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Non-profit status and metals guilds?


#1

Hi everyone,

The North Carolina Society of Goldsmiths has been in various stages
of research and application for a change in tax exempt status from
it’s current 501c6 status to a 501c3. Many of the board members have
no real opinion on this change and it seems there are a lot of
misconceptions about the benefits of one non-profit status vs the
other.

Our (Larry Seiger and I are co-presidents) current feeling is that
as an organization that primarily serves the members, not the public,
we don’t qualify for 501c3 status. We’re also afraid that changing
our status will restrict future activities. The upside is that as a
501c3 we can apply for and accept grants, which a c6 is not allowed
to do. The board members who are actively pushing the process along
believe that we will receive more financial support if that support
is tax deductible by our non-business members. We’re wondering if
this is near sighted.

If anyone here has any or expertise in this area, please
let us know. The guild has already paid an attorney to make the
change, and it will take even more money to push the process along.
Would it be better to bring in an accountant with expertise on
non-profit issues or an attorney? The current attorney we are using
seems more interested in simply pushing the change through, not in
advising the guild about benefits and pitfalls.

Thanks!

Beth Wicker
Three Cats and a Dog Design Studio
http://www.bethwicker.com


#2

Beth,

Perhaps you should check first with the IRS and ask to see the
paperwork for the application. Becoming a 501c3 is a major effort
and you will need to have the board members understand and support
this change. You have to keep records of your members volunteer time.
You cannot be involved in any lobbying. There are financial reports
that must be filed for 501c3. There are monetary thresholds of which
you must be aware. Is there a No. Carolina association of non profit
organizations with whom you can speak?

My husband is president of the Lake Anasagunticook Association of
Maine and it took over a year to gain 501c3 status. You might want
to google 501c3. or,

http://www.irs.gov/charities/article/0,,id-210,00.html

Publication 4220, Applying for 501©(3) Tax-Exempt Status, is
designed to help prospective charities apply for tax exemption under
the tax law. Also, google comparison of 501c3, 501c4 and 501c6

Good luck,
Mary


#3

I belong to an art guild that has very few members. We haven’t been
around but for about 4 years now. The president and I applied for
and got the 501©(3) status ourselves. We went to a class in Atlanta
that was for artists and guilds applying for non-profits and they
basically told us what to put in most of the blanks in the form. I’m
not sure if it is still the same, but at the time we applied there
were two application fees you could apply under and we only had to
pay the $350. It really wasn’t hard, it was just a matter of getting
it all organized and getting my counterpart to stop
procrastinating…

We have had some grants and some donations. People like it that they
can make tax-deductible donations. The grants we have had required a
501©(3) or for you to be sponsored by some group with one.

If you take in less than $25,000.00 a year, the IRS has what is
known as the e-card that you file every year. It on ONLY online. It
asks you for your EIN and if you are still in business and if you
made less than $25,000.00. That is all I can remember it asking you.
There are no other tax forms to file unless you make more than that,
or you take in some really large donations (in the thousands). When
you get your determination letter, they send you a pamphlet (I
attached it but I don’t know if the list owner will let it stay
attached). You can also go to the IRS website and it will give you
more info. You have 5 months after the end of your reporting year to
file that… The determination letter has your end of year on it, but
for some reason my groups was changed without notice. You have to be
behind by 3 years before your lose your 501©(3) designation.

Since Georgia doesn’t have a similar e-card, they require us to
photocopy that we filed with the IRS and send it to them. That is
all.

You can have a 501©(3) and get a sales/use tax certificate from
your state to sell products and not have to pay taxes when you
purchase them. That is something different than the 501©(3). We
haven’t bothered with that as we haven’t, as a group, had a product
to sell. I have worked with other groups that do. They would get
promotional items for events to resell.

There is another group I am in that ran into a problem with selling
their member’s items in their “museum” as a 501©(3), but they did
not stipulate anything like that in getting their designation. They
specifically put down a history museum and I think passively
mentioned an art center. They now have pretty much designated the
building as 1 area history museum, the rest as art center. The
commission % the artist pays if they sell anything is a “donation”.

You can hire an accountant, but unless you do over $25,000.00 it is
a waste of money. I’d have skipped the attorney also. We originally
talked to the one that taught our class and he wanted $800 to file
ours. He did that for a living and basically had everything already
filled out, he would have just needed our Articles of Incorporation,
By Laws, the amendment to the Articles of Incorporation for the “IRS
Limiting Language”, our Projected Budget (3 years, make something up
based on your last year), and your narrative (which has all the
"explain" stuff in it).

Most of that is the stuff of filing for it, and doesn’t do much to
answer your questions. I don’t know much of the section 6 you are
under. I know it isn’t hard being under the 501©(3). You can have
pretty much no money in your budget or even few members. It does have
advantages as far as grants, donations and other perks, like software
and web hosting… (techsoup.com is a site that companies go through
to allow non-profits get software at low or no cost; I got the full
Adobe CS4 for like $60-something to help with the website)
(grassroots.org does the webhosting for free for my group’s site, I
just put a tiny button-link on the front page with their name, no
other advertisements).

I hope this helps some.
Val (http://www.yonahartguild.com)


#4

It very well could be near-sighted. Tax deducatable donations and
potential grants sometimes seem like more powerful incentives than
they really turn out to be. Neither are a sure thing and neither are
really free money since both require a lot of effort to secure.

The few art organisations I have been involved with have found these
issues very tedious and in my own opinion counter-productive.
Volunteer organisations with reponsibilities frequently shifting to
new officers along side of constantly changing government
requirements for filing, fees and allowable activity can make for a
real mess. You may have someone who has it all figured out now, but
five or ten years down the road new officers don’t understand what is
OK and how and why things work.

My advice is to keep it as simple as possible. Focus on the mission
with your minds open to how that mission might change. A clever
change of tax status might seem like a good idea for what you are
doing now or want to do next year, but don’t trade away your future
options or lay bureacratic burdens on future officers that could make
it really difficult to find someone willing to volunteer.

Stephen Walker


#5
Perhaps you should check first with the IRS and ask to see the
paperwork for the application. Becoming a 501c3 is a major effort
and you will need to have the board members understand and support
this change. 

Eh. It’s not so hard. The application is called the 1023. Two friends
and I started an NFP. We wrote the 1023 ourselves, showed it to a
lawyer at the University legal clinic. He said it was the best one
he’d ever seen written without legal help, gave us one suggestion. We
made it, got our NFP status in less than 6 months.

The NOLO books on the subject are great.

Elaine
http://www.CreativeTextureTools.com


#6

Beth,

Your organization, The North Carolina Society of Goldsmiths,
primarily serves members. BUT, the big question is rather is it
closed to non members? Seems like a 5013c would be the better of the
options since you can apply for grants. You must be
non-discriminatory in your approach to the public. Can they attend
your meetings; maybe on a one time basis before joining? Are the
meetings really open to the public? Can only your members attend a
meeting? What about potential members? Can they attend a meeting? Is
there a charge for your meetings? If so, does the public and anyone
looking to join have to pay the same amount? These are all
questions, plus more, that will “test” if your organization will
qualify for a 501c3. Maybe you should rewrite the mission statement
of the organization to reflect current thinking and to make it open
to people who are interested in the metal arts. This could be a great
way to “solve” the problem of having a 501c3 be self directed while
at the same time invite the public who has interest in the metal
arts. You may find that there are more people out there who are
interested and may become members, or at least attend a special
class or event. The attorney you have hired to do the paper work will
be much more informed to “translate” the requirements of a 501c3 as
it applies to the public. Make sure you ask him or her these types of
questions as you proceed.

You asked: “Would it be better to bring in an accountant with
expertise on non-profit issues or an attorney? The current attorney we
are using seems more interested in simply pushing the change through,
not in advising the guild about benefits and pitfalls.”

Accountants have a great knowledge of the requirements of the
government in the filing of forms and various taxes, should you be
liable for taxes, or just in need of a registration with an annual
payment (think state requirements also). They help to keep your
organization healthy and in compliance with all the rules and regs
that go along with running a 501c3. The accountant is more familiar
with all the reporting issues of a 501c3. I would suggest that you
interview one or two CPA’s, get a feel for their knowledge, and hire
the person you feel more comfortable with to handle your reporting
requirements. You can still have an in-organization treasurer for the
everyday workings of your treasury and in the long run, that person
saves the club money since the accountant does not start from zero
each year, but has supporting and bank statements that
have been reconciled. You can also get a feeling for where your money
is coming in and where it is being spent, a very important factor
when running any organization.

Beth Katz
http://www.myuniquesolutions,com
paste and powder solder for jewelers


#7

It kind of sounds like someone thinks you can’t charge membership
for a non-profit organization. You can. We are required to only have
one actual meeting a year, but our group usually meets monthly (this
month was snowed/iced in). You have to have a President, Vice
President and Treasurer. The secretary and treasurer can be the same
person. In Georgia you file for Corporation Status with the Secretary
of State and you have to keep that paid yearly. You also keep the
Articles of Incorporation there; when you want to file for 501©(3)
you need to add “IRS Limiting Language” to the Articles of
Incorporation which state that you won’t discriminate against anyone
and that if you dissolve your group all the funds you have in your
bank account will be dispersed to another 501©(3). Somewhere in the
bylaws it also has to state stuff like no board member will be able
to vote for or effect a vote for something that will directly impact
his business.

You have to call the IRS and get an EIN. You will need that to get a
bank account also.

Every year you have to update your officers with the Secretary of
State when you renew your corporation status.

You make a 3 year projected budget for the Form23 and a narrative
also. The narrative basically summarizes all the questions you
answered in it if you get down to it.

And I’ve already explained the e-postcard for filing the taxes with
the IRS. If you take in less than $25,000. a year you only
electronically file the e-postcard. You will need your EIN to access
the page. You will make a password. Remember it for next year. You
let them know you are still in business, you check the box that says
your gross receipts were less than $25,000. If they weren’t then you
have more other forms to file…

You will have to check with your state to see what they require as
far as an equivalent form. Georgia doesn’t have one, so we have to
send them a copy of where we filed this.

A 501©(3) can not engage in political lobbying or talking about
how badly you think one politician is over another. That is in the
booklet they send you. It can jeopardize you status.

You need to take minutes at your meetings. You need to keep a
treasury of your funds. All this, your filing info, your tax info,
your ByLaws, Articles of Incorporation, everything, becomes public
domain. If anyone requests to see or make photo copies of it, they
can. You can charge photocopying fees, just be sure to add something
like that into your bylaws to CYA.

Here is a link to the IRS e-postcard page. It goes through
questions/answers before you actually do anything, so you can learn
more there. http://www.irs.gov/charities/article/0,,id=169250,00.html

Here is a link of “life cycle of a non profit”. It goes from
applying to forms to file, to compliance, to if you terminate it.

http://www.irs.gov/charities/charitable/article/0,,id=122670,00.html

This is another IRS site to help non profits called Stay Exempt with
resources. http://www.stayexempt.irs.gov/

As for grants. Depending on how hard the grantor makes the
application process and the follow-up paperwork, it can be a pain in
the butt, or not. You have to apply for them, give budgets,
narratives, fill out info about the board, etc, much like you do for
the 501©(3) ap. The state had this one we were doing (before budge
cuts) that was originally paper written in I think 5 copies, but the
last time it was emailed with mostly check boxes and a narrative. You
never know until you start to mess with it.

I hope this helps some. If you make less than $25000. I’d forgo the
accountant. If you have a sense for paperwork, you can file this
without the lawyer. If you just absolutely detest paperwork and are a
procrastinator, use the lawyer to get it started up.

Val


#8

We’re forming a Jeweler’s and Enameler’s Guild in Fayetteville, NC,
USA. There about about 20 folks who have expressed interest.

Sign up if you’re interested, too! We’re open to whomever wants to
join.

Our temporary web home is www.PurePortals.com\FayJewelers
http://www.PurePortals.com/FayJewelers

We just help each other learn. I just finished our first Guild
activity, a lost wax casting workshop. We finished casting at
midnight.

To simplify things, we have no dues and we just charge expenses for
whatever classes we offer in our homes. Since there is no money and
no assets, there’s no need to worry about taxes.

I’m putting together a set of grant applications to get some tools
to help us teach more folks. If we get them, we might have to
incorporate, but I’m hoping to avoid all of that for as long as we
can.

We’ll see!


#9
To simplify things, we have no dues and we just charge expenses
for whatever classes we offer in our homes. Since there is no money
and no assets, there's no need to worry about taxes. 

This is limiting. Some people will not join if events are not held
in a public place. It’s a little weird. Also, the homeowners are
opening themselves up to liability.

You can have an official NFP with no money and no assets.

In my experience, groups that do this start small, stay small and
later die off.

I'm putting together a set of grant applications to get some tools
to help us teach more folks. If we get them, we might have to
incorporate, but I'm hoping to avoid all of that for as long as we
can. 

You can’t get any grants unless you’re an NFP. It’s not hard, it’s
not scary. If three moms in Chicago can do it, certainly anyone can.

Elaine
http://www.CreativeTextureTools.com


#10

To get a bank account in the group’s name you will need an EIN
through the IRS. That is the form SS-4. I am not sure if you’ll need
to incorporate on not to apply, though. The form asks you if you are
an LLC or a corp and it also asks what type of entity. In Box 10 it
asks why you are filing. You would either put start new business or
opening bank account. You can get the form at

You can actually do it over the telephone with the IRS.

To get grants you will have to be a 501©(3) or “piggy back” on
another group’s 501©(3)'s status (with their permission). But to
do that you will have to be in business as a not for profit type
business. To become a 501©(3) you will have to incorporate, get a
EIN, a bank account, probably a PO Box since you don’t have a
permanent location, elect a board, come up with by-laws and articles
of incorporation with IRS limiting language, etc, and get some money
to pay the filing fee. My mind is all clogged up with ick right now
so I can’t think of anything else. I’m sick and want to go back to
bed.

If you do apply for 501©(3), put the date the group actually began
on the form, not just when you are applying. The IRS can go back and
date your status from then. Some grants require you to have your
non-profit status for a certain amount of time first. This can help.
Unless your group was bringing in a ton of unpaid taxes a year, this
won’t hurt you. The IRS doesn’t care about your group’s taxes until
your receipts are over $25,000. Anything under that and you just
file the e-postcard. You’ll have to check with the state to see what
form they have that is the equivalent.

Val