Advice from any 501(c)(3) clubs

[JackC]

My club was wondering if filing as a nonprofit organization with the IRS would help in outreach to schools and other youth organizations. I would appreciate if you could share your experiences-good or bad with us. Thanks!

JackC

 

[Steve Shannon]

No school has ever inquired about our tax status. They are interested in our insurance though and some now want to have background checks on adults who will be working with children.

 

[rfjustin]

My club was wondering if filing as a nonprofit organization with the IRS would help in outreach to schools and other youth organizations. I would appreciate if you could share your experiences-good or bad with us. Thanks!

JackC

Not being a 501(c)(3) would not typically preclude any outreach activities in my opinion. My advice, don't solve for an issue that does not exist in this case.

 

[tim cubbedge]

Our club is listed as 501(c)(3) and like Steve mentioned, no one has ever asked us about it. The only benefit I see is we don’t pay sales tax on club equipment.

 

[prfesser]

My club was wondering if filing as a nonprofit organization with the IRS would help in outreach to schools and other youth organizations. I would appreciate if you could share your experiences-good or bad with us. Thanks!

JackC

I am not a 501(c)(3) nor a lawyer, I just googled the advantages and limitations. Summarizing from this site:

• Organization is exemp from federal taxes.
• Donations to the org are (or can be) tax-deductible for the donor.
• Org can apply for some federal grants.
• Bureaucracy: org must follow IRS rules (and presumably fill out a tax form each year).
• Application fee of $400 for orgs making less than $10k per year.

It sounds as though one's club would have to be pretty big to take advantage of nonprofit status. Just my opinion.

 

[JackC]

Thanks for the responses so far. They will be helpful for our review!

 

[Steve Shannon]

Thanks for the responses so far. They will be helpful for our review!

Quite a few years ago I made the conscious decision not to seek 501(c)3 status for our rocket club (Big Sky Rocketry). Just couldn’t see a real benefit, but we’re a tiny club compared to many others and we are in a state with no sales tax, so the only benefit we’re sacrificed was the ability to seek donations from various foundations. That has never been a problem.

 

[rfjustin]

I am not a 501(c)(3) nor a lawyer, I just googled the advantages and limitations. Summarizing from this site:

• Organization is exemp from federal taxes.
• Donations to the org are (or can be) tax-deductible for the donor.
• Org can apply for some federal grants.
• Bureaucracy: org must follow IRS rules (and presumably fill out a tax form each year).
• Application fee of $400 for orgs making less than $10k per year.

It sounds as though one's club would have to be pretty big to take advantage of nonprofit status. Just my opinion.

"It sounds as though one's club would have to be pretty big to take advantage of nonprofit status. Just my opinion."

NAILED IT

 

[Rocketless]

Look at 501 (c) (7) as a possibility
501 (c) (3) are typically for charities

 

[Joshua Smith]

TNT Tripoli North Texas is a 501c3. I'm not a member, but we've been considering it down in Austin. The biggest advantage by far is donations. You won't get many large donations if it's not tax deductible for the giver. My understanding is that TNT's donations skyrocketed which allowed them to grow the club's members, the equipment and the amount of outreach they could do.

There's one decent downside too, 5013c's have to operate a certain way and have established processes and a board etc. It's a very non-trivial amount of work and often involves, tho doesn't have to, a lawyer

Josh

 

[drgarymartinez]

The 501(c)3 status is really a benefit for large donations (I have operated and managed several). The big issue has to be the background check and finger printing. If you are going to work with kids of any age, in this culture and climate, it is an absolute must. NO ONE affiliated with the club can have a sex crime of any kind, and no one can have a felony. As a high school science teacher, this is the big issue.

 

[jderimig]

I am not a 501(c)(3) nor a lawyer, I just googled the advantages and limitations. Summarizing from this site:

• Organization is exemp from federal taxes.
• Donations to the org are (or can be) tax-deductible for the donor.
• Org can apply for some federal grants.
• Bureaucracy: org must follow IRS rules (and presumably fill out a tax form each year).
• Application fee of $400 for orgs making less than $10k per year.

It sounds as though one's club would have to be pretty big to take advantage of nonprofit status. Just my opinion.

If you club collects money from the public (outside the membership), then that is taxable to the Feds and your state. So if you are a club that hosts a launch (LDRS, Airfest, NYPOWER etc) income from non-members is taxable. Some clubs require you to join the club to participate in the event. That is one method for tax evasion avoidance. A 501c(3) allows income from the public to be tax exempt. If you sponsor a big launch that covers the $400 lifetime application fee.

 

[cerving]

The 501(c)3 status is really a benefit for large donations (I have operated and managed several). The big issue has to be the background check and finger printing. If you are going to work with kids of any age, in this culture and climate, it is an absolute must. NO ONE affiliated with the club can have a sex crime of any kind, and no one can have a felony. As a high school science teacher, this is the big issue.

Most organizations in which you work with minors require a background check, and possibly a LiveScan or similar fingerprinting check. Usually on your nickel. Over the years I've helped with my sons' schools, Scouts, and churches, and they've all had me do that. Interestingly enough, when I mentored a TARC team for a private after-school program they did not... I thought that was rather odd.

 

[RocketPro]

If you club collects money from the public (outside the membership), then that is taxable to the Feds and your state. So if you are a club that hosts a launch (LDRS, Airfest, NYPOWER etc) income from non-members is taxable. Some clubs require you to join the club to participate in the event. That is one method for tax evasion avoidance. A 501c(3) allows income from the public to be tax exempt. If you sponsor a big launch that covers the $400 lifetime application fee.

Exactly. Also, if, like ROC, you are going to allow non-members to fly for a launch fee, that’s tax exempt income up to a certain amount ($50K Fed) and state vary, of course.

 

[Sooner Boomer]

The only advantage I know of, is that in some locations, there are city/county/state/university/federal surplus property programs where 501(c)3 orgs can pick up stuff for free. There might be an application process; it could be as simple as writing a letter. Could get you access to everything from desks and office furniture, to computers, to machine tools.

 

[dhbarr]

If even one member of your club is eligible for a corporate giftmatching program, it could easily be worth it.