Tax exempt organizations with religious, charitable, scientific, public safety, literary, or educational purposes are formed for many and varying reasons. This article discusses two broad classifications of exempt organizations the public charity and private foundation, either of which can be organized to serve all of the aforementioned purposes. For simplicity’s sake, the major difference to the lay person between these classifications is that a public charity is funded by a large group of people through small or large donations and a private foundation is funded through a small group of persons, and often just a single person.

Specifically, the public support of a public charity must be fairly broad, not limited to a few individuals or families. Public charities are defined in the Internal Revenue Code in the negative under sections 509(a)(1) through 509(a)(4) as being what a private foundation is not. A private foundation, sometimes called a non-operating foundation, receives most of its income from investments and endowments. This income is used to make grants to other organizations, rather than being dispersed directly for charitable activities. Private foundations are defined in the Internal Revenue Code under section 509(a) as 501(c)(3).

Non-profit organizations are required to register with the state before the process of securing IRS recognition (through incorporation, organization, charter, association, etc.).  There are privileges and exemptions available for nonprofit organizations through local, state and federal governments.  In order to apply to the IRS for exempt status, the organization must first obtain an Employer Identification Number (EIN); instructions for obtaining an EIN are located on the IRS website at: http://www.irs.gov/businesses/small/article/0,,id=97860,00.html.

It is possible to complete all the necessary plans and documents without professional advice.  However, many groups working on the development of a new organization will find it worthwhile to get help from lawyers and accountants who are familiar with the ins and outs of the process. Such advice can cut down on frustrating missteps and delays.

Forming the Organization

Typically, the first step in organizing is to incorporate with your state.  Most states have specific provisions for the formation of a nonprofit corporation.  Usually, there is a form to file that requires attachments including a list of the people who are forming the corporation (“incorporators”); articles of incorporation (a legal document establishing a corporation and its structure and purpose), bylaws (rules that govern the internal management of the organization), an Organizational Consent Resolution; and a fee.

The IRS will look closely at the charter documents when reviewing the application for exempt status, it is therefore important that they contain full and accurate descriptions of the organization’s purpose, limitations on the use of revenues and assets to prevent private parties from benefiting from the organization’s nonprofit status, and a plan for dissolution that assures that any remaining assets continue to be dedicated solely to charitable purposes.

The second step, possibly the most difficult to complete of the formation process, is the preparation and filing of an IRS Form 1023.  This is an application for Recognition of Exemption under Section 501(c)(3) of the Internal Revenue Code.  Form 1023 is a requirement to be recognized as an exempt organization by federal and state taxing authorities. It is a long and time-consuming document. Not only does it require a great deal of detailed information about your organization’s activities, but it also requires financial projections, or historical financial information, depending on the age of your organization when you apply. Generally speaking there are a lot of documents and explanations that must be attached. There is also generally an interaction between the IRS and the applicant to clarify any questions arising from the application submitted.

Organizations that are classified by the IRS as “private foundations” are subject to more stringent limitations on their activities and must pay an excise tax each year based on their investment income.  While those classified as “public charities” have less stringent rules and don’t pay this tax. The law requires the IRS to identify 501(c) (3) organizations as a “private foundation” unless it shows that it should not be classified that way.

After IRS approval, the next step is to ensure compliance with state law in soliciting for donations. In many states the charity must obtain a Charitable Solicitation Permit or something like it. This permit or authorization to solicit donations can be obtained from the state in which the organization plans to conduct any sort of fundraising which involves a broad circulation of an appeal to the general public.  Generally, it is also important that the organization also license with the applicable city and state in which they reside and/or operate.  Also, a copy of the IRS approval letter should generally be submitted to your state tax authority to ensure tax exemption on the state level as well.

Ongoing Obligations

In conducting the operations of an exempt organization, directors often have certain legal obligations. Failure to observe these obligations may subject nonprofit directors to liability.  Directors of for-profit and nonprofit institutions have the same two basic legal obligations, the duty of care and the duty of loyalty.  The duty of care requires directors to exercise care, diligence and skill that an ordinary, prudent person would exhibit under similar circumstances.  The duty of loyalty requires pursuit of the organization’s best interest, avoidance of self dealing and conflicts of interests, as well as disclosure of potential conflicts and obtaining prior board approval of any transactions or situations that might be considered self-dealing or a conflict.  There is also a duty to keep minutes of board meetings to have on record.

There are reporting requirements and operating restrictions that you need to keep in mind in order to comply with the law and maintain 501(c)(3) exempt status.  There is a need to comply with state corporate laws’ formalities for corporate governance, state laws on charitable organizations’ record-keeping requirements and IRS regulations on tax exemptions. In many states there are tax advantages to be classified as a exempt organization for sales tax, property tax, and other tax purposes.

The federal, state, and local law, especially tax related law, can be quite onerous as it relates to the formation of charitable organizations. It is highly advisable to seek out the advise of a competent attorney, cpa, or tax adviser in the formation and operation of any charitable organization.

Paul Jones is an Attorney and CPA practicing in Salt Lake City, Utah. Paul assists clients form charitable organizations and provides guidance in their operations. Paul can be reached through his web site www.pauljonesattorney.com or by email at paul@pauljonesattorney.com.

Afghanistan has been a land of challenges. Whether it’s political turmoil, financial anxiety, land mine nightmares, constant coups or recurring wars, Afghanistan has bore the brunt of its ugly fate. To achieve constant progress however, the country has tried to overcome various problems and has successfully emerged up in many situations. Take its Education sector for instance. Plight of education in Afghanistan had seldom been fine, until King Zahir Shah came and took serious actions.

King Zahir Shah (early to mid 20th Century) built primary schools for students under the age of 12, along with strengthening the secondary school system and increasing the number of national universities in Kabul. This move was a first step towards laying a stronger foundation for education. Though a large part of population still remained illiterate, it was a bold move nevertheless.

Then in the mid 1980s the country had around 800 primary schools, 300 general secondary schools and about 6500 students in Kabul University. Such low figures are due to the widespread destruction that took place, which also eliminated up to 80 percent of the schools and colleges. Resultant, a large portion of Afghanistan generation grew up without any formal schooling.

The year 1996 once again marked a setback for Afghanistan education sector. The then Taliban regime most ferociously banned the education for females in Afghanistan and evolved mosque schools (madrassa) for primary and secondary education.

The 21st century has marked a shining phase in the Afghanistan Education. From a “no-education-for-girls”, the scenario shifted to “separate-education-for-girls”. In 2003, the girls and women shed off their
camouflage and enrolled themselves in schools and colleges. Though they shared separate facilities, but they were given the right to study nonetheless. The transition is subtle, but sure.

Few of the named Universities of Afghanistan that have carved a niche in their education sector are as follows:-

• Kabul University
• American University of Afghanistan
• National Military Academy of Afghanistan
• Kabul Institute of Medicine
• Polytechnic University of Kabul
• University of Pedagogy

These estimable universities constitute a major chunk of illustrious scholars, and are gaining popularity with each passing day. Kabul University in itself presently holds 10,000 students, out of which 2000 are females. An educated mind is also an enlightened one. Hope the improvement in the Afghanistan education sector also paves the way for stronger community base.

On the one side Indians are considered as the proud owner of glorious education system in the past and on the other side we the same Indian are considered as one of the nations with poorest education structure in the world -with millions of illiterates in the country- even poorer than the countries those stands nowhere near us in the development in the last few years. On the other hand various other countries are amazed by the quality of the human resources that the Indian education system has produced. There was a time when India’s education system was considered as the best in the world and followed and adored by renowned scholars from every part of the world. But with the time this glorious system lost its luster and a time came when it hit its lowest ebb. There may be varied reasons behind this continued and long decline in the quality of education system in India. One of the prominent reasons was the social structure of the Indian society. Like Women and people of lower castes were not considered good enough to be educated thus denied the right to educate themselves and this continued for centuries altogether till eighteenth century. It was only in the middle of the eighteenth century with the spread of Jainism, Buddhism, Bhakti and Sufi movements did some liberating effects on the condition of the women and lower caste people known as sudra started to appears. But in the real sense it was the English language and the reformation movements of the 19th century that had the most liberating effect in pre-independent India. Although there was no real change in the education system or level of education in the India but certainly there started a thought process to check this menace of illiteracy. So it is the Britishers that can be credited for bringing a revolution in the Indian education system.

Education scenario in the post independence India

According to the constitution of Indian Republic Education falls under the control of both the central government and the states, with some responsibilities lying with the centre and the state having autonomy for other.At the time of independence the Government of India was dealing with so many critical issues like union of states to mother land, peace in the troubled area, poverty and increasing population and shattered economic condition. In all this chaos government of India give priority to the development of the education as this was seen as one of the main cause of the some other evils of the society. Main impediment in this was considered to be indiscrimination in the society on the basis of caste and creed. So to remove this evil strict laws were made and implemented. Special emphasis was started to be given to girl children education. So many schemes were started so that there will not be any discrimination as far as imparting education to the girl child is concerned.

With the 86th constitutional amendment Indian Government has made elementary education a fundamental right for the children of the age group- 6 to 14.

According to the 2001 census, the total literacy rate in India is 65.38%. The female literacy rate is only 54.16%. The gap between rural and urban literacy rate is also very significant in India. This is evident from the fact that only 59% of rural population is literate as against 80% (approx) urban population according to the 2001 census.

Present Scenario of Education in India

Education is being given utmost priority by both the state and Centre government of the country in the present past. Every effort is being done to organize the education system in India to tackle all ready grown up illiteracy rate of the Indian population for this the central government of India formulated the National Policy in Education (NPE) in 1986 and also re-enforced the Programme of Action (POA) in 1986. The central government initiated several measures like setting up of Navodaya Vidyalaya selective schools in every district, advances in female education, inter-disciplinary research and establishment of open universities. India’s NPE also contains the National System of Education, which ensures some uniformity while taking into account regional education needs. The NPE also stresses on higher spending on education, envisaging a budget of more than 6% of the overall national budget.

The present educational system in India is mainly divided into the following few categories according to the level of the education.

1. Primary education, -Eight years of the elementary education
2. Secondary education –Two years of education
3. Senior secondary education-Two years of education
4. Higher education – Depending upon the stream starting from 3 can extend upto 5 yrs.

Primary education

This is the first step of the ladder of education in the education system of India. The Indian government lays much emphasis on the foundation of education ie. Primary education up to the age of fourteen years. Besides putting a ban on child labor in order to ensure that the children do not enter unsafe working conditions. To universalize primary education District Primary Education Programme (DPEP) was launched in 1994 founded by central and state governments in 85% -15%of The DPEP with the support of UNICEF has opened approx 1,60,000 new schools delivering alternative education to approximately 3.5 million children. Significant improvement in staffing and enrollment of girls has been made as a part of this scheme. In spite of all these efforts overall primary school conditions in India as a whole continued to remain lag behind internationally due to understaffing coupled with lack of developed infrastructure and sufficient financing.

Secondary education

The National Policy on Education (NPE), 1986, has provided for environment awareness, science and technology education, and introduction of traditional elements such as meditation and yoga into the Indian secondary school system. Another feature of India’s secondary school system is its emphasis on profession based vocational training to help students attain skills for finding a vocation of his/her choosing.

A special Integrated Education for Disabled Children (IEDC) programme was started in 1974. The Kendriya Vidyalaya project was started for the benefits of the children of the employees of the central government of India, who are distributed throughout the country.

Tertiary education

Well organized main governing body at the tertiary level is the University Grants Commission (India)

Third largest in the world
20 central universities
215 state universities
100 deemed universities
5 institutions established and functioning under the State Act
16000 colleges, including 1800 exclusive women’s colleges
1200 engineering colleges
with an estimated 30000 graduates employed in the United States as of 2006
7 Indian Institutes of Technology (IITs), have been globally acclaimed for their standard of education.

This number will soon inflate as the setting up of 30 more central universities, 8 new IITs, 7 IIMs and 5 new Indian Institutes of Science are now proposed.

Above data is just the one side of the coin showing only the rosy picture of the state of affairs in the tertiary education system of India but the truth lies in the fact that our university system is still in the state of despair as more then 90 percent of our higher educational institutions are considered to be below par on the quality scale. The internal system of the universities system is marred with the political, caste and communal considerations on the cost of education of the students. And this truth is applicable on all the institution baring a few like IIT’s and IIM’s who are able to sustain their sanctity and established them self on the world map as one of the best. But the overall scenario cannot be considered rosy as it appears from the numbers given above.

Education for the Marginalized in India:
In order to reduce the gap caused by the earlier socio-economic condition prevailing in the Indian society the government of India took some measures. These measures are being taken to just reduce the disparities in the various sections of the Indian society so that we can progress as a whole rather then different factions of the same society. This is being done as education is considered to be a means for bringing socio- economic transformation in a society, various measures are being taken to enhance the access of education to the marginalized sections of the society. One such measure is the introduction of the reservation system in the institutes of higher education. Under the present law, 7.5% seats in the higher educational institutes are reserved for the scheduled tribes, 15% for scheduled castes and 27% for the non creamy layers of the Other Backward Classes (OBCs). Under the Indian constitution, various minority groups can also set up their own educational institutes. Efforts are also being taken to improve the access to higher education among the women of India by setting up various educational institutes exclusively for them or reserving seats in the already existing institutes. The growing acceptance of distance learning courses and expansion of the Open University system is also contributing a lot in the democratization of higher education in India.

Conclusion:
Taking other co-related social problems in view like poverty, the ever increasing population, old traditional values etc to find any conclusion on the progress of the Independent India on the education front as a hole appears to be a mounting task. But if we take the progress on this front of other countries like china having similar problems and hurdles as we are facing we can conclude that despite all the efforts to develop the education system in India, access, quality of education in India continue to haunt the policy makers till this date. This may mainly been due to the widespread poverty and various prejudices. But this is not the only cause of the shamble in the education system after so many efforts. This mystery has to be unrevealed by the policy makers by their sincere efforts to achieve this goal of education for all. However, the renewed emphasis in the education sector in the 11th five year plan and increased expenditure in both primary and higher education can act as a catalyst for the Indian education system.