EWB International tax status in the United States: Innovative fundraising through tax exemption status
In the United States (US), under federal law, an organization with 501(c) status is exempt from some federal income taxes. 501(c)(3) tax exemptions apply to specific organizations such as non-profit organizations. An organization with 501(c)(3) status does not pay income taxes related to its non-profit mission and purposes, is able to receive tax-deductible contributions, and is eligible for foundation grants. However, 501(c)(3) organizations are unable to participate in any political or lobbying activity.
EWB International (EWB-I) obtained 501(c)(3) status in the US, allowing US corporations to donate to EWB Member Associations (MA) on a tax-free basis. However, EWB-I must ensure that the funds are sent to the MA under the following stipulations:
- EWB-I would withhold 5 per cent for handling of the financial transactions, unless otherwise agreed (e.g. if the sum was large enough to make 5 per cent an exorbitant amount)
- EWB-I would receive a report ensuring that the funds were spent on the engineering and development projects for which the funds were awarded and in line with the overall missions of EWB-I and the EWB MAs.
The 501(c)(3) status presents an opportunity for EWB as a whole. It could be used to identify and formulate the fundraising strategy of EWB MAs with particular attention on target audiences, such as engineering companies and foundations that are currently active in development activities.