Exempt Organization

Exempt Organization

An Exempt Organization refers to a nonprofit entity that is exempt from federal income tax under the Internal Revenue Code (IRC), typically recognized as a 501(c)(3) organization. These organizations are created for purposes such as charitable, religious, educational, scientific, or literary activities.

To qualify as an Exempt Organization, the entity must meet specific guidelines set forth by the IRS, including the prohibition of benefiting private interests and the requirement to operate primarily for exempt purposes. Contributions made to these organizations are often tax-deductible for the donor, enhancing their appeal.

Examples include charities like the Red Cross, religious institutions, and educational institutions such as universities.