First I would like to express my thankfulness for this forum. Whenever I or one of our kids have posted a question in the past two years, we have always gotten helpful responses in a timely manner. This is a great community.
So, I have another question. Our team, Two Guys and a Robot, competed last year with two homeschooled middle school kids. They won two Excellence Awards and competed at the World Championship, and felt they had a great year. The year before that was their first year competing and they competed with a larger homeschool team here in Virginia.
Next year our kids want to add more team members. We also want to start a technology club that meets once or twice a month to do fun activities together, like programming, arduino, electronics and robotics. We want to have the meetings in a location where kids who don’t have a lot of other enrichment opportunities would be able to participate.
We were planning to become a 4-H group, but recently our county 4-H organization lost the ability to grant 501 (c) (3) status to 4-H clubs. That was one the main reasons we wanted to join 4-H, because we wanted to fundraise. We also wanted to become part of the 4-H community which helps youth develop leadership skills.
We have a corporate sponsor willing to donate money to our team, but we need non-profit status in order to accept the contribution. We would use the money to purchase more VEX robotics parts for at least two more members to build a robot for the upcoming season, pay for competition registrations, and supplies for our technology club meetings.
I am looking for advice and/or ideas on how to acquire non-profit status. Is the best option to simply incorporate on our own? Or are there other organizations besides 4-H out there who would be willing to partner with a robotics team who wants not only to compete but to contribute in the community.
In our county there is a Non-profit group that helps setup and run things like trust and estate scholarships… One small thing they do is allow groups like clubs to accept money under their 501c. The catch is the check has to be made to them and placed in their bank account and the groups have to give in writing any withdraw request. This is a well known group where I live and trust wasnt an issue.
BE sure to ask the sponsors if they need the 501c. We thought this was needed but have found alot of companies will sponsor without it.
If you do go with INC. yourself and filling for the non-profit it can run from $700-$1500 depending on your state. Sometimes you can find people to help with the paper work for free. The goverment was workign on a online process for it but it has been on hold for awhile. The online would only cost $300. Also remember al lthe tax forms that need filled out each year.
DID the 4-H give a reason why they don’t allow clubs to use their status? and I take it you aren’t with any schools to use theirs.
There is a difference between non-profit and tax exempt (501c3). Receiving tax exempt status can be costly and time consuming. Forming a non-profit, however, may not be that difficult. In Indiana I was able to form a non-profit online through the Secretary of State web site in less than an hour for a cost of $35. I found sample Articles of Incorporation online and modified them to fit my needs. I then applied for an EIN (Employer Identification Number) through the IRS.
For most businesses in my area being a non-profit was enough for them to donate. A couple of the larger companies in the area will only donate to a 501c3, so we do miss out on a few. The yearly tax filing so far has been trivial since our income was under $5,000. I was told by someone at the IRS the limit for the simplified filing was being raised to $50,000. I also have to file an annual notice with the Indiana Secretary of State which takes about 15 minutes.
I coach a Vex team and run an FLL (FIRST Lego League robotics) tournament each year. I had considered setting up a non-profit to collect funds for these groups, as my husband had successfully done it for his professional organization. However, I decided against it for a number of reasons:
To qualify, the group had to serve the community at large, and money spent would have to meet that qualification. Thus, funds for the FLL tournament would qualify (our events are open to community spectators free of charge), but not funds for the Vex team. I believe that your technology club would qualify, depending on how you recruit members and the population served. A “closed membership” team (reserving the right to limit team members to only people I invite) would probably not meet the “community at large” criterion.
We would need to keep a $500 minimum balance in the non-profit bank account at all times to avoid penalty (accounts for non-profits differ from those for individuals). Since I run the FLL event for about $200/year, keeping a “hoard” more than double our annual expenses was something I couldn’t justify.
We’ve found it easier to incorporate under the umbrella of a larger organization with bigger budgets. However, these organizations generally will only take you on if you are serving their populations as well. Organizations we’ve used in the past include the PTA/PTC at the affiliated schools (where students from the competing teams are located) and the FLL partner organization that serves our region. In recent years, rules seem to have tightened up. Our PTC lost its 501 (c)(3) status a few years ago, and and after years of receiving funds for us, was unable to do so, which is why we switched. It appears there are some hoops the organization needed to jump through and was unable to do so.
Rules will vary from state-to-state and year to year. I would check out the rules in your state (I’m in CA) to see if they differ and if you would qualify.
“Rules” for non-profit status can vary from state to state. Upper Perk Robotics is a full 501(c)(3) and PA non-profit. We serve FLL and VRC teams under our logos (this year three of each) ans well as support other JrFLL and STEM activity in our area,
I’ve been meaning to get “how to” info up on our website and have been too busy, but if you want more info shoot me an email @ kres[at]uprobotics.org
Thank you for the suggestions. I especially appreciate learning the difference between nonprofit and tax exempt. I didn’t know there was a difference.
I followed up with our local 4-H agent, and found out more details. The IRS removed the tax exempt status for the national 4-H organization. At least in our county, the local clubs were using the national EIN number to open bank accounts and receive donations. Apparently some state 4-H organizations are going through the necessary IRS process to obtain tax exempt status, but our state 4-H organization has decided not to do that. So the local clubs now have to have accounts with the local university extension foundation and request reimbursements.
So we will not be able to open a bank account or accept donations directly, they will have to go to Virginia Tech Foundation and then we will request reimbursements for expenses. Even though we will have to wait for our expenses to be reimbursed, I’m kind of relieved we won’t have to deal with bank accounts.
So our problem is solved after all. Thanks for all the replies.