How many have experience or have thought about being non profit. We ar ea rookie team this year and started being connected to our school. We have found it to be tricky to navigate funding since as of now everything needs to go through the school account. So to make snap purchases its becomes a process. Additionally we cant set up paypal or amazon donation accounts because we can have direct access to the account and the school system is behind the times when it comes to electronics payments regarding anything. So that leads us to set up an account on our our separate from the school but still non profit. Anyone do this? Any advice or issues that arise? Our concern is the tax work may over complicate it? Go figure, we try to get away from one bureaucracy for simplicity only to get tripped up by another. My thought is if we grow bigger it may be easier in the long run.
We had a fairly similar situation earlier this season. See the thread about what happened to us:
http://www.chiefdelphi.com/forums/showthread.php?t=107981&highlight=4183
In our situation, we end up having parents foot the bill for purchases during build season, and they get reimbursed afterwards. We have a process for this so it’s not unbearable, but it requires parents who can step up and help out on short notice. Large transactions like paying FIRST fees come directly from our account and are handled by the school business office.
For donations: I don’t see why you can’t set up a PayPal or Amazon account, have it feed into the school’s bank account, and then just have the Controller allocate those funds to the Robotics account? We’ve done something like this before with no trouble.
Being on a fellow MCPS team, I can tell you that doing anything through the school is a great pain! The biggest besides getting janitors to unlock your build space after you pay for it would be managing funds. I think we found that if we managed funds through the school, there would be many spending limits. These include but are not limited to; you can only spend so much money on any given purchase, you can only spend so much money per day and so much per month, I also think if you needed to spend more than the amount you wanted you had to fill out tons and tons of paperwork. Pain especially in FRC where you spend most of your money in a short span of a few weeks!
How Blair went around this is our funds are now managed through the Blair Magnet Program (a non-profit). This allows us much more freedom on how we spend our money. I’m not 100% sure on the details of this arrangement, but if you like, I can get some of our mentors to email you the details.
Glad to see a new MCPS FRC team. Now we are one a way from a full MCPS scrimmage! If you have any questions on how to deal with MCPS, or just questions in general feel free to shoot me an email.
All of our funding has to go through the school but we make sure we take the time before the season starts to set up purchase orders. We setup open POs for the popular places we shop like AndyMark and McMaster along with a few others, then have open POs for our two coaches. If we need something from a different vendor, our coaches will put out the money and turn in receipts to the office as an “as needed” basis to get reimbursed. Open POs are great because the bill just gets sent to the school’s office and they mail a check back to the vendor with no delays in shipping. McMaster also gives a 2% discount if you pay within 10 days of your PO
Our team is registered as a 501©3. This allows us to have our own bank account (which is registered under the team’s legal name, but tied to our teacher advisor’s name, meaning he has control over it). When initially registering, it can be a little complicated, but overall it’s not too difficult. Find out about how to file in your state. In California, we have to send our legal documents to the state every other year, just to make sure that they change whatever changes in the team. The IRS form, however, is necessary to remain tax-exempt and provide sponsors and donors with tax-deductions. This form (after the first year) is a simple few clicks online. We got started as a non-profit by consulting a tax lawyer, who made the whole process so much easier for us. If this is an option for you, I highly recommend pursuing it. Our only attachment to the school is our legal name which has the school’s name in it, and a school bank account for fundraisers that we do at school.
This is very interesting. I’m going to see if we can get something similar going with our business office, it would make things much easier if every purchase didn’t have to be fronted by a parent or mentor first.
Five or six years ago our team started taking the steps to incorporate. It wasn’t so much to protect the team, as it was that we wanted to eventually host an FRC tournament here in BC and knew that would require an organization much larger than one team could support.
Although I think “those rookies” in Calgary might just prove me wrong about that. 
Although we haven’t got an FRC regional yet, when the team folded the non-profit carried on and now organizes VEX competitions, workshops and road trips.
There are advantages to reaching outside the school, and having a vision beyond one team. Incorporation has helped us with that.
Jason
We operate with a school account and a booster group which is a 501©3 organization. For the school account we use open POs with McMaster and AndyMark. Both get stuff to us in a very timely manner. (Generally if we order it in the morning with will be there the next day.) We have some grant money and donations that go into the school account, most notably an AEP grant. The boosters do a lot of fundraising (they also support 20-30 FLL teams and this year an FTC team) and handle most of our bigger purchases, such as registration and travel payments. If we need something quickly from a vendor that is not already on the school list we tend to have the boosters pay for it. Having two distinct pools of money adds some complexity but it also gives us flexibility.
Thanks for the feedback we have some things to think about. I appreciate the neighborly support ehfeinberg.
Our team faced the same issue of actually using our money from the school account. It wasn’t that our administration wasn’t supportive, there is just a lot of bureaucracy and funding rules for the school that we have to go through. I think it was about three years ago that we began to look for a better solution.
We were orginally going to try to make our team itself a 501c3, but this process takes a ton of work and legal stuff, so instead we did the following. Our parents booster club joined Parent Booster USA, an organization that grants booster clubs 501c3 status. I believe there is a fee ~$100 to 400 dollars a year for this, but they handle a lot of the legal and tax documents. The booster club set up a bank account separate from the school, and that is where we keep the majority of our funds. I don’t think the school really gives us any money, so I’m not sure if we still have an account with them.
The Parent Booster association sounds like a great idea. I suspect they also carry liability insurance… running as a school team we were covered by the school’s insurance, but running a seperate non-profit exposed the directors to certain liabilities. We now carry one million in insurance and are looking at increasing that to two million.
I don’t think anyone plans to sue a non-profit, but it is really hard to get insurance *after *something goes wrong…
Jason
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.
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.
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©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.
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:
- stay as you are and use open PO’s for your suppliers. Create these now so you have them in January.
- 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.
- 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.