Our club is looking at 501(c)(3) status. What are the pros/cons of doing that, if you have experience with that status? Thanks.
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501(c)(3)
- Thread starter bayouace
- Start date
glassila
Double Eagle Member
- Joined
- Jun 30, 2013
- Messages
- 1,616
+ The club does not have to pay sales tax on purchases. That could be significant for a club that plans on making large purchases like new baskets or course equipment.
+ a lot of private foundations and government agencies will only give grants to non-profits.
- There are fees to apply for non-profit status, plus you will probably have to pay an accountant or attorney to submit the necessary paperwork.
If you are mainly looking at the "no sales tax" benefit then you would make a lot of purchases to overcome the cost to apply.
zgmc might be right, "why would you want to do this?"
+ a lot of private foundations and government agencies will only give grants to non-profits.
- There are fees to apply for non-profit status, plus you will probably have to pay an accountant or attorney to submit the necessary paperwork.
If you are mainly looking at the "no sales tax" benefit then you would make a lot of purchases to overcome the cost to apply.
zgmc might be right, "why would you want to do this?"
A corporate sponsor is offering us a large donation, which would be doubled if we were 501(c)(3) status, if I understand another club member correctly.
wolfmandragon
* Ace Member *
Do your due diligence. In the long run, the costs may outweigh any short term benefits. Find a good contract lawyer and get a consultation.
etdefender19
Eagle Member
Our baseball league is 501(c)(3)
Dozens of teams and hundreds of players though
We have to have a board of directors, by laws, official meetings, the whole nine yards
Dozens of teams and hundreds of players though
We have to have a board of directors, by laws, official meetings, the whole nine yards
CaptainAnhyzer
* Ace Member *
501c3 changed our club for the better in so many ways.
Donations/sponsorships are way easier.
Theyre more willing to write a check to a tax exempt club over writing one out to Dave the disc golfer.
DisCap has exploded in the Albany area because of it.
Donations/sponsorships are way easier.
Theyre more willing to write a check to a tax exempt club over writing one out to Dave the disc golfer.
DisCap has exploded in the Albany area because of it.
jeffmonty
* Ace Member *
- Joined
- Feb 20, 2010
- Messages
- 2,395
What Captain said, too. Our club is 501(c)(3).http://www.wsdga.org/
We have all of those things. I know it works well for us, but I'm not knowledgeable enough about the details to comment much on them here. I know you better be able to keep the books straight, and I believe a percentage of funds you have are required to be spent in a certain amount of time (like a year or something).
Another negative is that it comes with stricter guidelines on how funds are used
One key factor is whether the club may actually get grants or donations from anyone. For sponsorships from local businesses, it may not matter; they can write it off as a charitable donation or an advertising expense. But for getting money from those who can't consider it advertising, a 501(c)(3) may be useful, even critical. That may vary from location to location, or club to club.
But it appears our subject case is one of those.
Great comments! Thanks so much.
Shouldn't most clubs be run this way? If you have a membership, tournaments, leagues or any activity that handles and decides how money is earn or spent, should.
It allows for controls to be put in place and transparency of financial activity.
CaptainAnhyzer
* Ace Member *
This especially.
It's grown-up time. You want you club to grow and more courses to be installed? THIS is the way it works out REALLY WELL. But it takes work and some change in how you run things.
In 2010, just after we got the 501c3, we secured 18 $400 hole sponsors for the course in Central Park, Schenectady NY.
Just last fall we got a $6000 grant from a major corporation to install a course in Malta NY.
Between those two, we've installed/expanded/designed in Chatham, Schenectady, Saratoga, Coeymans and more. The money would not have been available unless we were an official organization.
It is a big step. Makes a club proactive, rather than dependent on recreation departments, it seems.
biscoe
* Ace Member *
Our club got the status a few years back- it makes fundraising in particular way easier and the bookkeeping demands are not really all that onerous. We are attempting to raise $30k plus for this year's USWDGC and could not even begin to work towards that without the status. It is also a big help in dealing with municipalities. Clubs in Virginia have been fortunate that we have a lawyer very involved in the disc golf community who has helped multiple clubs out on 501c at minimal cost.
DatRedDude
Eagle Member
we are actually discussing this tonight, at one time our club was a 501c but we are looking at the 501C7 which is listed as a social club
https://www.irs.gov/charities-non-profits/other-non-profits/social-clubs
not sure what the differences are but we have a club member that does know and will bring us up to speed. We lose a lot of money from businesses wanting to sponsor things but as someone said above, they don't want to write a check to Dave Discgolfer. Get that Tax ID and they can write it off.
https://www.irs.gov/charities-non-profits/other-non-profits/social-clubs
not sure what the differences are but we have a club member that does know and will bring us up to speed. We lose a lot of money from businesses wanting to sponsor things but as someone said above, they don't want to write a check to Dave Discgolfer. Get that Tax ID and they can write it off.
501c3 status can be good if you have a large enough group to field a few dedicated souls to take positions on the board, and take care of the paperwork requirements, (and being on the board of most any non-profit is a thankless job).
When you have a small group of nomadic players constantly moving in and out, it might be more headache than it's worth.
When you have a small group of nomadic players constantly moving in and out, it might be more headache than it's worth.
Plastic Thunder
Eagle Member
Having 501(c)(3) status comes with compliance requirements, the most obvious of which is operating the organization within the IRS regulations. In addition, most organizations must file some version of Form 990 with the IRS each year. Additional compliance requirements exist at the state level.
My point is this, you really need to be raising money from outside sources on a fairly grand scale for a 501(c)3 to be beneficial. Corporate and business donations would be easier to capture. Most individuals may not have the deductibility they once had under the new tax laws. I was not able to deduct any charitable contributions this year.
One other thing, I ran a 501(c)7 as the President of a club a few years back. I had 9 board members and a brilliant accountant, running it was a good bit of work. And we did have to deal with the IRS since the last board failed to file returns for the 2 years prior to me taking over. When I took over I had Janet, the accountant, rebook the previous 3 years and locate tax returns prior to my taking over as president. That is when we found the problem. We got through the IRS thing and I resigned at the end of that year.
My point is this, you really need to be raising money from outside sources on a fairly grand scale for a 501(c)3 to be beneficial. Corporate and business donations would be easier to capture. Most individuals may not have the deductibility they once had under the new tax laws. I was not able to deduct any charitable contributions this year.
One other thing, I ran a 501(c)7 as the President of a club a few years back. I had 9 board members and a brilliant accountant, running it was a good bit of work. And we did have to deal with the IRS since the last board failed to file returns for the 2 years prior to me taking over. When I took over I had Janet, the accountant, rebook the previous 3 years and locate tax returns prior to my taking over as president. That is when we found the problem. We got through the IRS thing and I resigned at the end of that year.
