Becoming Non Profit?

[bhsrobotics1671]

All of our funding has to go through the school but we make sure we take the time before the season starts to set up purchase orders. We setup open POs for the popular places we shop like AndyMark and McMaster along with a few others, then have open POs for our two coaches. If we need something from a different vendor, our coaches will put out the money and turn in receipts to the office as an "as needed" basis to get reimbursed. Open POs are great because the bill just gets sent to the school's office and they mail a check back to the vendor with no delays in shipping. McMaster also gives a 2% discount if you pay within 10 days of your PO

[dcarr]

Originally Posted by bhsrobotics1671

All of our funding has to go through the school but we make sure we take the time before the season starts to set up purchase orders. We setup open POs for the popular places we shop like AndyMark and McMaster along with a few others, then have open POs for our two coaches. If we need something from a different vendor, our coaches will put out the money and turn in receipts to the office as an "as needed" basis to get reimbursed. Open POs are great because the bill just gets sent to the school's office and they mail a check back to the vendor with no delays in shipping. McMaster also gives a 2% discount if you pay within 10 days of your PO

This is very interesting. I'm going to see if we can get something similar going with our business office, it would make things much easier if every purchase didn't have to be fronted by a parent or mentor first.

[dtengineering]

Five or six years ago our team started taking the steps to incorporate. It wasn't so much to protect the team, as it was that we wanted to eventually host an FRC tournament here in BC and knew that would require an organization much larger than one team could support.

Although I think "those rookies" in Calgary might just prove me wrong about that.

Although we haven't got an FRC regional yet, when the team folded the non-profit carried on and now organizes VEX competitions, workshops and road trips.

There are advantages to reaching outside the school, and having a vision beyond one team. Incorporation has helped us with that.

Jason

[mathking]

We operate with a school account and a booster group which is a 501(c)3 organization. For the school account we use open POs with McMaster and AndyMark. Both get stuff to us in a very timely manner. (Generally if we order it in the morning with will be there the next day.) We have some grant money and donations that go into the school account, most notably an AEP grant. The boosters do a lot of fundraising (they also support 20-30 FLL teams and this year an FTC team) and handle most of our bigger purchases, such as registration and travel payments. If we need something quickly from a vendor that is not already on the school list we tend to have the boosters pay for it. Having two distinct pools of money adds some complexity but it also gives us flexibility.

[amesmich]

Thanks for the feedback we have some things to think about. I appreciate the neighborly support ehfeinberg.

[Alex.q]

Our team faced the same issue of actually using our money from the school account. It wasn't that our administration wasn't supportive, there is just a lot of bureaucracy and funding rules for the school that we have to go through. I think it was about three years ago that we began to look for a better solution.

We were orginally going to try to make our team itself a 501c3, but this process takes a ton of work and legal stuff, so instead we did the following. Our parents booster club joined Parent Booster USA, an organization that grants booster clubs 501c3 status. I believe there is a fee ~$100 to 400 dollars a year for this, but they handle a lot of the legal and tax documents. The booster club set up a bank account separate from the school, and that is where we keep the majority of our funds. I don't think the school really gives us any money, so I'm not sure if we still have an account with them.

[dtengineering]

The Parent Booster association sounds like a great idea. I suspect they also carry liability insurance... running as a school team we were covered by the school's insurance, but running a seperate non-profit exposed the directors to certain liabilities. We now carry one million in insurance and are looking at increasing that to two million.

I don't think anyone plans to sue a non-profit, but it is really hard to get insurance after something goes wrong....

Jason

[AshWalker]

We started our own 501 this summer after a horrendous last season with the school dealing with finances. Money would be donated to the school and put into one large account for a lot of programs. It was up to us to keep track of it. This backfired in many ways. FIRST uses up money faster and in larger quantities than most other programs. It took us (the mentors) 6 months+ to get money back from the school from build season. I had nearly a month's rent tied up in that. I also think they gave the last of our money away to another program. That was our rookie year. Live and learn.

Our own 501 was relatively easy to get. A parent who had done a 501 filing before filled out the papers and a few weeks later we were rolling. We now have everything under our name and it is much easier. Should we need to make a purchase I have a debit card with the team's legal name on it or I write a check. We also know exactly how much is in our account at any moment. (And I've not given a debit card to the mentor who over spends!)

The best benefit in my view is that I can hand the finances over to the student leadership and allow them to see it and really run the team as a business. They get to see the money in the account and make choices about how to spend it. Previously it was all very fuzzy since the school put it into one account. It was "our money" in as much it was our donation to a larger fund we were allowed to draw out of.

Your mileage may vary on this, but I have really enjoyed our own 501. Schools are in the business of running schools. This allows us to be in the business of FIRST.

[dcarr]

Originally Posted by AshWalker

The best benefit in my view is that I can hand the finances over to the student leadership and allow them to see it and really run the team as a business. They get to see the money in the account and make choices about how to spend it.

This is very much something I have in mind for our team. We do have an individual account at the school, but transactions can still be slow and cumbersome as they run through the business office and we have to track everything with them.

Essentially what we will probably end up doing is keeping our own records and ensuring they match up with the schools, still "tracking our own money" but it won't be literally in our hands. For political reasons I don't believe obtaining independent non-profit status will be the best for us, and I'm hoping it's not truly necessary. It's clearly a great option for a lot of teams and I'm glad it was a relatively smooth process for you.

[Jimmy Nichols]

Our team utilizes not only the student account, but we also have our own non-profit. This gives us the best of both worlds. We use the Student account to receive student travel fees and pay for hotels and transportation for the Regionals. We also have some sponsors who prefer to donate their money to the school. We utilize their PO system to perform most purchases.

We also formed a non-profit and paired with our local Community Foundation as our 501(c)3. We have a Non-Endowed Fund set-up with them that can receive donations. We can make purchases and being reimbursed is much easier than with the school. We have some sponsors who prefer this method of donating. The Foundation handles the receiving of the donations, as well as other administrative duties (tax's, etc.). They charge us 2% annually with a minimum of $100 a year. Very little compared to how much work they do for us.

I hope the information I sent Paul is helping, let me know if you all have any other questions.

[wilsonmw04]

This is a tricky situation. I would discuss your concerns with your administration BEFORE becoming a nonprofit. As a nonprofit of a school activity you are tied to that school. If you do it without consultation it might cause issues for you. (trust me one this one...)

The easiest way to deal with your money issue has already been suggested. There are three options:
1. stay as you are and use open PO's for your suppliers. Create these now so you have them in January.
2. Create a booster club. This is typically easier than an independent entity. This allows you to use your school tax ID number. Depending on the state you are in you may have to register with the state as a corporation. You will need to register with the IRS.
3. true nonprofit. personally, the only advantage to this would be if you wanted to separate yourself from the school system entirely. There maybe some advantages, but I am unaware of them.