Hi yall, I am hoping to start a team sometime in many years to come but before that I want to register a fund/community group for helping students learn about robotics and I am not sure how difficult this is to do. This club/charity would be ran by myself a college student and a couple friends. So, I just wondering how difficult becoming a 501c3 is to be able to get donations and be able to give tax write offs… If I am understanding this correctly. This may not be created for a while but I want to learn the process so I know if I should eventually do it or not.
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From all my research and discussions with those who’ve done it, it’s doable but not trivial. If you’re tied in with a school district or other youth organization, that may make it easier (if they become your fiscal sponsor) or harder (rules and rules and bureaucracy and obnoxiousness).
You may want to look at the recent tie-up FIRST and Hack Club Bank have orchestrated.
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Like @Billfred said, the recent Hack Club Bank partnership is definitely something to check out.
On my team, we finally got the go-ahead from our school district earlier this season to make our organization and we are doing the incorporation and tax recognition processes ourselves. It’s complicated and it varies state-by-state—here in New Jersey, the state provides good guides on incorporation and registration. After we get our state paperwork sorted, we’ve got to file the IRS Form 1023-EZ to officially become a 501(c)(3) organization.
Because the process varies state-by-state if you’re not going through a 3rd party (school district, 4-H, Hack Club Bank, etc) it’s hard to give specific advice, but generally, you first have to get a legal entity for the nonprofit (what’s allowed varies by state) and then file with the IRS to officially become a 501(c)(3) organization. Regardless, it’s a pretty involved process and it requires a few people to make a pretty big commitment. There are some resources linked in this thread that you might find helpful.
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I’m sure none of the responders here want to discourage someone from taking a big step but do recognize it can be a big step. I posted recently some hints of what support my team could have lost if not part of the school system.
Besides having to do the taxes you get to fuss about big ticket items like auditors, work space, transportation, insurance, bonding, background checking, students excused from some classes, maybe even coaches. A couple of items might not apply as you aren’t proposing a splinter group from a school sanctioned team but most of it does.
As a director of a non-profit I even had to be concerned about who donated resources and could we assure that those resources would be used as the donor expected.
If you end up selling stuff for fund raising there are strict rules about that being a very small percentage of your budget if it’s not directly connected to your stated mission . Sometimes you see an odd expression of an organization selling stuff for a monetary “donation” amount knowing full well they aren’t suggesting you could have it for free if you didn’t want to donate. Splitting hairs to stay out of legal trouble and you even get to learn the state rules for gift certificates.
And you have to stay up-to-date on all the rules. Maybe even some of these comments may no longer apply in your state.
Good luck with your worthy project.
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6328 is a community team governed/funded by a 501(c)3 in MA, not affiliated with a school district or any other group. I’ve been president of our Board of Directors since 2018 though I was not involved in the initial set up of the company and organization. State rules in CT may differ slightly, though I’m happy to talk through what goes into the admin side of the organization. It takes some work but it’s a good choice for us.
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This is really interesting , however unclear about how much it costs to use.
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The Green Reapers setup a Booster Club that gives us 501(c)3 status through Parent Booster USA. It was pretty easy. Just make sure your school knows you are doing this.
Team 5113 did the same. I don’t know the intricate details, but it seemed to work well for us when I was a student on the team.
It ain’t cheap:
All fees waived on your first $25k until September 1st, 2023. Then, just 7% of revenue
“just”
For a small team it might make sense because 7% is pretty small. Once your budget is in the 20-30k range it starts to be hard bullet to bite.
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For large swaths of the FIRST landscape, this is going to make at least good sense:
- FTC and FLL teams aren’t likely to cross that range, unless they’re a big multi-team operation.
- FRC teams where some funds travel through other means (say, a supporter or school pays FIRST directly) can plausibly stay below that range.
- FRC teams in the “should probably be doing FTC” scale are often small enough budgets where it lines up alright.
1293 is the second category, and with online donations going to cost us about 3% no matter what due to credit card fees we decided Hack Club Bank offered enough convenience (both in collection and in compliance tools) to justify the expense. Will be glad to share our experiences as we get deeper in.
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I am on the Board of Directors of a 501c3 charity (unrelated to robotics).
It is a non-trivial step. The federal filing fee is $600. You will need to incorporate in your state first. Costs and difficulty varies there. If you need professional assistance to do so, you can expect that to cost $2-5k. You will need to have formal bylaws, officers/board members (at least 3), an annual meeting, and you will need file taxes so you need to keep good financial records.
The FRC team I mentor is under our county 4H. They take care of all that stuff. This makes us happy.
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Hi, I’m the parent of a middle schooler in FLL, and also co-founder of Hack Club, the nonprofit which operates Hack Club Bank.
I thought it might be of interest to share a bit more background about Hack Club–many don’t know that the majority of its young engineers are FIRST alum!
Hack Club is a nonprofit, founded in 2014 by teenagers living in San Francisco. Today, it’s based out of Vermont, and operates coding clubs, live coding events, technical projects and games and a vibrant online community – all for free for the 24,000 teenagers engaged across all our activities.
Hack Club Bank was built in 2020 initially for teen coders who wanted to raise money for coding events (hackathons). It’s grown in popularity as other groups in need of a fiscal sponsor really like it.
Whether you use Hack Club Bank for your team, I hope you’ll check out Hack Club if you have kids on your team interested in coding. Off season, my 11 year old daughter is learning a lot of coding at Hack Club, and we have Python workshops which ties into the kind of coding she does for FLL.
Again, it’s all free to teenagers, and there are many many FIRST teenagers now active in the online community.
In coming years, we’re hoping to work with FIRST leaders to support more teenagers learn to code and we’re excited to hear ideas and be part of this community. — Christina and email: christina@hackclub.com
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Depending on what you want to do, the IRS has an easy way to organize some nonprofits using form 1023EZ. It’s an online form, their turnaround is measured in weeks and not months, and it’s perfect for many smaller organizations which expect less than $50,000 in revenue in the first three years of operation. Depending on state law, you may be able to organize as an “unincorporated nonprofit association,” adopt bylaws that have specific language required by the IRS, file 1023EZ (fee: $275) and 6 weeks later be set up. File form 990EZ for annual taxes (“return on a postcard”).
That’s just general advice – it won’t work for every team and might not be the right solution for your team. And you should seek competent legal counsel.
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Should mention that the “return on a postcard” is 990n, (too late to edit the original post.) 990ez is for smaller non-profits too big for 990n.