WUNRN
Tax Exemption Benefits for Registered NGO's
in Specific Countries
Tax
exemption benefits exist for NGO’s in some countries
as regarding money received, and on specific
operational costs. It is absolutely necessary to check with your government on
eligibility and procedures, but these tax exemption benefits can be
very significant for NGO budgets. Comprehensive
documentation is required, and regular reporting.
The
information below is for the United States. NGO's must be registered with the
US Internal Revenue Service and are given a Federal Tax Exempt Code Number.
To
be exempt from State Taxes, an NGO must also be incorporated at the US
STATE Level.
US
NGO Tax-Exempt Status
Many NGOs in
the United States are qualified as exempt from state and federal taxes. This
legal status makes it easier for NGOs to operate as nonprofit organizations
because they do not have to pay tax on the income (funding) they receive. If an
NGO wants to receive exemption from income taxation from the U.S. Federal
Government, the NGO applies to the Internal Revenue Service. There are many
types of NGOs listed in the Internal Revenue Code that are eligible for
tax-exempt status, and the type of benefits available depends on the type of
NGO and the type of activities conducted. In general, NGOs organized
exclusively for educational, religious, charitable, scientific, testing for
public safety, literary purposes, and certain sports, that are non-profit and
do not play a partisan political role (e.g., by supporting candidates for
election or attempting to influence legislation), can apply to receive
exemption from federal income taxation on all income related to these purposes.
ALSO VERY
IMPORTANT FOR NGO FUNDRAISING - IN THE US:
Another
feature of tax-exempt status is that contributions to some of these
organizations may be tax deductible for the donor. This provides an important
incentive for citizens and corporations to donate funds to these groups.
Tax exempt
NGO's are required to provide regular financial reports.
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As a
foreign NGO, it is worthwhile to see if your country offers your NGO tax exemption privileges, and for those
donating to/funding your NGO. The rules vary, and the documentation, but if
available, can give advantages.
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Some
foreign NGO's create a Fiscal Agent relationship with a US Registered Tax
Exempt NGO. This enables the foreign NGO to have tax exemption in the US, but
not for donors in the US who contribute.
http://www.nonprofitexpert.com/fiscal-sponsorship-an-alternative-to-creating-a-nonprofit/ The
Fiscal Agent process is sometimes engaged by new NGO's just starting, and not
yet registered for tax exemption on the Federal or State level. As the Fiscal
Agent procedure involves monies and legal issues, it is important to have full
legal advice and required paperwork.
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