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

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!

"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.

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.

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

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.

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

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

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

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