There are many ways that an NPO can go about fulfilling an educational mission. Instruction through conventional classes is the most common method, but requires a location at which the classes can take place. There are many ways that people gather information, however, and the IRS recognizes that as long as an NPO fulfills its educational mission by teaching a useful skill, a nonprofit business does not necessarily need to run a school house[i][ii].
Research opportunities are considered viable not-for-profit work as long as the results of the NPO’s work are freely available, and as long as there is a public good resulting from the work. Any patents secured by an NPO must be made freely available to the public and the work must be performed in the
Charitable education is defined by the IRS as “the instruction or training of the individual for the purpose of improving or developing his (or her) capabilities” and “the instruction of the public on subjects useful to the individual and beneficial to the community.”[iv] Publishing educational materials falls under this category. These materials may be published online or as books that are sold as part of a fund-raising effort. As long as materials are disseminated in such a manner as to contribute to the public good, they are a part of an NPO’s work in charitable education. These materials, however, must be demonstrably different from commercial publications of the same sort, and any work that is contracted out to create such materials must be paid on a per-item basis. Because all profits from the sales of such literature must go into the nonprofit organization, no royalties are payable to authors.[v]
[i] "Education of the public may be carried on outside the classroom. The regulations provide examples including: public discussions, forums, panels, lectures, museums, zoos, and planetariums. Reg. 1.501(c)(3)–1(d)(3)(ii). " – ibid.
[ii] “This may also fall under the larger Public Education clause," Reg. 1.501(c)(3)–1(d)(3)(i) provide that the term educational includes the instruction of the public on subjects useful to the individual and beneficial to the community." – ibid.
[iii] “Public good research is further defined as, "Reg. 1.501(c)(3)–1(d)(1)(iii) provides that scientific research will be regarded as in the public interest:
1. If the results of such research (including any patents, copyrights, processes, or formulae resulting from such research) are made available to the public on a non-discriminatory basis;
2. If such research is performed for the
3. If such research is directed toward benefiting the public.” -- ibid.
[iv] IRS publications, online. http://www.irs.gov/irm/part7/ch10s04.html
[v] "…A nonprofit organization that makes funds available to authors and editors for preparing teaching materials and writing text books, and under the terms of the contract with the publisher receives royalties from the sales of published materials and then shares them with those individuals, does not qualify for exemption under IRC 501(c)(3). Rev. Rul. 66–104, 1966–1 C.B. 135.” IRS Web site: http://www.irs.gov/irm/part7/ch10s06.html
