Question about a Club that is "Not for Profit"

[PHolsted]

We are a semi large club with a little over 900 members. Appleseed came to one of monthly meetings and asked if we would host one of their shoots. The Club turned them down for the main reason of the Club would have made $x for every shooter. They see this as making a profit and thus violating our "Not for Profit" status.

I know there are other organizations out there that hold fund raisers, sell shirts, etc with the funds over cost(profit) going to their not for profit organization.

Anyone ever dealt with this? Or maybe provide me with some no binding info I can take back to the Club.

Thanks

[Aglifter]

Not a lawyer, but TMK, clubs can host matches, etc to raise funds, they just can't show a net-profit over the year... (Unless its a hospital - those can actually rake in tremendous profits, but not lose their non-profit status...)

[Loves2Shoot]

Our club is a not for profit and they host a lot of bigger matches where they charge big bucks. All the money goes back into improving the range, paying staff for events, toilets, targets, insurance, ect. Any decent accountant should be able to tell you the specifics of what you must do depending on the type of non profit your club is.

[GrumpyOne]

Not for profit is just that, not for profit. They can charge someone $1,000 to shoot a match, but as long as that money is spent maintaining the range, buying new equipment, etc., they aren't making any profit. I think that they feel that money coming in will somehow skew the relationship between the BOD of the club and the members, either that, or someone thinks they might get greedy.

[mda]

You need to know what non-profit status the club holds with the IRS as there are 28 different ones and most your club would not qualify for. The rules are different for each.

Most likely it is a 501( c)(7) which is for social and recreational clubs.

Under IRS rules, for a 501( c)(7), they only look an gross receipts and not how or where money is used. The IRS allows 35% of the gross income to come from outside sourced such as investment income and sources outside the membership(general public). Of this 35%, only 15% may be derived from the use of the club’s facilities or services by the general public or from other activities not furthering social or recreational purposes for members.

See IRS publication 557 concerning non-profit status info.

So the boards statement that they can not make any money is not true. However, they may know that the income received may put the club beyond the 15% allowed.

We host Appleseed at our club but do not recieve any money for the use of range. We see it as furthering the educational, social, and recational purposes of the club and also gain a few new members.

How do know most of this. Six year board member of a shooting club and this topic comes up at almost every other monthly board meeting.

Of course it is best to consult an accountant or tax lawyer in these maters.

MDA

Edited July 24, 2010 by mda

[PHolsted]

Thanks for all the info Guys. I am checking to see what we do file as with IRS.

[twodownzero]

How did "non profit" ever come to mean, "non revenue"?

[pjb45]

Not for Profit is a TAX issue. It has nothing to do with Revenues that exceed Expenses. Many hospitals are not for profit, that does not mean they do not make money. It has to do with how they spend and retain the monies.

Talk with a real accountant, I am not one, but I did work for Deloitte and Touche, one of the four largest accounting and consulting companies in the world.