508c1a Nonprofit Setup


The 508(c)(1)(a) Faith Based Organization (FBO) is a religious, non-profit, tax exempt organization.  The 508(c)(1)(a) FBO is separate and distinct from a 501(c)(3) charity and unincorporated FBO’s.  The 508(c)(1)(a) is applicable in all 50 states and recognized internationally under the Hague Convention of the United Nations Charter.

Since its inception in 1954 with the Johnson Amendment, the 501(c)(3) has been promoted and advertised by many as the only option to organizing a FBO. This is fatally incorrect.  Federal law, IRS publications, and court cases all confirm and establish the rights and protection of the 508(c)(1)(a) FBO. (Please see legal information.)

The 508(c)(1)(a) FBO enjoys a “mandatory exception” from all the restrictions a 501(c)(3) FBO has including free speech restrictions, IRS reporting requirements, rules and regulations that the IRS may from time to time prescribe and providing testimony under oath.



If your organization is involved primarily in educational, scientific, religious, or charitable endeavors, you’ll probably want to form a nonprofit corporation for the liability protections and tax advantages this status provides.

How to Start A Nonprofit Organization

Incorporating your nonprofit will set legal protections in place that can keep you and your directors’ personal assets separate from the company’s liabilities. There are a number of other benefits to forming a nonprofit, as well.

In general, nonprofit corporations enjoy the following benefits:

  • Limited liability protection. Directors and officers are not personally liable for the organization’s debts and liabilities.
  • Perpetual existence. The corporation continues even if a director leaves the business or passes away.
  • Eligibility for grants. Nonprofits may be eligible for certain public and private grants.

While nonprofits are bound by different state laws than for-profit enterprises, in general their formation processes are quite similar. Like a regular corporation, nonprofits must file Articles of Incorporation with the state in which they wish to incorporate.

Nonprofit Tax Forms

In addition, the IRS requires nonprofit organizations seeking tax-exempt status to file Form 1023. Several states also require organizations to file for state-level tax-exemption. The nonprofit status most commonly sought by organizations is the Internal Revenue Service’s 501(c) tax-exempt status. Organizations that qualify for 501(c) status enjoy the following advantages:

  • Tax-exempt status. Qualifying nonprofits can apply for federal and state tax-exempt status
  • Enhanced credibility. Potential donors may be more inclined to give to an organization that has an official nonprofit status
  • Tax-deductible donations. Donations made by individuals to the nonprofit corporation may be tax-deductible
  • Possible exemption. from certain property taxes.
  • Reduced postage rates.

incorporate.com Can Help Nonprofit Incorporation

incorporate.com can help you form a nonprofit corporation in any state or the District of Columbia and assist your nonprofit by providing the forms necessary for it to obtain tax-exempt 501(c) status with the IRS.

It is important to remember that a 501(c) must satisfy certain conditions and requirements imposed by the IRS to obtain and maintain tax-exempt status. incorporate.com cannot provide legal or tax advice regarding these conditions and requirements and it may be necessary for your nonprofit to consult with other professionals, such as lawyers, accountants or tax advisors.

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