Matchmaking and social-events organization was denied charitable exemption

Plain-English summary

An organization applied for Section 501(c)(3) status to connect members of a religious community through an online matchmaking service, paid in-person events, social media content, and giveaways. It argued that its events were open to the public and included religious holidays and teaching about relationships, marriage, community, and religious traditions. The IRS concluded that the matchmaking and events primarily provided direct social and recreational benefits to participants and served their private interests. Those substantial nonexempt purposes prevented the organization from operating exclusively for charitable or religious purposes, even if some activities also offered religious or educational benefits. The IRS therefore denied exemption and stated that donations were not deductible.

Ruling snapshot

• Question: Did the matchmaking and social-events organization operate exclusively for exempt religious or charitable purposes?
• Outcome: denied
• Key authorities: IRC § 501(c)(3); Treas. Reg. § 1.501(c)(3)-1; Rev. Rul. 77-366; Better Business Bureau of Washington, D.C., Inc. v. United States

Full text (IRS public release)

Department of the Treasury                                      Date:
Internal Revenue Service                                       02/20/2024
Tax Exempt and Government Entities
IRS PO Box 2508                                                Employer ID number:
Cincinnati, OH 45201                                           Tax years:

All
Person to contact:

Release Number: 202420031
Release Date: 5/17/2024
UIL Code: 501.03-00,
501.03-30, 501.35-00

Dear [redacted]:

This letter is our final determination that you don't qualify for exemption from federal income tax under Internal
Revenue Code (IRC) Section 501(a) as an organization described in IRC Section 501(c)(3). Recently, we sent
you a proposed adverse determination in response to your application. The proposed adverse determination
explained the facts, law, and basis for our conclusion, and it gave you 30 days to file a protest. Because we
didn't receive a protest within the required 30 days, the proposed determination is now final.

Because you don't qualify as a tax-exempt organization under IRC Section 501(c)(3), donors generally can't
deduct contributions to you under IRC Section 170.

We may notify the appropriate state officials of our determination, as required by IRC Section 6104(c), by
sending them a copy of this final letter along with the proposed determination letter.

You must file the federal income tax forms for the tax years shown above within 30 days from the date of this
letter unless you request an extension of time to file. For further instructions, forms, and information, visit
www.irs.gov.

We'll make this final adverse determination letter and the proposed adverse determination letter available for
public inspection after deleting certain identifying information, as required by IRC Section 6110. Read the
enclosed Letter 437, Notice of Intention to Disclose - Rulings, and review the two attached letters that show our
proposed deletions. If you disagree with our proposed deletions, follow the instructions in the Letter 437 on how
to notify us. If you agree with our deletions, you don't need to take any further action.

If you have questions about this letter, you can call the contact person shown above. If you have questions

about your federal income tax status and responsibilities, call our customer service number at 800-829-1040
(TTY 800-829-4933 for deaf or hard of hearing) or customer service for businesses at 800-829-4933.

Letter 4038 (Rev. 11-2021)
Catalog Number 47632S

Sincerely,

Stephen A. Martin
Director, Exempt Organizations
Rulings and Agreements

Enclosures:

Letter 437

Redacted Letter 4034
Redacted Letter 4038

Letter 4038 (Rev. 11-2021)
Catalog Number 47632S

Department of the Treasury
Internal Revenue Service
IRS PO Box 2508
Cincinnati, OH 45201
Date:

December 19, 2023
Employer ID number:

Person to contact:

Name:
ID number:
Telephone:
Fax:
Legend: UIL:
B = date 501.03-00
C = state 501.03-30
D = individuals 501.35-00
E= facility
F = religion
G = religion

H = individual
Dear Applicant:

We considered your application for recognition of exemption from federal income tax under Internal Revenue
Code (IRC) Section 501 (a). We determined that you don’t qualify for exemption under IRC Section 501(c)(3).
This letter explains the reasons for our conclusion. Please keep it for your records.

Issues
Do you qualify for exemption under IRC Section 501(c)(3)? No, for the reasons stated below.

Facts
You submitted Form 1023-EZ, Streamlined Application for Recognition of Exemption Under Section 501(c)(3)
of the Internal Revenue Code.

You attest that you were incorporated on B, in the state of C. You attest that you have the necessary organizing
document, that your organizing document limits your purposes to one or more exempt purposes within the
meaning of the IRC Section 501(c)(3), that your organizing document does not expressly empower you to
engage in activities, other than an insubstantial part, that are not in furtherance of one or more exempt purposes,
and that your organizing document contains the dissolution provision required under Section 501(c)(3).

You attest that you are organized and operated exclusively to further charitable purposes. You attest that you
have not conducted and will not conduct prohibited activities under IRC Section 501(c)(3). Specifically, you
attest you will:

Letter 4034 (Rev. 01-2021)
Catalog Number 47628K

2

• Refrain from supporting or opposing candidates in political campaigns in any way

• Ensure that your net earnings do not inure in whole or in part to the benefit of private shareholders or
individuals

• Not further non-exempt purposes (such as purposes that benefit private interests) more than
insubstantially

• Not be organized or operated for the primary purpose of conducting a trade or business that is not related
to your exempt purpose(s)

• Not devote more than an insubstantial part of your activities attempting to influence legislation or, if you
made a Section 501(h) election, not normally make expenditures in excess of expenditure limitations
outlined in Section 501(h) ,

• Not provide commercial-type insurance as a substantial part of your activities

You will create the next generation of D while facilitating connection and community.
During review of your Form 1023-EZ, detailed information was requested supplemental to your application.

You are an online matchmaking service and you hold in-person events all over the world, so D can meet and

connect. The in-person events are every [redacted] weeks and take place at ; , , ;
»E, , and . Participants must purchase tickets to attend your events. The

price of tickets are determined by your goals for the event, what the event is offering, where and what time the
event is, and making the ticket affordable for the attendees. Additionally, you create social media content for the
purposes of increasing F connectivity, and you conduct giveaways in collaboration with F organizations. [redacted]%
of your time and resources are spent on these activities.

Law

IRC Section 501(c)(3) provides for the recognition of exemption of organizations that are organized and
operated exclusively for religious, charitable, or other purposes as specified in the statute. No part of the net
earnings may inure to the benefit of any private shareholder or individual.

Treasury Regulation Section 1.501(c)(3)-1(a)(1) states that, in order to be exempt as an organization described
in IRC Section 501(c)(3), an organization must be both organized and operated exclusively for one or more of
the purposes specified in such section. If an organization fails to meet either the organizational test or the
operational test, it is not exempt.

Treas. Reg. Section 1.501(c)(3)-1(c)(1) provides that an organization will be regarded as "operated exclusively"
for one or more exempt purposes only if it engages primarily in activities which accomplish one or more of
such exempt purposes specified in IRC Section 501(c)(3). An organization will not be so regarded if more than

an insubstantial part of its activities is not in furtherance of an exempt purpose.

Treas. Reg. Section 1.501(c)(3)-1(d)(1)(ii) provides that an organization is not organized or operated
exclusively for an exempt purpose unless it serves a public rather than a private interest. The organization must
demonstrate that it is not organized or operated for the benefit or private interests such as designated
individuals, the creator or his family, shareholders of the organization, or persons controlled directly or
indirectly by such private interests.

Letter 4034 (Rev. 01-2021)
Catalog Number 47628K

3

Revenue Ruling 77-366, 1977-2 C.B. 192, stated that a nonprofit organization that arranged and conducted
wintertime ocean cruises during which activities to further religious and educational purposes were provided in
addition to extensive social and recreational activities was not operated exclusively for exempt purposes and did
not qualify for exemption under IRC Section 501(c)(3).

In Better Business Bureau of Washington, D.C., Inc. v. United States, 326 U.S. 279 (1945), the Supreme Court
held that the presence of a single non-exempt purpose, if substantial in nature, will destroy a claim for
exemption regardless of the number or importance of truly exempt purposes.

In Syrang Aero Club, Inc. v. Commissioner, 73 T.C. 717 (1980), the court held that while an organization may
serve educational and charitable purposes, it does not exclusively operate for educational, charitable, or other
exempt purposes because it also serves a substantial recreations purpose.

In Schoger Foundation v. Commissioner, 76 T.C. 380 (1981), it was held that if an activity serves a substantial
non-exempt purpose, the organization does not qualify for exemption even if the activity also furthers an

exempt purpose.

Application of law

Treasury Regulation Section 1.501(c)(3)-1(a)(1) states that if an organization fails to meet either the
organizational test or the operational test, it is not exempt. Treas. Reg. Section 1.501(c)(3)-1(c)(1) provides that
an organization will be regarded as operated exclusively for one or more exempt purposes only if it engages
primarily in activities which accomplish one or more of such exempt purposes specified in IRC Section
501(c)(3). You engage in substantial non-exempt activities through your matchmaking and social events.
Although portions of these activities are intended to further religious purposes, overall, these activities serve
substantial non-exempt purposes. You therefore do not operate exclusively for exempt purposes.

Treas. Reg. Section 1.501(c)(3)-1(d)(1)(ii) provides that an organization is not organized or operated
exclusively for an exempt purpose unless it serves a public rather than a private interest. Your matchmaking and
social event services further the private interests of your members rather that the interests of the general public.
These matchmaking and event services provide a direct social and recreational benefit to participants, furthering
their private interests and lack the benefit to the general public typical of organizations described in IRC Section

501(c)(3).

You are like the organization denied exemption in Revenue Ruling 77-366. Although your activities and
purposes do promote religion, the social and recreational activities are substantial not-exempt activities. You
therefore do not operate exclusively for exempt purposes.

Similar to the organization described in Schoger Foundation and Syrang Aero v IRS, you serve substantial
recreational and social purposes for paid participants. Those that participate in these matchmaking events and
social media activity benefit personally from the opportunity to socialize and find potential friends or partners.
There are no apparent religious activities other than the fact that the majority of participants are of a certain
faith. While participants in your matchmaking service could derive a religious or educational benefit, overall,
you serve substantial recreational and social purposes that preclude exemption under IRC Section 501(c)(3). If
an activity serves a substantial non-exempt purpose, as in those cases, despite the existence of other exempt
purposes, similar to the organization described in Better Business Bureau of Washington, D.C. Inc v IRS, you
will not qualify for exemption under IRC Section 501(c)(3).

Letter 4034 (Rev. 01-2021 )
Catalog Number 47628K

Your position

You do not and will not charge membership fees to be a part of your organization. Your events are open to the
public for anyone interested in connecting, dating, or meeting F people in accordance with the core teachings
and principles of the F religion. You strive to educate the F community and public on the importance of G in
one’s personal life and relationships, whether it be romantic, platonic, professional, or familial.

The in-person events include celebration and observance of all F holidays, in accordance with F religious law.
Also, you have many in-person events where you host a H to educate the public on the religious tenets of G in
relation to dating, relationships, marriage, community, and the importance of certain F traditions.

Our response to your position
The additional information you provided does not change our position that you are not operated exclusively for
exempt purposes. The facts show you have substantial recreational and social functions.

Conclusion

Based on the facts you provided, you do not meet the operational test because a substantial portion of your
activities have social and/or recreational purposes. Thus, you do not meet the standards of exemption under IRC
Section 501(c)(3). Donations to you are not deductible to the donor.

If you agree
If you agree with our proposed adverse determination, you don’t need to do anything. If we don’t hear from
you within 30 days, we’ll issue a final adverse determination letter. That letter will provide information on

your income tax filing requirements.

If you don't agree
You have a right to protest if you don’t agree with our proposed adverse determination. To do so, send us a

protest within 30 days of the date of this letter. You must include:
• Your name, address, employer identification number (EIN), and a daytime phone number
• A statement of the facts, law, and arguments supporting your position
• A statement indicating whether you are requesting an Appeals Office conference
• The signature of an officer, director, trustee, or other official who is authorized to sign for the
organization or your authorized representative

• The following declaration:
For an officer, director, trustee, or other official who is authorized to sign for the organization:
Under penalties of perjury, I declare that I have examined this request, or this modification to the
request, including accompanying documents, and to the best of my knowledge and belief, the request
or the modification contains all relevant facts relating to the request, and such facts are true, correct,
and complete.

Your representative (attorney, certified public accountant, or other individual enrolled to practice before the

IRS) must file a Form 2848, Power of Attorney and Declaration of Representative, with us if they haven’t
already done so. You can find more information about representation in Publication 947, Practice Before the
IRS and Power of Attorney.

Letter 4034 (Rev. 01-2021)
Catalog Number 47628K

5

We'll review your protest statement and decide if you gave us a basis to reconsider our determination. If so,
we’ll continue to process your case considering the information you provided. If you haven’t given us a basis
for reconsideration, we'll send your case to the Appeals Office and notify you. You can find more information
in Publication 892, How to Appeal an IRS Determination on Tax-Exempt Status.

If you don’t file a protest within 30 days, you can’t seek a declaratory judgment in court later because the
law requires that you use the IRC administrative process first (IRC Section 7428(b)(2)).

Where to send your protest
Send your protest, Form 2848, if applicable, and any supporting documents to the applicable address:

U.S. mail: Street address for delivery service:
Internal Revenue Service Internal Revenue Service

EO Determinations Quality Assurance EO Determinations Quality Assurance
Mail Stop 6403 550 Main Street, Mail Stop 6403

PO Box 2508 Cincinnati, OH 45202

Cincinnati, OH 45201

You can also fax your protest and supporting documents to the fax number listed at the top of this letter. If you
fax your statement, please contact the person listed at the top of this letter to confirm that they received it.

You can get the forms and publications mentioned in this letter by visiting our website at www.irs.gov/forms-
pubs or by calling 800-TAX-FORM (800-829-3676). If you have questions, you can contact the person listed at
the top of this letter.

Contacting the Taxpayer Advocate Service

The Taxpayer Advocate Service (TAS) is an independent organization within the IRS that can help protect your
taxpayer rights. TAS can offer you help if your tax problem is causing a hardship, or if you’ve tried but haven’t
been able to resolve your problem with the IRS. If you qualify for TAS assistance, which is always free, TAS
will do everything possible to help you. Visit www.taxpayeradvocate.irs.gov or call 877-777-4778.

Sincerely,

Stephen A. Martin
Director, Exempt Organizations
Rulings and Agreements

Letter 4034 (Rev. 01-2021)
Catalog Number 47628K