501c3 Status

Have you been able to use this to register with TechSoup (for free & reduced price software, etc)? Just curious. We already have a Foundation we work with but it is a real pain getting them to move money around and we can’t have our own bank account to take donations via venmo, etc.

To be clear, a conflict only occurs when you’re paying people on the board or they have an interest in a transaction (ie “let’s rent out Chuck’s shop for $10k/mo”).

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While involving people that are not currently mentors of the team would be beneficial (involving industry experts for things like finance and governance, for example), it’s far from a requirement. Your board could be made exclusively of your current mentors. I’m involved in two nonprofits in my area. One is my employer, which takes the “diversified board” approach, where a large portion of our board members are not actively involved in the program, but come from the community at large. The other, my FRC team, has a board made up exclusively of current parents, mentors, and alumni.

You can be as formal or informal as you’d like. Your board can be a group of current mentors that meets annually, or it could be a board of 30 community leaders that meets once a month, and anything in between. There is no legal requirement that I’m aware of where members of an organization cannot hold seats on the board. As long as you have bylaws that clearly define the structure, you can structure it to suit your needs.

And even then, board members are typically only required to
a) disclose conflicts of interest
b) recuse themselves from votes that would financially benefit them

Chuck could still be on the board, even if the team is renting his shop for $10k. He just has to disclose/document that conflict up front, and he shouldn’t vote on the rental agreement or anything involving that business arrangement.

Setting up the 501c3 is the right way to go. Some of the benefits include:

  1. You can setup a bank account including a Debit Card that can be used for online purchases.
  2. You can get open access to TechSoup and things like Google Workspace
  3. Some sponsors may want a tax form for their records, which you can provide.

There are others. You will need to lookup the rules in your state on 501c3 in terms of tax reporting and legal obligations of nonprofits. You will also need to have reliable board members. The nonprofit will be a separate entity from the team and exist to dispense funds to the team (via purchases). If you think of them as the same entity, it gets confusing.

If you are not comfortable navigating all the rules, 4H is a good option. There is also https://hackclub.com/ which provides the same sort of service as well as creating all the accounts and serving as the board for you. One of our team alumni currently works for them (for full disclosure).

Just to follow up on this with our progress: we used Parent Booster and os far, so good. Our booster club gets nonprofit and tax exempt status through them. They provide a bunch of guidelines and training videos/articles that make it pretty easy to make sure you stay legal if you are a novice to it. We were able to sign up for Tech Soup, Google Workspaces for Nonprofits and Slack (the verification for the Google one was a pain but it is up and running with 100TB of storage).

We signed up for bankingcrowded.com to handle funds for now. We’ve been able to take online and in-person payments with it, but we are going to see if we can get something local.

The non-profits I have been on the board have in the by-laws that board members are uncompensated for being on the board. But I don’t think that is a legal requirement for non-prifits. They could be compensated for non board work, that is a bit dicy. You could be reimbursed for expenses such as travel to nice places for meetings.

No law or rules about mentors or others being on the board.

The non-profits spending needs to be traceable if the IRS asks.