Seeking 501(c)(3) Recognition

1
Seeking 501(c)(3) Recognition

• Lessons Learned
• AABE Seattle-Portland Chapter
• June 6, 2003

2
Background

• Sought for fundraising and tax purposes
• Submitted application in March 2001
• Received 501(c)(3) recognition from IRS in May
  2003

3
Background

• Expected a long process, but not two full years.
• Completed application ourselves
• Spent most of our time responding to IRS requests
  for information
• Benefits far outweigh the headache of the process

4
Background

• The benefits of 501(c)(3) recognition
• Tax deductible donations
• Tax exempt status
• Funding from corporations and governmental
  entities who donate only to 501(c)(3)
  organizations.

5
Background

• If youre well established and have money to hire
  someone to complete the application, DO IT!
• If youre like us, little money and/or new
  chapter, heres what you need to do . . . .

6
Application Prep-work

• Before you begin, have ready
• Descriptions of your chapter activities
• Budgets for the current tax year and the three
  subsequent tax years
• Scholarship award guidelines
• List of all funding sources

7
Application Prep-work

• The national organizations 501(c)(3) recognition
  letter
• Chapter bylaws signed by the president and
  secretary
• Current state incorporation
• Tax or employer ID number

8
Prep-work Activities

• You will need descriptions of your non-profit
  activities
• type of activity
• purpose
• frequency
• how, when, where, and by whom
• participation
• fees/charges
• percentage of chapter time spent on that activity

9
Example

• Activity AABE Seattle Fun Run/Walk
• Purpose to raise funds for scholarships and
  activities, and to raise awareness of the AABE.
• Frequency annually
• How, When, Where, By Whom the Scholarship
  Committee will organize this annual event to
  alternate between Portland and Seattle.
  Necessary local permits for the route will be
  obtained. The event will be advertised through
  the membership, at their places of employment,
  community newspapers, and local sports related
  business, and other AABE events. Scholarship
  Committee will solicit the assistance of
  volunteers for the day of the event. Committee
  also will solicit sponsor to help defray the cost
  of the event so that a greater percentage of the
  money raised goes to fund scholarships and other
  activities.
• Participation open to the public participants
  must register
• Fees/charges a registration fee
• Time 25

10
Prep-work Scholarships

• You will have to submit scholarship award
  guidelines if your chapter awards or intends to
  award scholarships.
• We are willing to share our guidelines and
  application with you just ask.

11
Prep-work Bylaws

• Your bylaws document (and state incorporation
  document) needs to include language requested by
  the IRS (the IRS calls it sample language, but
  they really want that exact language).
• We are willing to share that with you just ask.

12
Prep-work Tax ID

• Obtaining the employer ID number is the easiest
  part of the process.
• You can obtain a tax ID number by mailing or
  faxing Form SS-4 or by calling 800-829-4933.

13
Prep-work Forms

• Youll need the following IRS forms for a
  complete application
• Form 1023 Application
• Form 872-C Consent Fixing Period of Limitation
• Form 8718 User Fee
• You may download the forms at www.irs.gov. There
  is no online application.

14
The Application

• Form 1023
• Part I Applicant
• Part II Activities and Operational Information
• Part III Technical Requirements
• Part IV Financial Data
• Schedule H - Scholarships

15
The Application

• The space on the page should not limit your
  response. For example, you should attach
  additional pages to describe your activities.
• Attach to your application all of the prep-work
  documents mentioned in the earlier slides.
• Submit the completed application and other forms
  with the fee to the address shown on Form 8718.

16
The Application

• About the fee
• The fee will vary depending on the size of your
  annual gross receipts.
• When we filed, the fee was 150 for under 10,000
  and 500 for over 10,000.

17
What Happens Next

• After submitting the application, expect
  correspondence from the IRS.
• Contact the IRS if you havent heard anything
  within 30 days.
• Be patient! For a smooth process, keep in mind
  the following important considerations.

18
Important Considerations

• Again, if you can pay someone, do it!
• But, if youre a new chapter, it may not be cost
  effective to hire someone since you will need to
  spend a significant amount of your time with that
  person defining your activities and goals.

19
Important Consideration

• Dedicate about two members to the process.
• Develop a good relationship with your IRS
  reviewer.
• Check your mailbox regularly.
• Be mindful of slow mail from the IRS your
  response time may be cut in half.
• Stick to response deadlines and call the IRS
  immediately if there will be a problem meeting a
  deadline.
• Stay on top of the IRS review.

20
Important Considerations

• Keep a log of any telephone conversations with
  the IRS.
• Keep a complete file of all correspondence to and
  from the IRS.
• Follow IRS directions exactly.
• All correspondence to the IRS has to be in
  writing to be officially recognized.

21
Important Considerations

• Do not expect the ability to e-mail or fax
  responses to the IRS, but dont hesitate to ask
  whether you can.
• Remember any annual tax duties that my be
  necessary - Form 990 or an audit of your
  financial records.
• If you are a large chapter, you may consider
  professional tax advice.
• Ask for help! Call us and others for tips on how
  to get your 501(c)(3) recognition!

22
Contact Information

• Sonya Baskerville
• slbaskerville_at_bpa.gov
• 503-230-5904
• Kirsten Watts
• rkwatts_at_bpa.gov
• 206-220-6762
• An electronic version of this presentation is
  available upon request and at www.aabe-sea-por.org