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Here are six way you can jeopardize the tax-exempt status of your organization.

1) Private Benefit/Inurement

Private benefit: Your activities should not serve private interests or private benefits of ay individual or organization more than insubstantially.

Inurement: The income and assets of your organization should not benefit insiders (officers, board members, employees).

2) Lobbying

You can’t directly or indirectly contact members or employees of a legislative body for the purpose of opposing, proposing, or supporting a legislation. However, organizations are allowed some lobbying as long as it not more than insubstantial part of its overall activities.

3) Political activity

Any political campaign on behalf of or in opposition to any candidate for public office, at any level, is prohibited.

4) Unrelated Business Income (UBI)

Income that comes from a regularly trade or business that is not substantially related to the organization’s exempt purposes can jeopardize the tax-exempt status. However, there are some exceptions.

5) Annual Reporting

Most exempt organization are required to report certain information to the IRS annually. In 2001, the IRS published a list of 275,000 organization that lost their tax-exempt status for failing to meet their annual filing obligations for 3 consecutive taxable years.

6) Operation in accord with stated exempt purpose(s)

Your organization can lose its tax-exempt status if it fails to pursue the exempt activities it stated in its tax-exempt application to the IRS. If you deviated from your original purposes, you must report it to the IRS. You should also inform your donors about any significant changes to your purposes or activities.