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What is / Why need 501(c)(3)?

23 years 2 weeks ago #94352 by Publisher

Your suggestions are always as subtle as subtle as a sledgehammer! :)

I agree that this is a great issue to delve into more deeply. We'll see what we can do in a future issue. In the meantime, all the feedback from you folks doing the independent "investigatin'" is a great start.

23 years 2 weeks ago #94351 by JHB
You may also want to use the search facility on this site using key words like "501" and "non-profit". There are extensive postings from the past that would be helpful to you. By the way, I think it's great you are making the effort to get professional advice (and perhaps you can come back and share some of that). Many of us on the forum don't have lawyers or CPA's and muddle through just with each other's help, so it's always good to hear what the professionals have to say.

The primary advantages of becoming a 501(c)(3) are additional credibility, the fact that contributions to your organization are tax deductible for donors, and some other perks such as the eligibility to use non-profit postage rates. These groups file an informational return with the IRS called a 990EZ or 990 if they earn more than $25,000 per year.

Theoretically, every person or entity that produces income should be filing something with the IRS (subject to exemptions, income thresholds, etc.) What we need is for somebody to get the answers from a professional and share it with us regarding situations like yours. We know there are tens of thousands of groups operating informally and filing nothing. Is there a general exemption based on some criteria? If not, what happens if you get caught? If they aren't going after non-profit status, what SHOULD clubs/groups be filing? A business return?

We know it's "good" to be a 501(c)(3) and that they file a Form 990, but I too am curious about what the rules are for the informal groups that exist. I've never seen that answered head on in the year I've been participating in this forum. If somebody has access to a lawyer/CPA and can post some answers (maybe you, after your meeting), I think it would be great to see it in print once and for all.

Anyway, if you DO go for the 501(c)(3) there's lots of help available from those of us on the Forums. Good luck!

[This message has been edited by JHB (edited 02-10-2001).]
23 years 2 weeks ago #94350 by Krippe
What is / Why need 501(c)(3)? was created by Krippe
I have been visiting this site for the past three months and I love it! Everyone that has participated in the discussion forum has helped me out a lot. I have learned more here then I have from any of the past members from my PTO group. I am a new president and learning fast. I just wanted to thank-you in advance....

Now, I have a problem and need some advice. We became a PTO in 1992. Some paper work fell through the cracks when officers changed. The officers of 1993 did not fill out the Annual Registration Report (Not For-Profit Corporations). In our secretary's folder I found a letter from the Office of Secretary of State requesting in 1995 that these froms be filled out. If the forms were not filled out then we would be disolved (not be a corporation). When I first became President this year I had been looking for somthing that a past President told me. I ran across these papers and had no clue what they were.

During all of our changes of officers we had also lost our tax id # (It had not been keep updated). Some how last year some one used our tax #. When the school year started and I went to clean out the PTO box there was a "1999 Return for Private Foundations or Section 4947(a)(1) Nonexempt Charitable Trusts Treated as Private Foundations". I had no idea what this was eather. I asked the previous President and her comment was "Oh-my gosh. The treasurer had used the tax #. Its not any good." She told me to check with our attorney on what to do. Needless to say, durring this time our Carnival was going on, and I had my hands full (little help was comming from past president/I had never been very active with PTO before this year. Always been a very cliqish group. Past President had told me if I took office she would walk me through Carnival/she didn't).

From checking out this site someone asked if they needed to file a 990. That reminded me that I had never gone to the attorny and checked out what I was suppose to. Anyway, this last week I have been to see a representative of our lawyer. She told me that the organization had been disolved in 1993. That I needed to talk with another person in the office who could give me more info on what to do about the 990 and getting us back incorporated. I do this Monday.

I talked to a past president about this who is on our "Playground Committee" (yes we are trying to purchase much needed equipment). She told me that she didn't think it was no big deal. That the "Booster Clubs" at the school are not a corporation and they do all kinds of fund-raising. And the reason we became a PTO was to get rid of paying out money (dues).

Now, my questions;

What does the 501(c)(3) do? Why do PTO's need it? OR do they? IF PTO needs this why not a Booster Club? Has anyone else been through this? And is this "NO Big Deal?"

Sorry for such a long post. I know I may find some of these answers Monday. I just have a hard time waiting.

Thanks again....

[This message has been edited by Krippe (edited 02-09-2001).]
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