Our Chapter currently is not a 501C3, but we are looking at changing. Other chapters that have been here, what are the pros and cons.
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Our Chapter currently is not a 501C3, but we are looking at changing. Other chapters that have been here, what are the pros and cons.
My chapter is going through a bit of an issue with this right now. We were approved as a 501c3 in 2004 but because our previous leadership failed to file the 990 "e-postcard" as required the last 3 years, we just got a notice that our 501c3 status has been revoked. We're now going through the paperwork to try and reinstate it...and there is a lot of paperwork! There is also a $300 filing fee and the IRS is reportedly much more strict in approving 501c3 status than they used to be. The main benefit is being able to accept tax-free donations, which the donator can deduct from their taxes as a charitable contribution. We could also buy supplies for our chapter tax exempt, though that might come from the 501c section in general and not necessarily the 501c3 status.
There is also a 501c7 "Recreational Organization" status that many chapters hold. It too is tax exempt to some extent but not quite sure of the differences other than the donations part. We will try to go this route if we can't get our 501c3 status restored. From what I can tell, if you want/expect to get a lot of donations, 501c3 is the way to go. Otherwise, it might not be worth the effort. I'm certainly not a tax attorney and very new to this, so this is just what I've learned in the past couple of weeks.
Regardless, we learned the hard way...whatever you do, make sure you file the proper paperwork each year!
Happy Flying,
Kevin
Last year I called the IRS and they were very helpful to walk me through everything needed to register us as a 501c3. There is some specific language you need in your by laws incorporation papers. Our chapter approved those and I submitted that to the IRS. I then applied for an Employer Identification Number (EIN) and once the IRS approved us we were done. The approval took a few months but there was no cost involved. You may want to wait until after tax season so the IRS has the time to help you. As long as your yearly reciepts are under I believe $50,000 you can file on line the 990 post card and it takes more time to get to it on line than it does to fill it out. Besides the tax advantages listed below, members can then deduct all costs that they donate to the chapter (driving mileage, cash donations, donations in kind up to a small limit). The one items we had to think about was if you disovle your chapter, any money left over needs to be doanted to either another 501c3 or given back to the government. You could always do a flight scholarship and wipe out your funds that way. Any questions, you can email me at mwoods@bizwi.rr.com. Have fun.
Some enthusiasts in Idaho solved the problem in another way. More than one organization. A c3 and a c7. Different functions. I don't know if any EAA chapters are doing this, but it wouldn't suprise me if they are, given the diverse sorts of activities that can take place all in the same chapter.
http://idahoaviationfoundation.org/ian.php