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Re: [AmateurRadioLeadership] 501c3 Status?

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  • Richards
    I have a different take, without contradicting Dan. Yes, Dan, I think you ARE missing something, although I agree with your conclusion ! Non-profit status
    Message 1 of 7 , Jul 2, 2012
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      I have a different take, without contradicting Dan.

      Yes, Dan, I think you ARE missing something, although I agree with your
      conclusion !

      "Non-profit status" can mean several things, including incorporating as
      a not-for-profit organization under State corporation laws. It can also
      mean "tax exempt non-profit" status under State and Federal tax laws -
      which is pretty much what Dan is referring to.

      I suspect one could well argue it is a GOOD IDEA to INCORPORATE as a
      Not-for-Profit corporation under State corporation and business laws.
      This provides at least one advantage: possible, but not guaranteed,
      immunity from liability for individual members, officers, and directors,
      which is usually available to corporate entities. It could also mean a
      second advantage, although not necessarily depending on how the
      organization was initially formed, namely the corporate form is usually
      a good way to organize and run this type of association. Having a Board
      of Directors to make policy decisions, and then have a President, VP,
      TREAS, SEC, etc., execute the policy, with regular meetings of the Board
      and of Officers, etc., is often a good plan for running the
      association's business. You can, of course, accomplish the same sort
      of thing without formal legal incorporation, so incorporating for this
      reason is a good idea, but you can skin the cat in similar way without
      doing do.

      Dan touched on the notion of obtaining TAX EXEMPT Non-profit status...
      and I agree with his assessment on that point.

      In many cases, becoming a formal legal entity under State corporation
      laws helps the association obtain insurance for its activities and
      property. Be wary that insurance rates can vary substantially from one
      company to another, and you really MUST shop around to get proper
      coverage for a good rate.

      Remember that each State has its own corporation laws, rules,
      regulations, etc., so what works in one state may not work as well or be
      as appropriate in another state. Also, most states have newer laws
      allowing associations to form as Limited Liability Companies (typically
      called LLCs) and these may be better suited for your particular
      association - or not - depending on applicable State and Federal laws,
      and the different tax treatment afforded LLCs, Corporations, and
      Partnerships.

      Under the Uniform Partnership Act, enacted in many, if not most States,
      a "Partnership" is merely two or more persons engaged in business for
      profit - so if you are making money or at least trying to make money- it
      is "possible" any loose association of persons making money will be
      governed by State partnership laws. Lots of clubs could fall within the
      purview of these laws and never realize it until some smart alec legal
      beagle wants to make something of it and, VOILA, you are suddenly all
      liable as freq-ing Partners! Surprise. Not likely, but "possible."

      So, it MIGHT be a good plan to incorporate as a Not-for-Profit
      corporation or other legal entity, e.g., LLC, ... maybe... possibly....
      or not... perhaps, ... but it IS A GOOD IDEA TO FIND OUT of that would
      benefit your organization. Again, I think the prime reason to do this
      is to avoid personal liability for members acting as a loose
      unincorporated association - sometimes called and sometimes confused
      with the concept of "joint adventurers" in a common enterprise or
      activity.

      Often, other persons and entities will take your group more seriously if
      it is a "legal corporation." Sometimes, members will accord the
      organization or association greater credibility therefor. But I would
      consider the limitation of liability a prime concern.

      Now, there is no guarantee that incorporation, alone, will preclude
      personal or individual liability, but it could be a major hurdle or
      speed bump to litigants seeking money damages for some odd calamity or
      loss. It is like fighting a war. Would you want to hide behind a
      tree, and maybe be struck by enemy fire... or just stand out in a clear
      field, alone, with no cover. If your club has enough insurance, the
      Plaintiff may just settle within policy limits and accept it as full
      satisfaction of his claim, rather than exact an aliquot share from each
      member. Again, it COULD be a huge hedge against exposure to individual
      liability.

      This is just MY quick take on the question. It is my opinion, and does
      not constitute legal advice in any state, your mileage may vary, all
      bets are off, no warranty is implied or expressed, stay off the grass,
      don't smoke, eat your vegetables, and all that jazz.

      Happy trails.

      ================ Anonymous / K8JHR ==============




      On 7/2/2012 2:26 PM, danromanchik wrote:


      > my take on this is that amateur radio clubs rarely ever need 501c3 status.

      > Am I missing something?
      >
      > ----------------------------------------------
    • Tom KD8DEG
      You might contact this e-mail group below. There are many lawyers available here to answere just these kind of questions ham-law@mail.altlaw.com KD8DEG Tom
      Message 2 of 7 , Jul 2, 2012
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        You might contact this e-mail group below. There are many lawyers available here to answere just these kind of questions
         
         
        KD8DEG  Tom

        ----- Original Message -----
        From: Ed Greany
        Sent: Monday, July 02, 2012 3:42 PM
        Subject: Re: [AmateurRadioLeadership] 501c3 Status?

         

        Good point Andrew.
        You have to file for non-profit status with your state AND the IRS.
         
        Ed

        From: "andrew@..." <andrew@...>
        To: AmateurRadioLeadership@yahoogroups.com
        Sent: Monday, July 2, 2012 11:58 AM
        Subject: RE: [AmateurRadioLeadership] 501c3 Status?

         
        This can be a state issue.  

        This pre-dates me, but our club nearly got into hot water because of something (raffle tickets or scratch-offs or something that we don't even do anymore) that we could not legally sell without 501c3 status, and it got into how hamfest tickets were being used as a raffle item (because we drew door prizes from them and did not limit purchasers to one or something of that nature).  Being a 501c3 allows us to legally do a lot of things that we normally do, we did, and somehow got caught doing.  Note that if you're not 501c3, in the eyes of the IRS you are not a not-for-profit agency, even though many clubs would (rightfully) consider themselves that.  Note that if someone contacts the state over it, they put you through the ringer and check everything.

        We had help from a CPA that is a friend of a club member.  I believe we paid the CPA for that, and I know we paid the CPA for tax help this past year and we likely will in the future.

        On the donations, we have had donations, but having only been 501c3 for just over a year, it is too early to tell how that will go moving forward.

        tl;dr: check your state laws to see if you need it, be prepared to pay for help with the paperwork and yearly for filing taxes. 

        73!
        AC8JO
        Andrew


        -------- Original Message --------
        Subject: [AmateurRadioLeadership] 501c3 Status?
        From: "danromanchik" <cwgeek@...>
        Date: Mon, July 02, 2012 2:26 pm
        To: AmateurRadioLeadership@yahoogroups.com

         
        A ham e-mail me today:

        "Somewhere, I recently read about attaining a non-profit status for a radio club. I don't think that it was your blog, but I can't think of anywhere else that might have covered the subject.

        But, do you have any advice or direction on the subject? Our club has been in existence for almost forty years, and I've been here for twenty-five and have been treasurer for twenty. From time to time, I've looked at the IRS forms, but they are beyond me. I'm not a lawyer or accountant, and our small club doesn't have anyone who is savvy about such matters.

        I'm sure that there must be a lot of little clubs out there with the same situation. Do you know how they are handling finances and insurance?

        You're a great thinker, and I enjoy the blog. Thanks for making it happen."

        I replied:

        "Well, I don't really know about being a great thinker, but my take on this is that amateur radio clubs rarely ever need 501c3 status. As far as I can tell, the only benefit is that it may encourage people to donate money or equipment to your club, as the 501c3 status will then allow them to deduct the value of that donation as a charitable donation. I don't know the situation with your club, but for our club, which has had 501c3 status for many years, this doesn't even occur once per year, and my guess is that most of the donations would have been made even if we didn't have 501c3 status.

        501c3 status was designed for what I call "real nonprofit corporations," organizations such as the Red Cross, private schools, and various foundations. These corporations not only have a board of directors, but a paid staff, and a real mission to serve the community. More often than not, these organizations are head and shoulders above most amateur radio clubs."

        Am I missing something?

        73, Dan KB6NU



      • Richards
        I second that Motion. ================= K8JHR ===================== ... ________________________________________________
        Message 3 of 7 , Jul 3, 2012
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          I second that Motion.

          ================= K8JHR =====================



          On 7/2/2012 6:32 PM, Tom KD8DEG wrote:

          > /You might contact this e-mail group below. There are many lawyers
          > available here to answer just these kind of questions/

          > ham-law@... <mailto:ham-law@...>
          > /KD8DEG Tom/


          ________________________________________________
        • Richards
          Both messages nicely said, Ed.
          Message 4 of 7 , Jul 3, 2012
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            Both messages nicely said, Ed.

            ------------------------ K8JHR --------------------


            On 7/2/2012 2:53 PM, Ed Greany wrote:
            >
            >
            > Oops, I forgot. You also inquired about insurance.
            > My club (team) does a lot of special events where we
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