Section 501(c)(3) organizations that are tax-exempt under Section 501(a) are defined as:

"Corporations, and any community chest, fund, or foundation, organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary, or educational purposes, or to foster national or international amateur sports competition (but only if no part of its activities involve the provision of athletic facilities or equipment), or for the prevention of cruelty to children or animals, no part of the net earnings of which inures to the benefit of any private shareholder or individual, no substantial part of the activities of which is carrying on propaganda, or otherwise attempting to influence legislation (except as otherwise provided in subsection (h)), and which does not participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office."

The Organizational Test.  The organization must be organized exclusively for one or more of the exempt purposes set forth in Section 501(c)(3).  The Organization Test is satisfied if the organization’s governing documents meet certain requirements, including limiting the organization’s purpose and irrevocably dedicating its assets to one or more exempt purposes.

The Operational Test.  The organization must be operated exclusively for one or more of the exempt purposes set forth in Section 501(c)(3).  Notwithstanding the use of the word exclusively, the Operation Test is satisfied if the organization is operated primarily for such exempt purposes.  An "insubstantial part" of the organization’s activities may be devoted to non-exempt purposes, such as operating an unrelated business.

No Private Inurement.  No part of the organization’s net earnings may inure to the benefit of any private shareholder or individual.  The private inurement doctrine generally prohibits an exempt organization from using its assets for the benefit of a person having a personal and private interest in the organization’s activities (i.e., an insider such as a director, officer or key employee).  An organization that engages in an inurement transaction (e.g., paying an unreasonable compensation to an insider) may face revocation of its exempt status.  In addition, or in the alternative, excise taxes, referred to as intermediate sanctions, may be imposed on "excess benefit transactions" between Section 501(c)(3) public charities and disqualified persons.

No Substantial Lobbying.  In general, no organization may qualify for Section 501(c)(3) status if a substantial part of its activities is attempting to influence legislation (commonly known as lobbying).  A 501(c)(3) organization may engage in some lobbying, but too much lobbying activity risks loss of tax-exempt status.  Legislation includes action by Congress, any state legislature, any local council, or similar governing body, with respect to acts, bills, resolutions, or similar items (such as legislative confirmation of appointive office), or by the public in referendum, ballot initiative, constitutional amendment, or similar procedure.  It does not include actions by executive, judicial, or administrative bodies.  An organization will be regarded as attempting to influence legislation if it contacts, or urges the public to contact, members or employees of a legislative body for the purpose of proposing, supporting, or opposing legislation, or if the organization advocates the adoption or rejection of legislation.  Organizations may, however, involve themselves in issues of public policy without the activity being considered as lobbying.  For example, organizations may conduct educational meetings, prepare and distribute educational materials, or otherwise consider public policy issues in an educational manner without jeopardizing their tax-exempt status.

No Electioneering.  All Section 501(c)(3) organizations are absolutely prohibited from directly or indirectly participating in, or intervening in, any political campaign on behalf of (or in opposition to) any candidate for elective office.  Contributions to political campaign funds or public statements of position (verbal or written) made on behalf of the organization in favor of or in opposition to any candidate for public office clearly violate this prohibition.  Such violation may result in denial or revocation of tax-exempt status and the imposition of certain excise tax.  Note, however, that certain activities or expenditures may not be prohibited depending on the facts and circumstances.  For example, certain voter education activities (including the presentation of public forums and the publication of voter education guides) and certain other activities intended to encourage people to participate in the electoral process (e.g., voter registration and get-out-the-vote drives), if conducted in a non-partisan manner, do not constitute prohibited political campaign activity.