501c or Not

[GK74]

Ive read up a few threads on this topic now that our club is thinking of switching leadership.
Its never been done before in our group, we have 3-4 tourneys a year with donations and sponsors, one event is even a fundraiser.

the issue I see is we work with the city to get supplies and now talks of a new cousre in our small town puts at at competion with funds.

We have only had a Bussiness Name Certificate registed.

 

[TheOtherBill]

Charlotte did this prior to hosting Worlds, hopefully someone who had a hand in that process can chime in. I spoke to the local club last year about becoming a 501.c.7 (sport and social club, you can sell beer at club meetings but the real issue was that it comes down to someone has to be willing to put their name on a federal tax document saying "I am responsible" and not a lot of disc golfers are up for that.

 

[GK74]

yes I hear ya on that fron t name on a federal document and the app fee of $00-$800 is stagering for just a group of guys playing who want a course around for years.

 

[aardvarkious]

Not American. Is the primary benefit of this to write tax receipts? If so, keep in mind that (I assume it is the same in the States), most businesses won't care. They can write off donations as marketing costs whether or not you are a charity. It is mostly for individuals that those tax receipts are beneficial.

 

[Pwingles]

Not American. Is the primary benefit of this to write tax receipts? If so, keep in mind that (I assume it is the same in the States), most businesses won't care. They can write off donations as marketing costs whether or not you are a charity. It is mostly for individuals that those tax receipts are beneficial.

This.

But in the search for sponsors you will quickly see that alot of businesses or potential sponsors would rather have the piece of mind of the legitimacy a registered NPO or w/e gives.

 

[joesouthfla]

Our club is thinking about doing it too. There are a bunch of companies that will do the paperwork for you for around $300. The advantage is that companies that make donations to you will be able to write it off of their taxes. Most corporations will not even donate to you unless you are a 501C. Not sure how much paperwork is involved during the year.

 

[aardvarkious]

Is there a difference between non-profits and charities in the states? Here in Canada, a non-profit is a recognized organisation that has to have certain by laws and cash management procedures in place but cannot write tax receipts. A charity is an organisation that has to have a lot more stringent by laws and procedures in place, but cannot write tax receipts. A non-profit is very easy for a volunteer without experience to figure out and maintain the paper work for. A charity is arduous and takes a professional and/or very dedicated and very smart volunteer to maintain.

I run our non-profit (our disc golf club) as a volunteer, and run a charity as my profession. In both roles, I do a lot of fundraising. When talking to businesses and governments, I have not noticed raising for a charity being more difficult than for a business. If anything, it is easier to fundraise for the non-profit because I don't have as many rules I need to abide by.

Individuals, on the other hand, do like when you are a charity. But as a charity, you need to be careful. A lot of things individuals typically "donate" to in disc golf (like raffles) are not eligible for tax receipts anyways.

 

[TheOtherBill]

Here are the IRS specs if anyone wants to read up, with links to their definitions. Below the 'must haves' are links on how to file and guidelines.

http://www.irs.gov/Charities-&-Non-Profits/Other-Non-Profits/Social-Clubs

I had my bookkeeper/tax guy ready to do all the paperwork for the club for no additional fees but...

 

[filobedo]

Plan on fronting significant money (possibly $1000 initially) and be prepared to provide documentation such as Articles of Incorporation, BOD minutes, etc. I would speak to a tax professional (which I am not) prior to dedicating much time and effort for this to discuss the pros and cons. I was told this was discussed at a Club a few years ago and it was brought to the forefront that the BOD was putting all excess funds into added cash for tournaments and not using any of funds generated for Club activities or to benefit the Club with additional courses, repair of baskets, fixed assets, etc.

 

[Dan H.]

Our club has considered doing this. You will have to get a lawyer who will initially charge at least around $1000 and then have to do taxes every year. To be a legitimate 501c3 you have to do actual charity work which, as a sports organization, would push you towards doing things for kids, the EDGE program being a good example, or sponsoring a minor to travel and play tournaments. There are other non-profit tax codes that might be geared more towards a club type organization like 501c4 or 501c7 but those would not let businesses donate to you with tax exemption.

 

[scarpfish]

If there's a chance that the leadership of your club are the type of people who don't like to deal with the legal requirements of 501 c status, or they could potentially move away with no responsible parties who could replace them, then its perhaps not a good idea.

You might have seen a news article about a year or two ago about numerous not for profits losing that status because they hadn't filed their 990 paperwork with the IRS for three or more years. That's precisely the sort of thing that you don't want to have happen.