501(c)(3) Status - How Long

[1978]

How long did it take your club or disc golf organization (or any organization) to achieve 501(c)(3) status. Any pitfalls or lessons learned that will help make others applications go smoother?


I already know not to put freedom or liberty in the name

 

[filobedo]

Hopefully you are an attorney or have accessibility to any attorney, someone that is good with tax provisions and filings and insurance for the club and each BOD member if you plan on becoming a 501(c)(3) due to liabilities. I am curious how many other clubs have this status and if any clubs/BOD members have been sued that are associated with a 501(c)(3) or have had fraud or tax problems due to lack of controls and people running the club with no business background

The link below has some concise information you may want to take a look at,

http://www.501c3.org/blog/dont-avoid-your-nonprofits-problems/

 

[bikinjack]

From having gone through it once, I'll say that while it's fairly important to have an attorney helping, it's way more important to enlist the services of an accountant. You'll need extensive records on your financials, as well as names and contact info for anyone who's ever served as an officer or on the board of directors. Once I got all that info together, and handed it over to the attorney and accountant, it took somewhere between six months and a year to get the status.

FWIW, we had "Friends" in our name.

 

[mattw]

The IRS has an new EZ online application that a lot of different groups qualify for. I have not had a chance to go through this yet. I brought it up at work and was told to read the attached link.

http://www.irs.gov/uac/Newsroom/New...x-Exempt-Status-Easier-Most-Charities-Qualify

 

[filobedo]

The IRS has an new EZ online application that a lot of different groups qualify for. I have not had a chance to go through this yet. I brought it up at work and was told to read the attached link.

http://www.irs.gov/uac/Newsroom/New...x-Exempt-Status-Easier-Most-Charities-Qualify

I recommend to anyone using the EZ Form to check the IRS website routinely to ensure nothing changes over the course of the initial paperwork.

 

[jrawk]

I am elbow deep in 501c3 application process right now and it's fairly overwelming. We chose to utilize LegalZoom to help with the process and i'd recommend it. For sure, do not try to turn your old existing club into the 501c3 association. Fill out all the paperwork as if your old club never existed and rename the club. Remember, as a 50c3 (three) you're not forming to play disc golf, you're forming to further the education of disc golf to the public.

Before doing anything legal wise, draft your charter and bylaws now and find two other people to have a president, secretary, and treasurer.

 

[filobedo]

Before doing anything legal wise, draft your charter and bylaws now and find two other people to have a president, secretary, and treasurer.

WOW! Hopefully you have a Charter and bylaws but they may need to be amended. If this is an issue, take several steps backwards and setup a timeline to get the most basic information completed before thinking about moving forward.

 

[jrawk]

WOW! Hopefully you have a Charter and bylaws but they may need to be amended. If this is an issue, take several steps backwards and setup a timeline to get the most basic information completed before thinking about moving forward.

absolutely. We are/were ready, but worth repeating.

 

[MacDaddy]

I didn't see why you wanted to be a 501-c-3.... maybe you don't need to be. Perhaps being some other form, like perhaps a 501-c-7 would be enough of a structure for your purposes. The accounting and paperwork is a lot simpler if you are not a "c-3".

 

[filobedo]

I didn't see why you wanted to be a 501-c-3.... maybe you don't need to be. Perhaps being some other form, like perhaps a 501-c-7 would be enough of a structure for your purposes. The accounting and paperwork is a lot simpler if you are not a "c-3".

Is a 501(c)(7) a private club with members/partners/stock holders that is by invite only similar to exclusive golf, tennis and social clubs? I thought this is how Augusta National was set up but could be incorrect.

 

[JC17393]

I didn't see why you wanted to be a 501-c-3.... maybe you don't need to be. Perhaps being some other form, like perhaps a 501-c-7 would be enough of a structure for your purposes. The accounting and paperwork is a lot simpler if you are not a "c-3".

501c3 allows for the club to accept donations that are tax exempt for the donor. There are a lot of businesses that don't donate to any non-501c3 "charities", whereas they might drop more money if they get a tax break out of it. That can be helpful in raising funds for baskets, tees, signs, etc.

501c7 clubs not only wouldn't be able to accept donations, but they also could not sell discs to the general public (they are funds not derived from membership fees) which is a fairly common and often essential service, particularly for clubs that run leagues, minis, and tournaments.

I also don't think it's in any disc golf club's best interests to have to limit membership in any way.

 

[DavidSauls]

One question to ponder is whether being a 501c3 is beneficial. Will enough businesses or individuals actually donate money, or more money, because of the tax write-off? Enough to make it worthwhile?

Our club started down that road in the early days, but the club president gave up after a good bit of work. Instead, we're a not-for-profit corporation. Businesses can still donate and write off their donation if they can frame it as advertising. We don't get a lot; it's unclear whether, if we had 501c3 status, we would actually get much more.

Another option I've read about, in some places, is that if you stumble across someone who wants to give $10,000 but wants a tax deduction, that it can be funneled through the parks department. I'm less clear whether that is correct.

 

[JRW III]

One question to ponder is whether being a 501c3 is beneficial. Will enough businesses or individuals actually donate money, or more money, because of the tax write-off? Enough to make it worthwhile?

Our club started down that road in the early days, but the club president gave up after a good bit of work. Instead, we're a not-for-profit corporation. Businesses can still donate and write off their donation if they can frame it as advertising. We don't get a lot; it's unclear whether, if we had 501c3 status, we would actually get much more.

Another option I've read about, in some places, is that if you stumble across someone who wants to give $10,000 but wants a tax deduction, that it can be funneled through the parks department. I'm less clear whether that is correct.

This.

Lot of work to get and properly maintain a c3. After the initial set up, you will have to maintain proper organizational functions. Liability and potential penalties increase. (I have seen organizations pay significant tax penalties for failure to file annual From 990s. Even though no tax is due, if you miss the deadline you will pay a penalty).

As mentioned above, if there is another organization whose mission is inline with yours, and has a c3 status (i.e. a Parks Department) you can use their c3 status for donor tax deductions. For example, if you are raising funds for baskets and tee pads on a new course, the donor can donate the funds to the Parks Department, and state that they are restricted to be spent on baskets and tee pads for your course. Since it is also within the mission of the Parks Department, it qualifies as a tax deductible donation.

 

[JRW III]

I am elbow deep in 501c3 application process right now and it's fairly overwelming. We chose to utilize LegalZoom to help with the process and i'd recommend it. For sure, do not try to turn your old existing club into the 501c3 association. Fill out all the paperwork as if your old club never existed and rename the club. Remember, as a 50c3 (three) you're not forming to play disc golf, you're forming to further the education of disc golf to the public.

Before doing anything legal wise, draft your charter and bylaws now and find two other people to have a president, secretary, and treasurer.

I have seen many instances where groups will form two separate legal entities. A c3 to "further the education" and another non-profit entity to "play" disc golf. Most of the operations are run through the non-c3 entity.

 

[Tpro]

Innova

 

[MacDaddy]

A 501-c-7 does not have to be private. I fact, it is really set up to be a public org. The charter spells out the details. It does give the officers a "corporate veil" which protects their assets (unless they are doing illegal things with the club). It also provides a long term structure for various parks departments and other to deal with, helping to ensure that things are not just a "one man band" and subject to ending on a whim. It also gets you out of paying sales tax for the things you buy for the club. It does not allow donations to the club to be a "charitable deduction" those those doing the giving. They can however, usually write them off as advertising or some other business expense (consult your local tax code...).

 

[dickparker]

I have seen many instances where groups will form two separate legal entities. A c3 to "further the education" and another non-profit entity to "play" disc golf. Most of the operations are run through the non-c3 entity.

Any particular club that you know of that may have or is doing this? I'm curious how this operates.