Deducting Startup costs of a 501(C)(3) Nonprofit

Deducting Startup costs of a 501(C)(3) Nonprofit

Founders, initial board members, and donors may claim a deduction for contributions made to set up and establish the organization on their individual or corporate tax return once the organization has obtained the 501(C)(3) status. The organization should acknowledge the payments by issuing donation receipts and confirm in writing that no goods or services were received in return (assuming that is an accurate statement), so that the donor has the requisite substantiation letter if ever audited by the IRS.


Helpful resources: 

IRS Publication 535, Business Expenses: https://www.irs.gov/publications/p535

IRS Publication 17, Federal Income Tax for Individuals: https://www.irs.gov/publications/p17


Disclaimer: Individuals, corporations, and nonprofit organizations should confirm their tax obligations by speaking to a Tax advisor.



    • Related Articles

    • Can the organizers of a newly formed 501(C)(3) take a tax deduction for personally paying the organization’s expenses during its first year in operation?

      Yes, founders, initial board members, and donors may claim a deduction for contributions made to set up and establish the organization on their individual or corporate tax return once the organization has obtained the 501(C)(3) status. The ...

    • Ways To Lose Tax-Exempt Status

      There are many ways an organization can lose tax-exempt status. We’ll expand on the most common methods below. If you have questions about your specific situation, please reach out to one of BryteBridge’s specialists, who guide you with the best ...

    • What is a 501(c)(3)?

      501(C)(3) is an IRS designation identifying tax-exempt organizations. The name comes from the fact that this type of organization is defined under Section 501(c) of Title 26 of the U.S. Code. Receiving 501(C)(3) status requires an organization to ...

    • Advantages of a 501(C)(3)

      Advantages of a 501(C)(3) The recognition of your organization as a 501(c)(3) tax-exempt entity by the Internal Revenue Service (IRS) offers many advantages in helping your organization receive donations and establish credibility. Tax Deduction for ...

    • What types of organizations will qualify for 501(c)(3) tax exemption?

      To qualify for 501(c)(3) tax exemption you must be organized and operated exclusively for one or more of the following purposes: Charitable Religious Educational Scientific Literary Testing for public safety To foster national or international ...