that, and revenue cannot benefit other private shareholders.
Since November 28, 1978, these organizations are also unable to offer stock. Organizations that did provide stock options before this date must use funds that don’t pay dividends to provide care and improvement for the cemetery.
Once again, most of these cemeteries do not provide burial plots for the poor. But as long as they serve a broader class of people and operate for public purposes, they do not have to pay federal taxes.
If you are hoping to start a nonprofit 501(c)(13) cemetery, you must file Form 1024 with the IRS and provide a detailed list of all activities your cemetery will include. This form also requires organizations to list all potential sources of income and provide names, addresses, and titles of board members.
Before filing this form with the IRS, most organizations must file Articles of Incorporation with their state. Filing Form 1024 with the IRS costs either $275 or $600 depending on the size of your organization, and it will take between one to six months to receive your letter of determination.
With tax-exempt status does come a few restrictions. For cemetery companies to qualify under Section 501(c)(13), they must declare in the Form 1024 application for tax-exempt status that members will use their plots for only bona fide burial purposes, and will not resale.
All revenue must be used to upkeep the cemetery or crematorium. The nonprofit can use the funds to conduct burials and cremations and provide monuments, markers, vaults, flowers, and other necessary funeral items.
The nonprofit can use these items only at the cemetery. Unlike private funeral homes, nonprofit 501(c)(13) cemeteries cannot run a mortuary or funeral service home.
Let’s have a look at how the IRS defines the usage of funds for these nonprofits:
IRS has a detailed Audit Technique Guide for 501(c)(13) cemetery organizations. Read this for more information on mandatory organizational and operational requirements to avoid any future risks.
The below nonprofit cemeteries have all been working for a long time toward the restoration and maintenance of some of the most historic burial grounds in the US with the help of their community members, volunteers, and donations. Have a look at their websites, and check out different pages, details, services, and donation forms for more understanding of how they work.
The Hillcrest Cemetery Memorial Association was started in 2001 to help restore the heavily overgrown cemetery in the community. This 501(c)(13) cemetery is the final resting place for approximately 10,000 people including veterans of the U.S. It took them nine years to clear all the overgrown graves in the cemetery with the help of volunteers and donations. In 2022, they started a $50,000 fundraising drive to help with new programs including volunteer days and adopt-a-block for further betterment of the place. They surpassed their goal!
The Macon Cemetery was established in 1917 and this association has worked to maintain and improve its condition with the help of its members and donations from the community. Their website takes you on a virtual tour of the cemetery through a short video. It lets you locate graves and make donations. They have an annual membership program and details on upcoming events are mentioned on the website.
The Lancaster Cemetery is a 20-acre cemetery from the Victorian era with a resting place for over 16,000 people. It remains active to this day. Friends and neighbors can visit the cemetery during the day. They offer various services including burials, monuments, tombstones, genealogical research of family members, and more. You can find details on their visiting hours, requests, restrictions, events, tours, directions, and more on the website. The cemetery accepts donations for grounds maintenance, employment expenses, and equipment costs using the above donation page.
The reason for tax-exempt status for these nonprofit cemeteries has been questioned by many, but they remain tax-exempt. They still serve many across the country to provide burial and cremation services. These cemeteries can raise funds through individual and corporate donations and grants as tax-exempt nonprofit organizations.
All 501(c)(13) cemeteries can collect donations online with a fundraising solution like Donorbox. Our features offer several advanced options including crowdfunding, peer-to-peer fundraising, text-to-give, membership campaigns, donor management, and more.
For more fundraising tips and resources, visit our blog and subscribe to our newsletter.
We’ll answer some common questions regarding 501(c)(13) nonprofit cemetery companies.
Donations to these nonprofit organizations are tax deductive, but not if the gift only funds one plot. The gift must benefit the organization as a whole. Any payments to care for a single plot or crypt are not tax deductible. The purchase of a plot is also not tax deductible.
Generally, church and potter’s field cemeteries that bury for a charity are 501(c)(3) organizations. The 501(c)(13) started primarily for fraternal and other associations needing burial options for their members or family members and descendants.
The IRS ruled that pet cemeteries do not qualify for this exemption and are not eligible to operate as 501(c)(13) cemeteries.
The IRS ruled that a mortuary is not required for cemetery operations and does not qualify for this tax exemption.
Kristine Ensor is a freelance writer with over a decade of experience working with local and international nonprofits. As a nonprofit professional she has specialized in fundraising, marketing, event planning, volunteer management, and board development.
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Kristine Ensor