5013c Help

[Dr.Gusta]

Our team (5107) mostly payed for our robot outside of the registration costs came out of pocket for our rookie year (last year). This year we are much more involved in fundrasing thus establishing our relationship with our nonprofit much more. The way they have it set up currently is they accept any and all money for us then put it out ASB account. We had no issue with that until we went to get the money they put in there. Our ASB has set up a system where you have to propose to them what you want to purchase then once the ASB has approved that, one or more week later, you have to give them a receipt of purchase so they can reimburse you if you buy it out of pocket or an invoice so ASB can order the part for us. We were very frustrated because we can not afford to buy it out of pocket. When we asked why we can not get out money out of ASB then put it in a team controlled checking account so we have direct access to it, I was told it was illegal. What are your thoughts on that? Is it illegal? What is your teams relationship with your nonprofits?

[Foster]

Wha does ASB mean?

[Joe G.]

School financial systems can be difficult to work with for FRC, as they aren't used to the lightning speed at which purchases must be made after the team has decided what to buy. It's a large part of what lead 1687 to fold this year. It's well intended -- as a public agency they must protect themselves from misuse of funds, but it can be frustrating. I highly suggest trying to find a nonprofit partner to work with for financial management. My rookie team is set up with 4-H, and we've been very happy with the system they have. It's very much "make purchases now, and give us an audit to verify compliance later," rather than the other way around.

Short of that, become best friends with the people who are in charge of financial management at your school. Make sure they understand the constraints you operate under. Rather than forming an "us vs them" relationship where you're bugging them constantly to get work done, get them as excited about your program as you are, so they provide the support it needs.

[Steven Smith]

I am by no means an expert or a tax lawyer, but here is what I believe to be true.

What your 501c3 is telling you is correct. For them to give you unlimited access to the funds and dispersing them, without them having any oversight, is to act as a "fiscal agent".

It is not necessarily illegal, but essentially, you are "using" their tax free status for your own purposes, and they are legally responsible to make sure the funds are dispersed properly (for a charitable purpose).

If you had 100% control of the checking account, what keeps you from being able to receive a grant from FIRST to a legal 501c3, then turn around and write a check to yourself and keep the money? Your best bet is to either work within their system as best you can to have them order on your behalf, or float the charge on a credit card waiting on the reimbursement. To have more unlimited control over your funds, you basically need to either start your own 501c3, or be high enough up on an existing one to have purchasing power.

Just my 2c.

[Coach Norm]

We have our own 512(c)3 organization for our robotics program. If you are interested in information ours or the process we went through, send me a PM.

We chose to get our own for a few reasons:
1. Handle finances easier
2. We can qualify for more grants since we have our own non profit not associated with our high school and/or district.
3. We have a Board of Directors from industry professionals that serve and guide our non profit.

Good Luck to you,

Norman

[MrTechCenter]

Originally Posted by Foster

Wha does ASB mean?

Associated Student Body

[Dr.Gusta]

Originally Posted by MrTechCenter

Associated Student Body

Thank you for that and from what is sounds like is I need to contact the head of ASB and probably CC the principal because he understands FIRST (kinda). If we could find a law firm to donate their services to write up a legally binding contact saying that we will spend all funds on club related activities and there would be a punishment if it is violated then have that signed by all of the team leaders? This way we can have direct access to our money that we raised. What do you think?

[Steven Smith]

If we could find a law firm to donate their services to write up a legally binding contact saying that we will spend all funds on club related activities and there would be a punishment if it is violated then have that signed by all of the team leaders? This way we can have direct access to our money that we raised. What do you think?

I think that is a bit overkill, and might not even help. The liability the 501c3 takes on by acting as a fiscal agent for your team is not transferable, and if the funds are under their umbrella, ultimately they are responsible. Only a subset of people in a normal 501c3 are allowed to touch funds, and larger ones might even carry insurance that protects against financial impropriety... so that insurance contract wouldn't allow them to give you access to the funds. Also, keep in mind, that legally, those funds are not yours. The funds are 100% owned by the 501c3.

If it's a smaller 501c3, once again, your best bet is just having an honest conversation with them. Let them know why the faster turn-around is important to you, and be prepared to compromise a bit. Maybe you can get a quicker (24-48h) turn around on orders during build season, but you wait for the normal cycle the rest of the year when you don't need things as quickly. For this year, we'll be paying for things out of our school account, and it takes me 2-3 weeks to get a new vendor approved, and about 2 weeks to get an order processed and in hand. I just have to work further ahead, and I'll be ordering a lot of "standard material" in November that I know I'll need.

As Coach Norm said (and our team will probably do), starting your own tax exempt organization is doable and has been done by teams. This will introduce overhead, as you'll be filing tax reports, paying some fees, and filling out a lengthy application. It can also take up to 12-18 months. However, all that headache may be less than working with your existing 501c3 or school, and it gives your group full control. It isn't something I'd consider lightly, but it also shouldn't be so intimidating that you not consider it as an alternative.

Steven

[Joe G.]

Originally Posted by Dr.Gusta

Thank you for that and from what is sounds like is I need to contact the head of ASB and probably CC the principal because he understands FIRST (kinda). If we could find a law firm to donate their services to write up a legally binding contact saying that we will spend all funds on club related activities and there would be a punishment if it is violated then have that signed by all of the team leaders? This way we can have direct access to our money that we raised. What do you think?

Not a lawyer, but I imagine that the primary concern would be not so much punishing you guys, but freeing the ASB of any liability should privileges be abused (which as mentioned above, is likely not possible). Definitely brainstorm solutions with your ASB before taking any actions -- run this by them and see if they think.

[FrankJ]

The 501C has an obligation to sure that the funds under its control are used for tax exempt purposes & track them in an auditable manner. While what you propose is not "illegal", I can see why they would have a problem with that. They have a lot of freedom on how that is done. It sounds like the ASB has thought through its policy and is probably set in its ways. If it is associated a school, it might well have policies dictated by the school. They probably have a limited ability to deal with different rules for different clubs. Definitely worthwhile to talk to them, but do not be surprised if the answer is 'we have to follow our policy". You might be able to work out a "petty cash" fund that would be refilled as receipts are turned in. Or maybe a budget they can preapprove.
The advantage of having your own 501C is they can more nimble in the way they handle funds.

[EricH]

A proposal that might work:

Discuss with the ASB the restrictions you're under (particularly emphasizing the 6 weeks AND the FRC robot budget constraints, I think they'll be interested in those). Note that while 1 week is long enough for some items, say team T-shirts, for critical robot parts you need a faster turnaround, say 1 business day.

Then propose the following: Have one ASB approver designated for robotics, with a list of "normal" purchase types (metal, wheels, motors, etc.), locations (AndyMark, VEX, McMaster...), and let's just say a reasonable cost ceiling per order. For any purchase on the "normal" list, that person ought to be able to approve it QUICKLY (say, 1-2 business days), provided that a reason is noted on the request for funds, if the team is in build or competition season. For any purchase not on the "normal" list (let's just say, a drill press) or over a certain dollar amount, the approver may request more information from the team and/or a full review.

In essence, you're requesting a "fast-track" approval for certain items in a certain timeframe, and any item not in that list or larger-than-normal amounts of such items are subject to extra scrutiny. And you're asking that one of the approving parties be a point-of-contact, and thus relatively familiar with what the team tends to purchase, so that person can spot "funny" items even more easily.

I don't know for sure if they'd go for it, but it's worth a shot.

[sanddrag]

We've been doing this for 13 years and I still float everything other than registration on my personal credit card, even $7,000 airfare or hotel bills. Having someone quick with a credit card and a high limit has become a necessity for FRC, and it's the simplest way to do things. I get reimbursed through the school ASB account usually within 10 days time. Logging and copying the receipts ias a pain, but we have the process down. In a typical season, I'll make on the order of 120+ different purchases.

We'd like to do a 501c3 to qualify for more grants, but we haven't got it done yet. I would be interested in hearing more from others who have.

[cadandcookies]

Originally Posted by sanddrag

We'd like to do a 501c3 to qualify for more grants, but we haven't got it done yet. I would be interested in hearing more from others who have.

2220 has had our booster club incorporated as a 501c(3) since 2011 or so. I'd recommend looking at Section 6 of the FIRST Fundraising Toolkit. Specifically the associated webinars, which have more personal opinions on the process.

The 2220 structure is that the team itself isn't a 501c(3), but the booster club is. This enabled us to avoid the red tape associated with filing all the associated paperwork by using Parent Booster USA, which has a startup fee and then a recurring ($100) fee. We use this in conjunction with an online part ordering system to keep track of funds that go through the organization. We've gotten several grants via our nonprofit status that we wouldn't have been able to get otherwise.

I don't want to sound like I'm plugging it too much, but the FIRST Fundraising Toolkit section has a lot of great information and I'd recommend that you read those whitepapers and watch the associated webinars (they're a total of about an hour, and definitely worth the time). Good luck!

[Kingland093]

4215 has non-profit status from our school and they have set up an account for the robotics team. when we get money from a sponsor, we always request that the sponsor rights us a check so we can give it to the school's business administrator and he handles the depositing stuff for us. Not sure about the process for receiving grant money though.

When we want to order something, we use the head mentor's personal credit card and he gets reimbursed by the school from the robotics account.

We have found this system to be effective in getting parts quickly. I would recommend a mentor personally buying the parts and seeing if the ASB can reimburse them

[wilsonmw04]

have you thought about requesting blank PO's? Set an ammount at the beginning of the year and purchase away. You have the benefit of quicker turn around times and the ASB gets the control they need as well.