If you want to make a difference in the lives of current and former service members of the United States Armed Forces, but don’t know how to get tax-exempt nonprofit status, this is the guide for you! Read on to find out what types of organization qualify under IRS code 501(c)(19), filing requirements, and five steps to start one today.
If you have an idea to make a difference in the lives of current and former service members of the United States Armed Forces but you’re not sure how to get tax-exempt nonprofit status (or if you’re even eligible!), this is the guide for you.
Where do you get started? What are the steps to get the correct tax-exempt status?
If your organization fits the IRS requirements for 501(c)(19) status, you’re eligible to apply and should follow these five steps to make your idea a reality.
Section 501(c)(19) refers to tax-exempt organizations that specifically benefit veterans of the U.S. Armed Forces. That means the work of 501(c)(19) nonprofit organizations must focus solely on making life better for veterans or current members of the Army, Marine Corps, Air Force, Navy, Space Force, or Coast Guard.
You might have heard of 501(c)(3) nonprofits, which account for a significant portion of organizations registered under the IRS’s tax exemption codes. Lets get more into the differences between 501(c)(3) and 501(c)(19) organizations.
Let’s dig into the difference between 501(c)(3), perhaps the most well-known tax exemption status, and 501(c)(19).
501(c)(3) refers specifically to public charities, private foundations, or private operating foundations. Donations to most 501(c)(3) organizations are deductible for federal tax purposes. Many states allow 501(c)(3) organizations to be exempt from sales and property taxes.
501(c)(19) veterans’ organizations also have the benefit of allowing their donors to deduct their charitable contributions on their federal income tax returns, similar to 501(c)(3) organizations. However, at least 75% of the organization’s membership has to be made up of veterans.
The biggest difference, then, is the specific group the organization serves. While 501(c)(3) organizations might serve some veterans, their main goal usually isn’t to serve only veterans. That’s where 501(c)(19) organizations come in!
As mentioned above, to qualify for 501(c)(19) exemption status, an organization must attempt to make life better for veterans. But the IRS does get a little more specific about the types of organizations that count under this exemption status:
The IRS gets even more specific about the activities of these organizations, which must be in operation to serve one or more of these purposes:
The IRS specifies several requirements for an organization to be given 501(c)(19) tax exemption status.
Here are the main requirements each organization must adhere to:
If your organization fits these requirements, read on to learn how to start an official 501(c)(19) nonprofit organization.
Starting a 501(c)(19) can be tricky if you aren’t aware of the steps. In the following sections, we give you every detail of the process!
You’ve reviewed the criteria for getting 501(c)(19) status and you’re excited to start your organization to make life better for veterans. Excellent! The first step toward your goal is to establish a nonprofit organization with the following elements:
Once you have these items ready, you can move on to the next steps.
Sometimes referred to as the certificate of incorporation or corporate charter, the articles of incorporation are legal documents you file with the Secretary of State in the state your organization will primarily operate in. The articles contain basic business information and legally establish your organization with the state.
Check for your state’s specific requirements to make sure you have everything in order before you submit.
The IRS requires every business and organization to register for an EIN to identify your organization on a variety of documents, including Form 1024, which you’ll submit in the next step!
You can apply for an EIN with the IRS’s online application. Here are some things to keep in mind:
With your EIN in hand, you’re ready to file your Form 1024.
Your organization is almost ready to start helping veterans and active service members. When it comes time to file your Form 1024, here are some things to keep in mind:
Remember that any time you’re dealing with the IRS, it pays to do things right the first time. Ensuring you have all the necessary information on your form 1024 means a quicker turnaround time to establish your exemption status.
Related Article: What is a 501(c)(8) Nonprofit, and How Do You Start One?
To stay in good standing at a 501(c)(19) exempt organization, you must abide by the annual filing requirements to show that your veterans’ organization is operating with good financial practices.
To do this, you’ll need to file form 990 annually. This provides the IRS with updates on your organization’s activities and finances. Form 990 should also be publicly available so that anyone can see how your nonprofit is being run.
There are three versions of form 990, so you’ll need to review the financial status requirements for each to determine which best fits your nonprofit.
Once you decide which version you need to use, review the instructions and be sure to fill out all required schedules.
Now that you know a little more about what it means to be a 501(c)(19) nonprofit organization, you can decide if your organization fits the requirements.
Ultimately, the goal of offering tax exemption is to help organizations that do important work for their communities. Improving the lives of our former and current service members and their families is very important. Therefore, you must get the tax benefits allowed to support your crucial work.
Be sure to check out our Nonprofit Blog for more nonprofit management tips. We also have a comprehensive guide to registering a 501(c)(3) nonprofit organization to compare the types of exemption statuses. Additionally, we have dedicated articles for starting a nonprofit in different states in the U.S., including Texas, Minnesota, Oregon, Arizona, Illinois, and more.
Check out Donorbox, a powerful recurring donation system, that will help you on your way to becoming a successful nonprofit.
Lindsey spent years wearing many hats in the nonprofit world. Whether she was helping arts nonprofits with their messaging and content, planning a fundraising gala, writing an NEA grant proposal, or running a membership program with over 400 members, she learned how to navigate – and appreciate! – the fast-paced world of fundraising. Now, she loves sharing those hard-earned lessons with the Donorbox community.
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Lindsey Baker Bower