If this is your first visit, be sure to check out the FAQ by clicking the link above. You may have to register before you can post: click the register link above to proceed. To start viewing messages, select the forum that you want to visit from the selection below. |
|
|
|
Thread Tools | Display Modes |
#1
|
|||
|
|||
Tax Exempt Clubs (USA)
Our club is hoping to join the list of clubs in the USA who are
501(c)(3) tax exempt. My question is: why isn't the SSA a 501(c)(3) organization, and why aren't all SSA clubs tax exempt? It would seem to be an obvious way to grow revenues! All club dues would be a tax write-off, and all donations could be deducted as well! Am I missing something? F2 |
#2
|
|||
|
|||
Tax Exempt Clubs (USA)
Fox Two wrote:
Our club is hoping to join the list of clubs in the USA who are 501(c)(3) tax exempt. My question is: why isn't the SSA a 501(c)(3) organization, and why aren't all SSA clubs tax exempt? It would seem to be an obvious way to grow revenues! All club dues would be a tax write-off, and all donations could be deducted as well! Am I missing something? F2 There is a difference between an organization that is tax exempt (no tax on its income), and one to which people can make deductible donations. Any 501 organization falls into the first class, but to fall into the second class you must be a 501c3. The SSA is a 501c3 (charitable) organization, and so donations (such as to the Eagle Fund) can be deducted. It is hard to make a club fit under 501c3 -- more likely it would fall under 501c7 (club for pleasure or recreation). In any event, whether c3 or c7, you don't get to deduct dues, because you are getting something in return for your money. If a c7, you don't get a deduction for donations, but there is no tax on income (i.e., no tax on dues). So there is only one reason for a club to file the necessary paperwork with the IRS -- to escape tax on its income from dues. In other words, there is no free lunch! |
#3
|
|||
|
|||
Tax Exempt Clubs (USA)
"Fox Two" wrote in message ups.com... Our club is hoping to join the list of clubs in the USA who are 501(c)(3) tax exempt. My question is: why isn't the SSA a 501(c)(3) organization, and why aren't all SSA clubs tax exempt? It would seem to be an obvious way to grow revenues! All club dues would be a tax write-off, and all donations could be deducted as well! Am I missing something? F2 The SSA is a 501(c)(3), as are many soaring clubs in the United States. Check out the listing at for a listing go to www.guidestar.org and do a search for soaring. If you look into it, I think you'll find that while donations are deductible, dues are not. (I know someone is thinging that they'll just call their dues a donation. This is a not very clever way to loose your tax exempt status.) As local clubs are not "owned" by the SSA and do not pass their funds through to the SSA, the fact that the SSA is tax exempt does not provide any such status to the local club. This is my understanding as a non-professional officer of several 501(c)(3)'s over the years. If any professionals are out there perhaps they have better information. |
#4
|
|||
|
|||
Tax Exempt Clubs (USA)
Michael McNulty wrote:
"Fox Two" wrote in message ups.com... Our club is hoping to join the list of clubs in the USA who are 501(c)(3) tax exempt. My question is: why isn't the SSA a 501(c)(3) organization, and why aren't all SSA clubs tax exempt? It would seem to be an obvious way to grow revenues! All club dues would be a tax write-off, and all donations could be deducted as well! Am I missing something? F2 The SSA is a 501(c)(3), as are many soaring clubs in the United States. Check out the listing at for a listing go to www.guidestar.org and do a search for soaring. If you look into it, I think you'll find that while donations are deductible, dues are not. (I know someone is thinging that they'll just call their dues a donation. This is a not very clever way to loose your tax exempt status.) As local clubs are not "owned" by the SSA and do not pass their funds through to the SSA, the fact that the SSA is tax exempt does not provide any such status to the local club. This is my understanding as a non-professional officer of several 501(c)(3)'s over the years. If any professionals are out there perhaps they have better information. Seems about right for a club that is a c3, but I wonder if there are many clubs that have such status. Maybe the IRS was more generous in the past, but I bet clubs aren't granted c3 status these days. It is hard to argue that there is anything "charitable" about a group of glider pilots. |
#5
|
|||
|
|||
Tax Exempt Clubs (USA)
Greg Arnold wrote:
Fox Two wrote: Our club is hoping to join the list of clubs in the USA who are 501(c)(3) tax exempt. My question is: why isn't the SSA a 501(c)(3) organization, and why aren't all SSA clubs tax exempt? It would seem to be an obvious way to grow revenues! All club dues would be a tax write-off, and all donations could be deducted as well! Am I missing something? F2 There is a difference between an organization that is tax exempt (no tax on its income), and one to which people can make deductible donations. Any 501 organization falls into the first class, but to fall into the second class you must be a 501c3. The SSA is a 501c3 (charitable) organization, and so donations (such as to the Eagle Fund) can be deducted. It is hard to make a club fit under 501c3 -- more likely it would fall under 501c7 (club for pleasure or recreation). In any event, whether c3 or c7, you don't get to deduct dues, because you are getting something in return for your money. If a c7, you don't get a deduction for donations, but there is no tax on income (i.e., no tax on dues). So there is only one reason for a club to file the necessary paperwork with the IRS -- to escape tax on its income from dues. In other words, there is no free lunch! Actually, this is quite inaccurate. A number of SSA chapters are 501c(3) non-profit organizations. Many are 501c(7), however, IMVHO the rationale is often mistaken and improperly applied, both by those within the chapters and by the IRS. Much has to do with the dates in which the chapters incorporated and when and how they applied for their determination and whether or not. Realize that the national policies regarding non-profit organizations is a result of congressional actions. As such, it can be modified, so complete understanding must include certain paradigm shifts. The IRS is only empowered to make determinations and rulings under the law. The particular case officer may not have ever entertained the concept of an SSA chapter before. This is where professional legal or accounting help can be crucial. Some of the well known 501c(3) SSA Chapters include Texas Soaring Association, Greater Houston Soaring Association (president David Coggins will be talking during the club track Friday afternoon at the convention), Soaring Club of Houston, Blue Ridge Soaring Society, St Louis Soaring Association, Willamette Valley Soaring Club, Tucson Soaring Club, Harris Hill Soaring Corporation, Shreveport Soaring Club, and most recently Central Indiana Soaring Society. Other chapters have 501c(3) foundations that operate gliderports, AirSailing Inc, and Tidewater Soaring Foundation (used by Tidewater Soaring Society). 501c(x) organizations in the US form that body known as non-profit organizations. As such they benefit from certain tax exemptions, normally on income, based on their category. It's okay to make a profit, the difference between NPO's and private enterprise is what is done with the income. Generally speaking, no one in the non-profit organization can incure a private inurement (benefit). Private inurement implies private enterprise, the purpose is to take a profit from the corporation. Likewise, it doesn't mean that members can't be contracted or paid for services, however, they cannot be involved in making decisions resulting in such an arrangement. Even the appearance is a disqualifier. All states have statutes governing the activities of non-profit corporations and the body of law is common to most. There are separate rules for private foundations and trusts and certain other non-profits, but the corporate statutes are those of interest to soaring chapters and clubs. There is a separate distinction called not-for-profit, but under current law this is generally treated as non-profit. In my state, Colorado, the bulk of statues under non-for-profit have been repealed except one remaining for recognition of those so organized generally as associations, rather than formally incorporated. New groups will be corporations will be known as non-profit. That being said, the IRS has shown a willingness to recognize some Limited Liability Companies as non-profits. If a non-profit is determined to be a 501c(3), then doors to other state and local statutes may open, offering relief from sales, real and personal property taxes. The 501c(3) determination allows for charitable, tax deductible donations. At the 2006 SSA Convention, we looked at some numbers and it would appear that GHSA and SCOH both were about $30K better off than five years previously due to their 501c(3) determinations. Part was tax relief, part through donations. A US citizen's daily experience is generally with private enterprise and government. Common exposure to non-profits may be through their place of worship, schools, and volunteer organizations. Serving on committees and boards will be educational. You have to wrap your mind around some concepts that will surprise you. I personally recommendation that anyone serving or considering stewardship in a non-profit organization read Bruce R. Hopkins "Starting and Managing a Nonprofit Organization, A Legal Guide", 4th Ed, Wiley, 346.73064 HOPKINS. Within a non-profit, not only must you 'talk the talk', but you must absolutely 'walk the walk'. A former board member of my club said his church had some tax items flagged because the church had become a regular host to recitals and performances. In many ways, a 501c(7) determination may be more restrictive than a 501c(3) determination. These are not obvious on the surface, but apply as a result of rulings pertaining to flying clubs, club membership dues, and locations of the activities. Soaring organizations generally hold 501c(3) determinations as amateur sport (soaring is an international air sport) or educational (vocational ed). The SSA Clubs and Chapter Committee has some online resources and reading at http://www.coloradosoaring.org/ssa/chapters/ Hopefully next week there will be some streaming media and presentation downloads on convention presentations, but a different host is being set up for this purpose. There are about 110 SSA chapters and clubs with a pulse around the country. There are almost as many business models. Most have reinvented the wheel at some point. Many have forgotten more than they now know. The committee is looking for the 'best practices' among these clubs. By their nature, clubs are what I tend to call 'provincial' and it's hard to get them to talk initially about their successes and failures or why they are doing what they do. We hope to change that by sharing and discussing. A few clubs have had IRS reviews. Only one we aware of has had an IRS audit, but seem reluctant to discuss it, though there really wasn't anything embarrassing and a lot to share. Speaking of committees, check out the SSA volunteers page and contact a committee you might want to work with. This will work better than calling the SSA front office. Snow's getting deep here in Colorado. Frank Whiteley SSA Clubs & Chapters Committee SSA Governor Colorado |
#6
|
|||
|
|||
Tax Exempt Clubs (USA)
Might add that the National Football League is a non-profit
organization, though not charitable. Frank Whiteley Greg Arnold wrote: Michael McNulty wrote: "Fox Two" wrote in message ups.com... Our club is hoping to join the list of clubs in the USA who are 501(c)(3) tax exempt. My question is: why isn't the SSA a 501(c)(3) organization, and why aren't all SSA clubs tax exempt? It would seem to be an obvious way to grow revenues! All club dues would be a tax write-off, and all donations could be deducted as well! Am I missing something? F2 The SSA is a 501(c)(3), as are many soaring clubs in the United States. Check out the listing at for a listing go to www.guidestar.org and do a search for soaring. If you look into it, I think you'll find that while donations are deductible, dues are not. (I know someone is thinging that they'll just call their dues a donation. This is a not very clever way to loose your tax exempt status.) As local clubs are not "owned" by the SSA and do not pass their funds through to the SSA, the fact that the SSA is tax exempt does not provide any such status to the local club. This is my understanding as a non-professional officer of several 501(c)(3)'s over the years. If any professionals are out there perhaps they have better information. Seems about right for a club that is a c3, but I wonder if there are many clubs that have such status. Maybe the IRS was more generous in the past, but I bet clubs aren't granted c3 status these days. It is hard to argue that there is anything "charitable" about a group of glider pilots. |
#7
|
|||
|
|||
Tax Exempt Clubs (USA)
Fox Two wrote: Our club is hoping to join the list of clubs in the USA who are 501(c)(3) tax exempt. My question is: why isn't the SSA a 501(c)(3) organization, and why aren't all SSA clubs tax exempt? It would seem to be an obvious way to grow revenues! All club dues would be a tax write-off, and all donations could be deducted as well! Am I missing something? F2 It depends. Dues, like your SSA dues, are not deductible, as you derive some benefit of membership. There are lots of member benefit organizations. However, a monthly voluntary contribution to a youth flight scholarship could be. It's a tough call I think to segment the dues. You have to create the win-win-win situation, where every dollar contributed does three things, rather than one or two. That's the true benefit of the 501c(3) status. Frank Whiteley |
#8
|
|||
|
|||
Tax Exempt Clubs (USA)
Greg Arnold wrote: Michael McNulty wrote: "Fox Two" wrote in message ups.com... Our club is hoping to join the list of clubs in the USA who are 501(c)(3) tax exempt. My question is: why isn't the SSA a 501(c)(3) organization, and why aren't all SSA clubs tax exempt? It would seem to be an obvious way to grow revenues! All club dues would be a tax write-off, and all donations could be deducted as well! Am I missing something? F2 The SSA is a 501(c)(3), as are many soaring clubs in the United States. Check out the listing at for a listing go to www.guidestar.org and do a search for soaring. If you look into it, I think you'll find that while donations are deductible, dues are not. (I know someone is thinging that they'll just call their dues a donation. This is a not very clever way to loose your tax exempt status.) As local clubs are not "owned" by the SSA and do not pass their funds through to the SSA, the fact that the SSA is tax exempt does not provide any such status to the local club. This is my understanding as a non-professional officer of several 501(c)(3)'s over the years. If any professionals are out there perhaps they have better information. Seems about right for a club that is a c3, but I wonder if there are many clubs that have such status. Maybe the IRS was more generous in the past, but I bet clubs aren't granted c3 status these days. It is hard to argue that there is anything "charitable" about a group of glider pilots. Nor is there much social in many 501c(7)'s. Some have a formal social/recreation component. http://flybasa.org which does no training, towing, or checkouts. Shreveport Soaring Club, late 2005, amateur sports Central Indiana Soaring Society, 2006, amateur sports Frank Whiteley |
#9
|
|||
|
|||
Tax Exempt Clubs (USA)
Frank Whiteley wrote:
Greg Arnold wrote: Fox Two wrote: Our club is hoping to join the list of clubs in the USA who are 501(c)(3) tax exempt. My question is: why isn't the SSA a 501(c)(3) organization, and why aren't all SSA clubs tax exempt? It would seem to be an obvious way to grow revenues! All club dues would be a tax write-off, and all donations could be deducted as well! Am I missing something? F2 There is a difference between an organization that is tax exempt (no tax on its income), and one to which people can make deductible donations. Any 501 organization falls into the first class, but to fall into the second class you must be a 501c3. The SSA is a 501c3 (charitable) organization, and so donations (such as to the Eagle Fund) can be deducted. It is hard to make a club fit under 501c3 -- more likely it would fall under 501c7 (club for pleasure or recreation). In any event, whether c3 or c7, you don't get to deduct dues, because you are getting something in return for your money. If a c7, you don't get a deduction for donations, but there is no tax on income (i.e., no tax on dues). So there is only one reason for a club to file the necessary paperwork with the IRS -- to escape tax on its income from dues. In other words, there is no free lunch! Actually, this is quite inaccurate. Actually, it is perfectly accurate! Some of the well known 501c(3) SSA Chapters include Texas Soaring Association, Greater Houston Soaring Association (president David Coggins will be talking during the club track Friday afternoon at the convention), Soaring Club of Houston, Blue Ridge Soaring Society, St Louis Soaring Association, Willamette Valley Soaring Club, Tucson Soaring Club, Harris Hill Soaring Corporation, Shreveport Soaring Club, and most recently Central Indiana Soaring Society. Other chapters have 501c(3) foundations that operate gliderports, AirSailing Inc, and Tidewater Soaring Foundation (used by Tidewater Soaring Society). Any of these get their c3 status in the last couple of decades? Snow's getting deep here in Colorado. Frank Whiteley SSA Clubs & Chapters Committee SSA Governor Colorado |
#10
|
|||
|
|||
Tax Exempt Clubs (USA)
Greg Arnold wrote:
Any of these get their c3 status in the last couple of decades? As late as 2006, Central Indiana Soaring Society. One of their next goals, as a club that's been relocated, is to establish a gliderport, something that Greater Houston Soaring Association did from farmland (and David Coggins will speak to at the convention) while establishing their 501c(3) status, 1998, educational. I would be the first to tell you that past performance of the SSA leadership, until the last four or five years, has not been on the forefront of acknowledging or supporting chapters and clubs much beyond recruiting members for SSA. There are chapter benefits through the office and insurance, though the chapter rebate was eliminated and the current financials have reduced some of the others. However, that doesn't mean it won't change for the better in the future. Look back a few years. There was a 'Club Chatter' column in Soaring and the occassional article, but there was no committee involvement. Looks at how clubs are recognized in Sailplane & Gliding. Granted, the BGA is club based, but know that we have SSA regions where clubs are the only access to soaring. That's why I will repeat the suggestion that members who want to be involved check the Volunteers area, find the committees and consider joining one. As a committee, we want to know what we can do to help clubs form, thrive, and be successful. We have to ask ourselves and others, what is success in a soaring club? Would we recognize it if we saw it? Implemented a stellar idea? We'd like to steal it and share it. When a club has gone through this 501c(3) determination process, we'd like to capture a case study. All too often, within five years, several of those involved have forgotten the details, can't recall who did what as a result (e.g. property tax exemption), or have moved out of the area. The devil's in the details. BTW, I mentioned elsewhere in this thread that we know of 110 clubs/chapters with a pulse and club provincialism. It's difficult just maintaining contact lists, as officers and e-mails change so frequently. Costello tells us of 160 glider clubs, but his list is private, as client confidentiality dictates. We know several are LLP ownership clubs, and that's fine. The others are open membership organizations. Frank Whiteley |
|
Thread Tools | |
Display Modes | |
|
|
Similar Threads | ||||
Thread | Thread Starter | Forum | Replies | Last Post |
SSA-OLC Regional Update | Doug Haluza | Soaring | 4 | September 22nd 06 03:22 PM |
US Glider Clubs Lead IGC-OLC World League! | Doug Haluza | Soaring | 6 | July 8th 06 06:16 AM |
Is your soaring site at risk - looking for clubs concerned | DNewill | Soaring | 0 | June 7th 06 04:45 AM |
Looking for Clubs that LEASE aircraft from members / others | DNewill | Soaring | 0 | April 23rd 05 07:57 PM |
Maps of gliding clubs (specifically near Chicago) | Robert Sharpe | Soaring | 6 | February 7th 05 08:49 AM |