Tax Exempt StatusAugust 12, 2019
Cape Fear HFH
20 N 4th St Ste 200
Wilmington, NC 28401
RE: 501(c)(3) Letter for Cape Fear HFH, Partner ID# 0166-9260
Dear affiliate leader:
This letter will confirm that Cape Fear HFH, with employer identification number 56-
1555858, is considered a subordinate under the group tax exemption umbrella of Habitat for
Humanity International, Inc. (“HFHI”) under Section 501(c)(3) of the Internal Revenue Code.
The group exemption number assigned to HFHI by the IRS is 8545. This number may be
provided to prospective donors, foundations and other grant organizations as they request it
and is required on certain IRS forms.
Enclosed is a copy of the determination letter dated June 18, 2019, provided by the IRS as
evidence of HFHI’s tax exempt status as well as its group exemption. The determination
letter, together with this letter, confirms Cape Fear HFH’s subordinate status and provides
evidence of its tax exempt status under Section 501(c)(3) of the Code.
In partnership,
Jim Mellott
VP Finance
Enclosure
IRS Group Exemption FAQs
The IRS refers to “central” or “parent” organizations, as well as
“subordinate” organizations? What does these terms mean?
An organization that has been granted a 501(c)(3) group exemption by the IRS is referred
to as the central or parent organization. The central organization generally supervises
many affiliates or chapters, called subordinate organizations. The subordinate
organizations have similar structures, purposes, missions and activities.
What is the reason for group exemptions vs individual exemptions?
Group exemptions are an administrative convenience for both the IRS and organizations
with many affiliated organizations. Subordinates in a group exemption do not have to file,
and the IRS does not have to process, separate applications for exemption. Instead, the IRS
allows the central organization to include its subordinate organizations under its tax
exempt “umbrella.”
Who determines if a subordinate organization may be included under the central
organizations’ group exemption?
The central organization, not the IRS, determines who is exempt under its 501(c)(3)
umbrella. The IRS does not approve or deny a subordinate’s inclusion on HFHI’s roster of
exempt subordinates. It is solely at the discretion of the central organization holding the
501(c)(3) designation as long as the subordinate is similar in mission, purpose, structure
and activities. The IRS leaves it up to the central organization to police its own list of
subordinate entities and to report any changes. Failure to monitor the list in accordance
with the rules set forth by the IRS may result in the central organization having its
501(c)(3) status revoked.
In Habitat’s case, HFHI is the central organization and each
Affiliate is a subordinate organization.
HFHI is the final determiner of whether Affiliates are on its
group exempt list. The IRS will not issue a letter with regard
to an individual Affiliate.
Group exemptions are more convenient because only one
central organization (HFHI) needs to be checked for tax
exempt status.
How does a donor verify that an organization is included as a subordinate in a
group exemption ruling?
The central organization which holds the group exemption (rather than the IRS)
determines which organizations are included as subordinates under its group exemption
umbrella. Therefore, a donor should verify that an organization is a subordinate eligible to
receive tax deductible donations by requesting a copy of a letter provided by the central
organization to the subordinate confirming the subordinate entity’s inclusion on its roster
of exempt subordinates. This letter, coupled with a copy of the central organizations
501(c)(3) determination letter provides adequate proof of the entity’s tax exempt status.
How do donors verify that contributions are deductible with respect to a
subordinate organization in a section 501(c)(3) group exemption ruling?
Many donors are accustomed to consulting the IRS database known as EOS Select Check to
confirm that donations to a specific organization are tax deductible. This works well for
organizations that have an individual tax exemption; however, it creates a bit of confusion
when it comes to organizations with a group tax exemption status.
The EOS Select Check database does NOT list all subordinate entities. It lists the central
organization because the central organization is the entity that applied for, and was
granted, a 501(c)(3) designation. Many times donors become alarmed when they do not
see the individual Affiliate listed in the database. It is important to explain to your donor
that providing HFHI’s group exemption number (GEN) along with a confirmation letter
from HFHI, as the central organization, is sufficient proof of the subordinate entity’s tax
exempt status. Donors may rely upon central organization verification with respect to
deductibility of contributions to subordinates covered in a section 501(c)(3) group
exemption ruling.
Donors should be told that the IRS determination letter will
not reference the Affiliate by name.
Explain to your donors early the procedure so that they will
not be surprised when the Affiliate is not referenced on the
EOS database.
Affiliate should provide donors a copy of the confirmation
letter (with the HFHI IRS determination letter attached) that
HFHI provides to each Affiliate on an annual basis.
Employer Identification Number (EIN) vs Group Exemption Number (GEN)
The Employer Identification Number (EIN) is a nine-digit number that is unique to each
business and generally appears in the following format: XX-XXXXXXX. Its role for a
business is similar to that of the Social Security number for an individual. The number
includes information about which state the corporation is registered in. This unique
identification number is assigned to a business entity so that they can easily be identified
by the Internal Revenue Service. The EIN is also known as a Federal Identification Number
(FIN) or Tax ID.
This number is apart and separate from a company’s group exemption number (GEN). The
EIN identifies the specific organization. The GEN identifies the entity’s further designation
as a tax exempt organization.
The GEN number is a number assigned by the IRS which identifies the central organization
who was granted the group exemption. The GEN number is a 4 digit number that should be
supplied to donors when they make a donation. This number allows the donor to make a
tax deduction based on the donation to the tax exempt entity.
·HFHI’s GEN is 8545. This should be given to your donors.
·Do not use HFHI’s EIN in your Affiliate’s tax return and other documents. This will
cause the IRS to confuse your Affiliate with HFHI (including accidentally holding you
responsible HFHI’s payroll taxes, misreporting on Form 990, etc.)
HFHI’s GEN is 8545. This should be given to your donors.
Do not use HFHI’s EIN in your Affiliate’s tax return and
other documents. This will cause the IRS to confuse your
Affiliate with HFHI (including accidentally holding you
responsible HFHI’s payroll taxes, misreporting on Form
990, etc.)