Forming a non-profit versus being under a school's jurisdiction

[Qbot2640]

Originally Posted by Jimmy Nichols

Do you still have to deal with Annual audits and tax filings?

We formed a Non-Profit with the State of Ohio when we lost our space at the school. This was fairly easy. We were beginning to work on our 501(c)(3) paperwork when we met with the Community Foundation in our area. After meeting with them we decided to create a Fund under their organization. Reimbursements and payments are really easy. They aren't able to do PO's (Purchase Orders), but that's probably specific to them. They do charge a 2% annual fee for administration charges. Cutting checks, processing deposits, handling the tax's and audits. For a group of engineers this was worth it. Plus our account earns interest and typically we earn enough to cover the annual fee.

We also still carry an account at the school in which we use to collect student travel fees and pay for charter bus and hotels. We found that we had sponsors that preferred to donate to the school and sponsors who preferred to donate outside of the school. So having both accounts maximizes our opportunities to receive donations and grants.

Yes, we have to file taxes...and have not yet done this for the first time. I suppose we will deal with audits if someone decides to audit us, but as a pretty small player I can't imagine that being a big deal. We can submit the very easy "post card" version of the 990 form...but may choose to do a complete submission in our first year so that all our information is searchable to potential donors.

For us, the relationship with our school was becoming increasingly tenuous. I never will understand what a school has to gain from becoming more and more obstinate when dealing with a group of the very best students at the school - and further, a group that consistently provides them with good publicity, but that was the situation. I don't think we would have been able to continue under the school's draconian control. I realize that the average team has a much better situation, thus understand that our answer is not correct for all.

[Kevin Leonard]

20 has had a nonprofit since 2004 in addition to our association with the school.
It allows us significantly more financial freedom and allows. For direct donations and fundraising.