Local governments vs Nonprofits

Local governments (i.e., counties, cities, towns, school districts, water districts, etc.) are not always eligible to apply for private grants. Many local government employees believe they work for a nonprofit organization. Sort of—but not really. Local governments are a special animal; they’re political subdivisions of their states.

When private/corporate foundations say they accept proposals from nonprofit organizations, 99 times out of 100 they’re referring to private, charitable 501(c)(3) nonprofit organizations. If a foundation only accepts proposals from 501(c)(3) nonprofits, chances are local governments are out of luck. However, if the guidelines don’t specify which types of nonprofits are eligible, local governments have a definite window of opportunity. Here’s what to do:

Call the Internal Revenue Service and ask for a “Government Information Letter” (also known as a 4076C letter). The Government Information Letter is similar to an IRS determination letter for nonprofit organizations. It confirms the government’s tax-exempt status and that donations are tax deductible as long as the donations are used for a public purpose.

When you call the IRS, you’ll need the following information: the FTID/EIN and the exact name and address from your government’s EIN letter. You’ll also need to state that you have the authority to represent your municipality and to request the Government Information Letter. The letter should arrive within a couple weeks.

For more information, visit the IRS website.