Tax-exempt 501(c)(3) Bonds

Tax-exempt bonds have traditionally been issued by state and local governmental units for traditional government functions, such as school construction, public infrastructure and municipal utilities. However, certain private organizations may also avail themselves of the benefits of conduit tax-exempt financing through state and local governmental units. One such category is organizations which are exempt from Federal income taxation under Section 501(c)(3) of the Internal Revenue Code of 1986.

The principal advantages of such bond financing are the low interest rates and the attractiveness of the debt to lenders and investors. Bond financing may permit a user to build its projects sooner, expand the scope of its projects, or direct its fundraising to other purposes. With facilities financed by low-interest, long-term bonds, fundraising can be directed to other purposes, as well as into debt reduction.