Internal Revenue Code Section 501(c)(3) affords organizations tax exemption if certain requirements are satisfied. These organizations must accomplish a charitable purpose. Such purposes include conducting scientific, religious, educational, or literary activities. At least one of these purposes must be set forth in the organization’s Articles of Organization. This post focuses on educational and scientific purposes.
An educational purpose includes not only "instruction or training of individuals for the purpose of improving or developing his capabilities" but also "the instruction of the public on subjects useful to the individual and beneficial to the community." Treas. Reg. Section 1.501(c)(3)-1(d)(3). For example, the IRS has determined that an organization whose purpose was to educate the public about the accuracy and fairness of news coverage was eligible for tax exemption. Rev. Rul. 74-615, 1974-2 C.B. 165.
In order for a purpose to be qualified as scientific research, it must be performed for the public interest. Therefore, research conducted with the purpose of obtaining scientific information which is then disseminated to the public will be included under this stated purpose. Treas. Reg. Section 1.501(c)(3)-1(d)(5)(iii)(c)(2). The IRS has found that an organization established to encourage the creation of nonprofit regional health data systems, to conduct studies, to educate, and to make suggestions to the necessary authorities on how to improve the efficiency and effectiveness of health care agencies qualified for tax exempt status. Rev. Rul. 76-455, 1976-2 C.B. 150. The organization sought to augment the available knowledge concerning health agencies in an attempt to streamline health facilities and effectively serve the health needs of the community. The IRS designated the organization's purpose as both educational and scientific in nature.
Therefore, organizations seeking tax exempt status can achieve this objective in ways not typically thought of for charities. These exempt purposes include educational and scientific purposes and, within these purposes, there is a wide range of flexibility.