Nonprofits MUST avoid this common Form 1023 and Form 1023-EZ mistake | SE4N Clips

SE4N's A. Michael Gellman and Benjamin Takis discuss one of the most common and most significant errors that new nonprofits make when applying for 501(c)(3) status using the Form 1023 or Form 1023-EZ: inadvertently selecting "private foundation" status.
For more information, check out our 4-page guide sheet on the steps to forming a #501c3 #nonprofit organization: www.se4nonprofits.com/steps-t...
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[@roboticks]

If you miscategorize your public nonprofit on a 1024-EZ, how do you fix it? You mentioned it is fairly easy to do.

[@se4nonprofits]

I never said it was easy to do, I said there are potentially ways to correct it and it will cost time and money. See 2:20 of the video: you can submit a Form 8940 for reclassification on the basis of an "erroneous determination of private foundation status." But you generally need to show that it was actually erroneous and that the organization has been satisfying the tests.

[@se4nonprofits]

I thought some more about your question and I think I can clarify further: what I said was fairly easy to do is to switch between different public charity statuses - i.e. between the 509(a)(1) / 170(b)(1)(A)(vi) test and the 509(a)(2) test. You do this on the Form 990 simply by filling out a different section of the Schedule A. You CANNOT use this process to fix an erroneous classification of the organization as a private foundation.

[@seansuccessjones]

The name of my non-profit ends with the word foundation, but is it ok that the non-profit is filled as a 501 (c)(3) publicly charity?

[@se4nonprofits]

Yes, many public charities use the word "foundation" in their name. That doesn't make the organization as "private foundation."

[@seansuccessjones]

@@se4nonprofits Thank you very much for the reply!