Is your FRC team a nonprofit?

[neoshaakti]

I'm really confused about teams being nonprofit organizations in accordance to the IRS...
does that mean almost all FRC teams are non profit organizations because they receive donations from companies?

A teacher and myself have started up a FRC team at my school, and we are both perplexed about the IRS. The NASA grant, along with other local grants, require us to provide an IRS code...but an IRS code takes a few months to process....which means we wont be able to get a code in time for build season...

thanks for your opinions/advice in advance

[Madison]

My understanding is that most teams use the tax ID of the school that hosts them. Not all teams are associated with schools, however, and in those cases, some may be non-profit organizations.

[VanMan]

You can just use the school one for the NASA grant. Thats what my team did. This year one of our sponsors has a "GIVE" program which they are letting us route all our money through them. Its basically a non-profit.

[Akash Rastogi]

Our FRC, FTC, and all FLL teams fall under MOREA (Mount Olive Robotics Education Association) which is a 501 (c)(3) non-profit organization that the team started in 1997. Mostly everything is tax exempt and we get a lot for free b/c of the non-profit status. It will take a while to file your request though.

[wilsonmw04]

our team uses our schools tax code for most things, however, some companies won't talk to you unless you have a 501 (c)(3) number. Those numbers take some doing to get. you have to have a board of directors and there is a LOT of paperwork involved in getting that status. If you don't qualify based on your school's tax number, see if your state FIRST organization can't help you.

[wendymom]

Our team is a 4-H team and as such we fall under the 4-H 501 c 3 number and we are considered a non-profit organization much like girl scouts or boy scouts.

[rbrown1]

Our team was set up under the school districts education foundation which is a 501.c.3 organization.

[RoboMom]

Originally Posted by neoshaakti

I'm really confused about teams being nonprofit organizations in accordance to the IRS...
does that mean almost all FRC teams are non profit organizations because they receive donations from companies?

A teacher and myself have started up a FRC team at my school, and we are both perplexed about the IRS. The NASA grant, along with other local grants, require us to provide an IRS code...but an IRS code takes a few months to process....which means we wont be able to get a code in time for build season...

thanks for your opinions/advice in advance

There are a few ways to approach this.
You have 2 Regional Directors and 1 Senior Mentor. I would suggest that you contact them for advice. http://www.usfirst.org/contact.aspx?id=2988

Also Carol's presentation on 501(c)3's on the NEMO resource page. http://www.firstnemo.org/resources.htm

[Carol]

Technically, to be declared nonprofit by the IRS means you have fulfilled all the requirements under section 501(c)(3) of the tax code. (Hence the term, a 501c3 organization). A corporation can be set up as a non-profit organization under state law, but does not have to have the 501c3 label. Anyone can donate to any organization but it is easier for the donor to get a tax write-off of the donation is the receiving organization is 501c3. Every organization (school, corporation, or group like a 4H club), nonprofit or for profit, gets a tax id number from the IRS when it is formed. As was stated already, schools are already 501c3 organizations and you can use their tax id number (also called a EIN) to give to donors who want to write-off their donations.

It is complicated but can be done. Many groups in FIRST have do so already. The biggest hurdle is first getting set up as a non-profit corporation - easier in some states than others. And then you have to keep good financial records.

As Jenny said, we did a presentation on this in Atlanta a few years ago. Would it be helpful to give it again this year? Maybe with the help of some teams that have become 501c3 since then?

[Billfred]

To my knowledge, 1618 operates entirely underneath Richland County School District One's EIN. I'm not the money-handler on the team, but I haven't heard any real reason for us to change that arrangement at this point.

1293, on the other hand, is a district-wide team in the process of (if they haven't done it) changing to work under their district's education foundation. Before that, funds were handled through the individual schools under the district's EIN.

[wilsonmw04]

Originally Posted by Carol

As was stated already, schools are already 501c3 organizations and you can use their tax id number (also called a EIN) to give to donors who want to write-off their donations.

This is incorrect. Schools are not 501c3 organizations. I thought the same thing until i tried to write a grant and one of the requirements was a EIN for the 501c3 organization. I put our school's number on the application and it was kicked back for not being on the federal list. School districts have gotten around this by creating a foundation for the entire school system that is 501c3 compliant. My county has no such foundation. I had to get help from my state FIRST organization to push the grant through.

Edit: ok it might not be totally incorrect. i'm just giving you my experience.

[mathking]

Schools are not 501(c)(3) organizations, but they have a similar status under a different section of the code. So donations to a school are tax deductible, purchases made have tax exempt status, etc. But some grants require 501(c)(3) status. One possible source of help might be your local rotary club. Those clubs often have foundations which are 501(c)(3) and might be willing to help you by having donations flow through them. (Rotary foundations often have helping the local schools and community as a major part of the their charter.)

Getting 501(c)(3) status is not a simple process. There is a lot of paperwork and you have to have the organization up and running for a time before you get the status approved.

[Carol]

Actually, we got our 501(c)(3) notification letter from the IRS less than 6 months after we were incorporated. Without the help of an attorney or accountant. I agree it is a lot of work, but it really isn't that hard - just getting a lot of the paperwork together and making sure you follow the instructions.

I don't want to discourage any team who wants to explore this route. It is possible.

[JaneYoung]

LASA Robotics is a non-profit that is completely separate from our school. We formed a corporation with the state, with limited liability. We applied for and received non-profit status under IRS rules much as a booster club for athletics or band - but we are robotics.

I think it would be a great idea to have another presentation available at the Championship for teams to learn about this if it is possible. That would be awesome. Great suggestion, Carol.

Edit: when going through this process, we were able to access some help from an attorney and an accountant via parents in the Association. We were very appreciative of their help and support. We took it one step at a time and followed instructions to the letter. The people who made up the board understood that they would have to meet regarding this process and we never had any difficulties or problems with any of it. At one of our competitions during semi-finals, we were meeting outside the venue to finalize some aspect of it. That was actually pretty funny at the time - we finished up just in time to catch the last matches. (I wouldn't recommend that but have lived to tell the tale )

[RoboMom]

The Baltimore Area Alliance teams got a small local family foundation to agree to incorporate the local FIRST teams. Donations to these teams can be sent to this foundation, and the donors get a tax write off. It's not a lot of work for the local foundation. It is a little work for the local Senior Mentor (me). And the BAA teams have discovered the effectiveness of fundraising as an alliance.

Carol, maybe your presentation could be expanded to include other best practices for organizing the financing of teams. Could have a panel of different ways. Just an idea....