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Do's & Do Nots for a 501C7

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  • Do's & Do Nots for a 501C7

    I belong to a small NON Profit Org. That has long since lost it's way of the way things are supposed to be ran and handled.
    I have several issues as most of this was "" Lets say inherited when the board was disbanded.
    Currently we are selling candy Bars (Bought Wholesale) and we are selling them to raise money in order to finance an event that the club hold on club property. I was brought to my attention. That we are doing what is called a NON TRADITIONAL activity.
    Since we are not selling to members of the club. (Some are but most are not who buy the cany bars) it is my understanding that the club must raise the funds on club property and all of the profits cannot benefit any member of our club. I Get that part but I am really confused on what we can do and what we should not be doing in order to raise money.
    Our club is 35 strong and we do fundraisers and support several charities within our community.
    Since we are a 501c7 we have to tell people who donate that their donation is not tax deductible.
    Please help me understand what we can and can't do examples would be perfect.
    Jim

  • #2
    Re: Do's & Do Nots for a 501C7

    Hmmmm, funny you should ask. Here is exactly what you were looking for.

    http://www.irs.gov/pub/irs-tege/eotopicc96.pdf
    Due to a recent promotion, I should now be referred to as Major Obvious.

    I would not be trying to provide information and knowledge if I did not sympathize.

    Some days it is just not worth chewing through the restraints to face life.

    Comment


    • #3
      Re: Do's & Do Nots for a 501C7

      Thank you for the information
      I have read it and re-read it.
      on one hand it says that we are doing a Non Traditional activity yet on the other hand (If I understood it correctly) the Government put a special stipulation in that says we can.

      Comment


      • #4
        Re: Do's & Do Nots for a 501C7

        The way I read it, the gov't says you can safely do a non traditional activity, as long as the proceeds of it are less than 15% of all the money taken in by the organization. I would limit it to the old 5% threshold they mentioned, to avoid scrutiny.
        Due to a recent promotion, I should now be referred to as Major Obvious.

        I would not be trying to provide information and knowledge if I did not sympathize.

        Some days it is just not worth chewing through the restraints to face life.

        Comment


        • #5
          Re: Do's & Do Nots for a 501C7

          Thank you
          Is a NON Profit in accordance with it's mission statement if it no longer provides services to the mission ststement.
          And if it is not then what should the club do in order to be in compliance with federal, state, and local laws?

          Comment


          • #6
            Re: Do's & Do Nots for a 501C7

            Hmmm, that is a bit tougher to comment on. Can you be specific to your situation?
            Due to a recent promotion, I should now be referred to as Major Obvious.

            I would not be trying to provide information and knowledge if I did not sympathize.

            Some days it is just not worth chewing through the restraints to face life.

            Comment


            • #7
              Re: Do's & Do Nots for a 501C7

              Sorry should have included more details
              Our mission statement says that we are supposed to support all emergency personell in a time of crisis
              We are A CB club and were founded in 1943. Over the course of time our members lost their way as a result of not knowing and thinking that they were doing the right thing. However we have not nor do we follow the guidelines set in our mission statement. we do however do several fundraisers and contribute all of our proceeds (Minus 35%) to local charities and organizations that are in need.

              Comment


              • #8
                Re: Do's & Do Nots for a 501C7

                Social clubs

                It sounds like you have deviated enough from your original mission that you are misclassified. The primary source of revenue for the club is supposed to be from member dues rather than fundraisers. It may be time to look into refiling your groups classification.
                Due to a recent promotion, I should now be referred to as Major Obvious.

                I would not be trying to provide information and knowledge if I did not sympathize.

                Some days it is just not worth chewing through the restraints to face life.

                Comment


                • #9
                  Re: Do's & Do Nots for a 501C7

                  Just read the entire link (thank you, it was very helpful,) but I still have a question.
                  Are annual member dues to be included in the "normal and usual" calculation of gross receipts?

                  Comment


                  • #10
                    Re: Do's & Do Nots for a 501C7

                    I am not an expert by any means. But........ My understanding is such as My case( we are a 501C7) Everything we do needs to come from the members for the members which I would translate as (Dont quote me) this is revenue that is paid by the members which would go towards the operations of the club.
                    I cannot say anything about a 501C3 . A C7 is a little different in otherwords if we get a donation form a company they cannot use it as a write off for their taxes and as such we need to let them know that up front before asking for any kind of donations. Provided we were doing a fundraiser which of course we would then have to include the monies as Gross reciepts. and then take What I think is 33% and the rest of it needs to be donated to a local charity or other.

                    Got away from myself gross recipts in my opinion would towards the daily operations of the club. But I would have to do more research to find out if that is 100% true or not.
                    Like I said I am still learning and have a long way to go.
                    Jim

                    Comment


                    • #11
                      Re: Do's & Do Nots for a 501C7

                      In what respect are you referring to Gross Receipts? As far as Taxes are concerned IRS from 990 is used for Non Profits. Section VIII (8) is Revenue. Line 1b (may have changed on updated 990) is members dues. As with most tax forms there are a page full of various types of Revenues and add lines x - x and bottom of the page is total revenue. There are 4 areas of section 8 that come back to the front summary page "Revenue" and added together establishing Total Revenue. From my experience as a treasurer of a non profit (former), what I did was downloaded the current 990 and the instruction from the IRS web site. After going through it I had narrowed my list of confusion and then researched from there. There are tons on places out there to get tax and finance assistance and most likely in your local area. Do some google work and I bet you can find a local to call for some assistance and/or just get some questions answered.

                      Of course there are plenty of sight like this for great information as you have all ready discovered. The one advantage to locals is, that every state may have differences specific to them that the locals will have more knowledge of. Not as for the IRS of course but local law.

                      Hope all that gibberish helps a little. Oh, and no I am not an expert or lawyer and my opinion has absolutely no value. I am just speaking from my personal experience.

                      Comment

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