501(c)(3) vs. 508(c)(1)(A): Two Paths, One Calling
Granted, registering as a 501(c)(3) tax-exempt organization is the well-known route. It involves applying to the IRS, paying filing fees, and submitting annual reports. It’s often seen as the “official” way to gain nonprofit status, especially if you plan to apply for grants or large institutional donations.
But what many people don’t realize is that churches are already automatically tax-exempt under federal law—specifically Section 508(c)(1)(A) of the Internal Revenue Code. This means you don’t necessarily need to apply for 501(c)(3) status at all. In fact, by operating under 508(c)(1)(A), faith-based organizations reap many of the same benefits, with less paperwork, fees, and government oversight. Helping Hand Outreach is the leader in establishing churches and church ministries as 508(c)(1)(A) organizations, with a variety of service levels to help you get started with the process.
What Are the Differences?
| 501(c)(3) | 508(c)(1)(A) | |
|---|---|---|
| Definition | Voluntarily registers with the IRS as a tax-exempt charitable organization. | Churches are automatically considered tax-exempt without applying under 508(c)(1)(A). |
| IRS Recognition? | Receives a formal IRS determination letter, which may be revoked at any time for addressing politics or influencing legislation. | No IRS determination letter is required or issued (and therefore, none to be revoked), unless the church applies voluntarily. |
| Donations Tax Deductible? | Yes | Yes |
| Reporting Requirements? | Must file annual Form 990 (unless qualifying for a church exemption). | Not required to file Form 990—automatically exempt. |
| Government Oversight? | Direct oversight and scrutiny by the Internal Revenue Service. | Less direct oversight = more freedom from IRS involvement. |
| Political Restrictions? | Subject to the Johnson Amendment, restricting speech and prohibiting political or legislative influence. | Greater flexibility, less oversight, and more freedom to endorse candidates. |
| Speech Considerations? | Tax exemption may be revoked by the IRS for a single instance of speaking out on politics or seeking to influence legislation. | Generally favored by churches seeking greater speech freedom. |
| Start-up Efforts? | Requires detailed application (Form 1023 or 1023-EZ) and IRS approval, costs up to $600 in fees alone, and greater prep time. | Helping Hand Outreach, the leader in starting church ministries as 508(c)(1)(A) organizations, can help! |
| Cost and Time? | Costs between $275-$600 in fees plus prep time for paperwork, with approval taking between 2-12 months. | No Federal fees or paperwork required for tax-exempt status. |
| Audit Protections | Organizations (except churches) subject to IRS audit, similar to businesses and individuals. | Audit Protection applies to all 508(c)(1)(A) churches. |
So Why Would a Church File as a 501(c)(3)?
501(c)(3) status is well-known and admittedly carries some caché. Some file this way for the sake of appearance. Others may feel pressured by banks, donors, or other influential groups who don’t fully understand the 508(c)(1)(A) option. But more and more churches are taking advantage of greater freedom by opting for a path Congress created specifically for faith-based organizations.
As a 508(c)(1)(A), your church remains compliant—but on your terms. There’s no IRS involvement in speech, structure, or service. The ministry remains free to answer its calling as you see fit. If your church wants to skip the red tape and build a ministry that’s as flexible as it is faithful, Helping Hands Outreach can help. Simply click the button below to get your free quote, and we’ll be in touch soon to help you get started!