Is It Time To Rethink 501(c)(3) Designation

from Philanthropy 2173:

In a changing landscape, whither the 501c3?

For almost a century, 501c3 nonprofits have held a privileged place in our communities and in our tax code. They are provided tax exempt status, and supporters can deduct their contributions to these organizations from their income taxes. In so doing, the US tax code privileges these organizations – from major hospitals and universities to small neighborhood groups – as providers of social goods and contributors to civil society.

Those privileges are being challenged from numerous directions.

… Currently, most of the innovation in the sector is around the edges of our existing corporate and tax frameworks – we are developing “workarounds” to the 501c3 or commercial corporate model to encourage social entrepreneurs and new investors or donors.

The preponderance of these workarounds should have been our first clue – it is time to reconsider the entirety of the systems and policies for the production, financing and distribution of social goods and civil society in the Twenty First century.