That's a little unfair. A 501(c)3 is a huge asset - not only is a 501(c)3 exempt from federal income taxes (and often state sales taxes) but people can make tax-deductible contributions to a 501(c)3. If two companies are producing a product and one is a 501(c)3, then that company has an enormous competitive advantage in the marketplace. Yorba is producing software that commercial software developers also produce. The IRS has a very good reason to make sure that Yorba is actually an exempt organization before it grants tax-exempt status - otherwise the government is effectively subsidizing one company in the marketplace.