This paper will discuss the process that not-for-profit (NFP) organizations must undergo to qualify fortax-exempt status
. It will begin by discussing the steps that must be followed in order for not-for-profit organizations to receive tax-exempt status, as well as what they must do in order to maintain that status. It will then explain the rules these organizations must follow to remain exempt, the activities that can jeopardize their tax exempt status, and the effect of losing said status with specific focus on the rules dictating automatic revocation of tax exempt status. The article will then conclude with some recommendations that can be implemented to improve the effectiveness of charitable organizations.