I live in a country without any internet censorship. I want to help people who do have internet censorship by hosting a TOR node at my house, more specifically an exit node. What do I do when people access illegal websites from my IP address? Should I be concerned? Is there a way to notify law enforcement or my ISP that I’m hosting a TOR node, and that these activities are not coming from me?
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Depends on your local laws and ISP rules explicitly. A lot of ISPs discourage hosting of Tor nodes and torrents on residential networks, and a lot of countries tend to seize equipment that is used for hosting Tor nodes (since it may become a investigation evidence in case of any illegal activities being traced back to an exit node).
Tor project has written a blog that I recommend you read to understand the very real risks of hosting an exit node, and how to do it safely (though the guide is US centric): Tips for Running an Exit Node | The Tor Project
I’d recommend hosting a relay if you are not keen on exit nodes after reading this, those are easier to work with, and less likely to be seized as part of investigation (since traffic through them is encrypted).
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Wait so you mean I shouldn’t run a Tor node in an unsupervised government institution that I suspect have corruption in it? 
You should not do this.
Should I run an exit relay from home? | Tor Project | Support.
It is just as useful to run non-exit-nodes, because having non-malicious guard nodes is very important too.
I am starting an exit relay association at https://www.triplebit.org/ and the amount of effort it is taking to avoid these problems is immense. If you want to support exit nodes on the network it would be a better use of money donating it to nonprofits who can run exit nodes in a safer way, like https://emeraldonion.org/
There is this list for example, although I probably wouldn’t contribute to anyone in Germany or the Netherlands (not that these groups aren’t great, but… Tor has a centralization problem): Tor Project | Relay Associations
Otherwise, yeah, run a non-exit-node.
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Good luck with the initiative!
Nice to see folks walking the talk when it comes to privacy advocacy. I believe everyone who is in a position to do it, should ideally do stuff like running Tor nodes, monero nodes, community services, filing FOIA equivalents in their countries, etc. But too many “leaders” in the privacy space advocate “fuck you, I got mine” mentality.
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