Lotus Petal USA supports Lotus Petal Foundation India, is a non-profit organization founded in 2011 to provide equal opportunities for underprivileged children living in the urban slums of Gurugram, Haryana, India. The Foundation has over 11 years of grassroots-level expertise in handling challenges faced by underprivileged children and transforming their lives through education, nutrition and skill development & livelihood support.
The two schools and one fast-track program for school-dropout children run by the Foundation impart education to underprivileged children living in Gurgaon. The Foundation also runs live interactive online classes and provides infrastructural support to schools in remote areas in India.
The Foundation takes care of the nutrition of students enrolled in its schools by providing them daily breakfast and lunch freshly prepared in their FSSAI certified school kitchen. Students can also avail free health check-up or E-Doctor Sewa from the TeleMedicine Center (TMC) run by the Foundation.
The Foundation runs Jeevika skill training center to impart skill training to students for better employability. The courses are NSDC certified and are conducted by reputed training partners.
The section 501(c)(3) constitutes the section that is part of the US Internal Revenue Code that permits exemption from federal taxation for nonprofit organisations, particularly those classified as private foundations, public charities and private foundations operating for profit. It is administered and regulated through the US Department of Treasury through the Internal Revenue Service.
To be able to be considered tax-exempt, 501(c)(3) is the nonprofit must be established for at least one of the following exclusively charitable goals:
501(c)(3) Organizations are classified into three categories that include private foundations and private operating foundations.
Public charity: These are what people think of as organisations that are active in their programs. Examples include benevolence and church organizations as well as animal welfare organizations and educational institutions, among others. They usually get a large part of their revenue either from people in general or the government.
Donations to public charities may be tax-deductible up to 60 percent of the individual donor’s income. Corporate limits generally are 10 percent. Additionally, public charities have to maintain a governing body mostly composed of non-related, independent individuals.
Private foundations are generally classified as non-profit organizations that help public charities by providing grants, however that’s not the norm. Private foundations’ donations can be tax-deductible to the donor’s individual up to 30 percent of the amount of income. The management for a foundation that is private may be more tightly controlled as opposed to the case of a public charity. Family foundations are an instance of private foundations.
Private foundation operating: The third grouping is the most infrequent Private operating foundation. These foundations typically run programs similar to those of public foundations, but they can also possess features (such such as close management) like a foundation. Therefore private foundations operating as non-profit organizations are typically referred to as hybrids. The majority of the profits are used to fund the execution of the programs. Donation deductibility is comparable to the tax deduction for a public charity.
A 501(c)(3) organization in the US is a type of nonprofit organization exempt from federal income tax under Section 501(c)(3) of the Internal Revenue Code, providing that certain criteria and purposes are fulfilled to qualify as tax-exempt status. To become one, an organization must meet specific requirements and fulfill specific purposes to qualify as a 501(c)(3).
Here are the main criteria of a 501(c)(3) organization:
Purpose:
The primary mission of any 501(c)(3) must be charitable, religious, educational, scientific or literary with regards to animals or children as its purpose and must benefit the general public in some way.
Nonprofit:
For an organization to qualify as non-profit status, its activities must exclusively serve exempt purposes, which means no private individuals or shareholders should benefit directly. Any earnings or profits generated from the operation of such an entity should only ever be used towards fulfilling those exempt purposes.
Prohibited Activities:
As with other nonprofits, 501(c)(3) organizations are prohibited from engaging in certain political activities, such as endorsing or opposing political candidates or running campaigns for or against candidates for public office. Likewise, their lobbying activity may also be limited.
Dissolution Clause:
All organizations must include in their organizing documents a dissolution clause which ensures that should the organization disband, its assets are distributed for an exempt purpose or donated to another 501(c)(3) nonprofit.
No Private Inurement:
An organization’s income and assets cannot unduly benefit any private individual shareholders; rather, its operations must serve to benefit society as a whole.
IRS Application:
In order to gain official 501(c)(3) tax-exempt status, organizations must file Form 1023 or 1023-EZ with the Internal Revenue Service and receive approval.
Important to keep in mind is that these requirements provide only an outline, as there may be additional guidelines and regulations specific to certain activities or types of organizations. Therefore, legal and tax professionals are strongly recommended when creating or running a 501(c)(3) nonprofit.
*A 501(c)(3) organization refers to any nonprofit that is tax-exempt under Section 501(c)(3) of the Internal Revenue Code. This designation grants many advantages to this category of non-profit, including exemption from federal income tax and providing donors with tax deductions for contributions made.
While they are permitted to engage in limited lobbying activities, such as engaging in some lobbying for or against specific political candidates and participating in their campaigns, violating these restrictions could result in the loss of tax-exempt status and may void your tax-exempt status.
To form a 501(c)(3) organization, typically you will follow several steps, such as developing a mission statement and bylaws for your organization before incorporating at the state level and applying to the IRS via Form 1023-EZ for tax-exempt status.
Yes, individuals may receive fair compensation for services rendered to a 501(c)(3) organization; however, excessive and unreasonable compensation could potentially jeopardize its tax-exempt status and cause disapproval by tax authorities.
Yes, a 501(c)(3) can generate income through donations, grants, fundraising events, program services or investments; however, any generated funds must only be used towards fulfilling its exempt purposes and not used directly by individuals for personal gain.
Processing times can vary widely when applying for 501(c)(3) status with the IRS; typically it takes several months. Exact duration will depend upon factors like complexity of application, workload issues with IRS, as well as whether any additional information or clarifications are requested by them.
Yes. As long as their activities relate directly to their exempt purposes and any income generated goes towards meeting those purposes, commercial activities related to these purposes are permissible within a 501(c)(3) structure; any unrelated business income (UBIT) tax obligations should also be taken into consideration.
Even the smallest act of kindness can change lives for the better. At Lotus Petal Foundation we have a number of volunteering opportunities for those who wish to give time for the betterment of society. We offer both academic and non-academic volunteering options like teaching in the school, counselling, and library maintenance to name a few. Join our E-Volunteering group to provide academic support, guidance, motivation and life skill training to the students of various age groups staying home in the urban slums of Gurugram, India.
Founder & Managing Trustee
Co-Founder & CTO
