Comments on: The Other Nonprofits – 501(c)(4), 501(c)(6) & 501(c)(7) http://www.501c3.org/blog/the-other-nonprofits/ Wed, 25 Aug 2010 20:25:42 +0000 hourly 1 http://wordpress.org/?v=3.0.1 By: Greg McRay, EA http://www.501c3.org/blog/the-other-nonprofits/comment-page-1/#comment-1299 Greg McRay, EA Mon, 23 Aug 2010 03:14:15 +0000 http://www.501c3.org/blog/?p=761#comment-1299 Great question. With a 501c7, you do not have tax deductibility of contributions like you do with a 501c3, so the rules are usually more flexible. That being said, private inurement rules still apply. Your example of the wrapping paper sale is NOT acceptable in the eyes of the IRS. You're right...it happens all the time, but improperly. Great question. With a 501c7, you do not have tax deductibility of contributions like you do with a 501c3, so the rules are usually more flexible. That being said, private inurement rules still apply. Your example of the wrapping paper sale is NOT acceptable in the eyes of the IRS. You’re right…it happens all the time, but improperly.

]]> By: curious http://www.501c3.org/blog/the-other-nonprofits/comment-page-1/#comment-1221 curious Thu, 19 Aug 2010 20:42:36 +0000 http://www.501c3.org/blog/?p=761#comment-1221 Are 501(c)7 organizations subject to the same private benefit test as 501(c)3 organizations. For instance, could a 501(c)7 organization members sell holiday wrapping paper to offset each individuals cost of travel to tournaments? I understand that this practice, although common, is illegal. Are 501(c)7 organizations subject to the same private benefit test as 501(c)3 organizations. For instance, could a 501(c)7 organization members sell holiday wrapping paper to offset each individuals cost of travel to tournaments? I understand that this practice, although common, is illegal.

]]> By: Greg McRay, EA http://www.501c3.org/blog/the-other-nonprofits/comment-page-1/#comment-1178 Greg McRay, EA Thu, 29 Jul 2010 04:14:36 +0000 http://www.501c3.org/blog/?p=761#comment-1178 Sounds like a 501(c)(6) would indeed be the way to go. You are correct that dues, while not deductible as a charitable donation, can be considered a deductible business expense. Voluntary donations above the cost of dues may not be deductible, however, due to the lack of attributable expense category. You <em>might</em> be able to consider it a lobbying expense if it were designated toward such efforts. Sort of a gray area... Sounds like a 501(c)(6) would indeed be the way to go. You are correct that dues, while not deductible as a charitable donation, can be considered a deductible business expense. Voluntary donations above the cost of dues may not be deductible, however, due to the lack of attributable expense category. You might be able to consider it a lobbying expense if it were designated toward such efforts. Sort of a gray area…

]]> By: JM http://www.501c3.org/blog/the-other-nonprofits/comment-page-1/#comment-1174 JM Tue, 27 Jul 2010 16:09:09 +0000 http://www.501c3.org/blog/?p=761#comment-1174 Greg - great post and lot of good info in your comments I am thinking of starting a business league to improve business conditions in my state for a particular industry. It would conduct mostly advocacy, but would also lobby during the state's regular session(s); however, it would not give directly to candidates for office. From what I've been reading here and elsewhere, it seems to be best suited as a (c)6. Agree? Subsequently, would business donors possibly be able to deduct as a business expense their dues, or a portion thereof, on their tax returns if the "league" does get (c)6 status? Same question for sponsors/donors who give over any dues amount. Greg – great post and lot of good info in your comments

I am thinking of starting a business league to improve business conditions in my state for a particular industry. It would conduct mostly advocacy, but would also lobby during the state’s regular session(s); however, it would not give directly to candidates for office. From what I’ve been reading here and elsewhere, it seems to be best suited as a (c)6. Agree?

Subsequently, would business donors possibly be able to deduct as a business expense their dues, or a portion thereof, on their tax returns if the “league” does get (c)6 status? Same question for sponsors/donors who give over any dues amount.

]]> By: Greg McRay, EA http://www.501c3.org/blog/the-other-nonprofits/comment-page-1/#comment-1140 Greg McRay, EA Wed, 14 Jul 2010 19:43:56 +0000 http://www.501c3.org/blog/?p=761#comment-1140 Erin...Your organization most likely would qualify as a 501(c)(7) given its recreational nature. "Adult" is the key here. Children's sports programs can usually qualify as 501(c)(3)s due to it being considered educational. Having said that, your organization can operate as a defacto 501(c)(7) without having to apply to the IRS if it has less than $5k in revenue per year. You basically fly under the radar and get left alone by Uncle Sam. The problem with that lies with the businesses, though. Most will want to see official IRS recognition of your tax-exempt status. For many of them, just saying we are will not be enough. Erin…Your organization most likely would qualify as a 501(c)(7) given its recreational nature. “Adult” is the key here. Children’s sports programs can usually qualify as 501(c)(3)s due to it being considered educational. Having said that, your organization can operate as a defacto 501(c)(7) without having to apply to the IRS if it has less than $5k in revenue per year. You basically fly under the radar and get left alone by Uncle Sam. The problem with that lies with the businesses, though. Most will want to see official IRS recognition of your tax-exempt status. For many of them, just saying we are will not be enough.

]]> By: Erin http://www.501c3.org/blog/the-other-nonprofits/comment-page-1/#comment-1127 Erin Tue, 13 Jul 2010 20:05:18 +0000 http://www.501c3.org/blog/?p=761#comment-1127 I am trying to help an amature adult baseball team get off the ground. We find that alot of local businesses require that organizations have a non-profit id to participate in their programs. I don't belive we can file as a 501(c) (3) since we are not a youth team, but can we file as a 501(c)(7) org? I have also read that if your organization budget is under $5,000 you may not have to register, but can still be function as a 501(c)(7) how does that work? Any information would greatly help! Thanks! I am trying to help an amature adult baseball team get off the ground. We find that alot of local businesses require that organizations have a non-profit id to participate in their programs. I don’t belive we can file as a 501(c) (3) since we are not a youth team, but can we file as a 501(c)(7) org? I have also read that if your organization budget is under $5,000 you may not have to register, but can still be function as a 501(c)(7) how does that work?

Any information would greatly help!

Thanks!

]]> By: Greg McRay, EA http://www.501c3.org/blog/the-other-nonprofits/comment-page-1/#comment-1120 Greg McRay, EA Mon, 12 Jul 2010 16:23:27 +0000 http://www.501c3.org/blog/?p=761#comment-1120 501(c)(6) organizations can apply for grants if the grant maker allows for that in its criteria. Having said that, most grants are intended for charitable organizations. As to your farmer's market question, most do not qualify for 501(c)(3). You are more likely to find them organized as 501(c)(5) or 501(c)(6). 501(c)(6) organizations can apply for grants if the grant maker allows for that in its criteria. Having said that, most grants are intended for charitable organizations.

As to your farmer’s market question, most do not qualify for 501(c)(3). You are more likely to find them organized as 501(c)(5) or 501(c)(6).

]]> By: Jen http://www.501c3.org/blog/the-other-nonprofits/comment-page-1/#comment-1099 Jen Thu, 08 Jul 2010 16:54:56 +0000 http://www.501c3.org/blog/?p=761#comment-1099 Can you use a 501(c)(6) status to apply for grants, or do you need to have a 501(c)(3)? Which status would you recommend as best suited for a farmers' market? Thank you! Can you use a 501(c)(6) status to apply for grants, or do you need to have a 501(c)(3)? Which status would you recommend as best suited for a farmers’ market? Thank you!

]]> By: Greg McRay, EA http://www.501c3.org/blog/the-other-nonprofits/comment-page-1/#comment-995 Greg McRay, EA Fri, 18 Jun 2010 20:04:03 +0000 http://www.501c3.org/blog/?p=761#comment-995 You absolutely CAN pay a coach as a 501(c)(3). Not a problem. A c7 is a recreational organization and some sports groups file under this...especially adult groups. Kids' sports are usually filed under c3, however, because it is considered educational to promote athletics to children. And, you are correct. Donations to c7 groups are not tax deductible. You absolutely CAN pay a coach as a 501(c)(3). Not a problem. A c7 is a recreational organization and some sports groups file under this…especially adult groups. Kids’ sports are usually filed under c3, however, because it is considered educational to promote athletics to children. And, you are correct. Donations to c7 groups are not tax deductible.

]]> By: Karissa Sullivan http://www.501c3.org/blog/the-other-nonprofits/comment-page-1/#comment-994 Karissa Sullivan Fri, 18 Jun 2010 19:10:42 +0000 http://www.501c3.org/blog/?p=761#comment-994 I am also a baseball mom and we are putting together some summer ball leagues. We are fixing to file for our 501c3 as an educational organization. Currently we only have funds from parents as registration fees. We plan to do some fundraising and also taking donations. My question is that we might in the future pay experienced coaches to coach the players. If we do this do we need to file for a 501c7? What are the differences between the two? I read somewhere that are donations would not be a tax write off for our donars if we are a 501c7. Can we be a 501c3 and pay a coach? Thanks, Karissa Sullivan I am also a baseball mom and we are putting together some summer ball leagues. We are fixing to file for our 501c3 as an educational organization. Currently we only have funds from parents as registration fees. We plan to do some fundraising and also taking donations. My question is that we might in the future pay experienced coaches to coach the players. If we do this do we need to file for a 501c7? What are the differences between the two? I read somewhere that are donations would not be a tax write off for our donars if we are a 501c7. Can we be a 501c3 and pay a coach?

Thanks,
Karissa Sullivan

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