Acquiring a 501(c)(3) For Your FRC Team
One of the more daunting tasks of most FRC teams is to raise the money needed to meet the operating budget of a competition season. Even if a school-sponsored team can rely on some district funds, most have to raise some funds to cover all the various expenses of going to a regional competition. Some teams (home-schooled, or private school) are obliged to raise the entire budget each year. These funds can come from team dues, various fund-raising activities, private donors, and sponsors. Private donors and sponsors can help contribute to a lion's share of the operating expenses for your team. However, these last two groups are more likely to help if your team or organization is listed with the IRS as a legitimate 501(c)(3) non-profit corporation. Some corporations require this before they will give.
Acquiring 501(c)(3) status can take some time and effort. But, for a serious FRC team it's worth it. Becoming a non-profit corporation will help you raise money year round. The usual caution does applies. You may want to pay a lawyer or CPA to file all the paperwork for you. This can be expensive. Some teams have forgone the cost of a lawyer and successfully applied by themselves. Regardless of which way you choose to go, the following are 5 general tips to think about in this process.
1. Determine your Purpose
Spend some time thinking about the purpose of your non-profit. Some teams incorporate their FRC team only. Others choose to broaden the concept and create an organization that supports a group of FLL, FTC, and FRC teams. Some non-profits are dedicated to fostering STEM education (which includes FRC)in a certain location or population. If the team is connected to a public school district, its better to organize the 501(c)(3) as a booster club or parent's organization. The articles of incorporation will require you to state the purpose of the non-profit and this should be carefully worded.
2. Consult the Internet
There are three main things you will need to do in this process: (1) File articles of incorporation as a non-profit with your Secretary of State or other appropriate state agency, (2) Apply for 501(c)(3) status with the IRS, and (3) Register with the appropriate agency of the state or states where you plan to do fundraising. The Internet is the place to start to help you figure out how to begin. Be cautious, however, because many sites will want to charge you money to help. One place to start is http://www.usa.gov/Business/Nonprofit-State.shtml. Most states have instructions online to file articles of incorporation. The IRS has a downloadable PDF File with excellent instructions at http://www.irs.gov/pub/irs-pdf/p4220.pdf. When these sites start throwing around the technical legal jargon, you can use the Internet to find correct definitions.
3. Investigate what Others have Done
Again, the Internet is the place to start. Usually your Secretary of State maintains a database of non-profit organizations and the articles of incorporation filed by such. Check to see if there is another team or organization similar to yours and how they filed. Other examples will help you in the process of filing. The IRS also provides a charities database at http://www.irs.gov/Charities-&-Non-Profits/Search-for-Charities. You can contact other groups who have been successful in filing. Generally, they may be willing to help. There is no need to reinvent the wheel.
4. Do as much of the Preliminary Work as Possible
If your group is the kind that routinely cautions others not to try this at home, it would be less stressful to hire a lawyer to incorporate for you. Less stressful generally means more expensive. However, this is a great exercise for the students to learn how a organization goes about filing as a non-profit corporation. Much of the task involves organizing, electing officers, establishing rules of membership, meetings, and etc. The paperwork for most states can be self-filed. The IRS 501(c)(3) Form 1023 can be daunting, but smaller organizations may be able to file Form 1023-EZ online. Doing as much as you can will help cut down on the cost of paying a lawyer or CPA and on filing. For many FRC teams on a shoestring budget doing as much of the preliminary work saves money that can be used elsewhere.
5. Get Help
Don't be afraid to get help. Call your state agency or the IRS. You might have to fight some redcap, but generally these offices are willing to help. In addition, one of the parents or mentors of your group might be a lawyer or CPA. They or others in your community and connected to your group may be willing to do pro bono work for your non-profit. It helps for you to do as much of the preliminary work as possible. Even if you are required to pay something for the service, these professionals are willing to reduce their fee depending on what you have already completed.
Acquiring 501(c)(3) status will benefit your team or organization, especially if you plan to make build robots every year. Private donors and business sponsors will appreciate your commitment to following the rules for fundraising. It will help you establish your team on a more sure foundation.