Becoming Non Profit?

[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.