[wplug-plan] Tax Status, parent organizations, and more (fwd)
David Tessitor
dttessitor at home.com
Wed Mar 21 17:38:14 EST 2001
SHORT ANSWER: About the most that can be fairly said is that WPLUG has a
website, a list, monthly user meetings, bi-monthly installfests, and is in the
process of trying to decide what we would like to do. To say anything more
would be to speak for the group when the group has not yet resolved what it
is, let alone what it wants to be or do. Individuals have made some comments
in past months and certainly could in response to the inquiry, but none should
be offered as the position of the group. There are some important
considerations with such an arrangement which must be taken into account
before an informed group opinion can be issued.
LONGER EXPLANATION: The notion of a financial umbrella organization is
something that could be quite beneficial if an organization were to strive to
be more like some of the LUG's whose by-laws were linked last fall by
Jonathan. Most of those seem to be quite active and are well structured in
order to accomplish that activity, but mention of such structure has been
highly objectionable to many in WPLUG.
Before anything can be considered about WPLUG joining in the proposed
association, not only would WPLUG need to resolve more on its end, but there
are also many things which would need to be worked out about the umbrella. I
can comment on this because I am currently associated with something similar
to this arrangement through my founding of the American Town & Country
Alliance, a project of the Tides Center. Originally, the Tides Foundation in
San Francisco was established upon a similar umbrella premise. It has since
divided into the Tides Foundation and Tides Center, the first assisting donors
who want to give to various groups and the second managing "projects" as their
financial management umbrella.
Many of the arrangements with Tides would also apply in the case of this
proposal for LUG's because these are a requirement of the applicable laws and
regulations. For example, organizations which are already incorporated or
have a 501(c)3 status cannot apply to join Tides or the proposed umbrella (at
least they would not be able to be covered by the 501(c)3 status). Those
which join under the 501(c)3 umbrella must then technically become
sub-entities of the umbrella (at Tides they are called "projects"). While
they can function much as separate organizations (with a common purpose), all
finances are required to go through the umbrella -- all income must be
deposited with the umbrella, which must keep accounts, and all dispersals must
be made from the accounts by the umbrella. There must be detailed accounting
and requisition procedures which must be carried out by the sub-groups and
then sent to the umbrella. Anything less than this risks having the 501(c)3
status revoked.
In order to cover its own staffing and office expenses, the umbrella must take
a cut of the income. At Tides it is now 9% (up from an original 6 or 7%);
Earth Island Institute takes a smaller percentage.
Such an umbrella arrangement can offer a number of benefits, but it is not a
magic pumpkin, and those who treat it as such could find their coach turning
into mush at the stroke of midnight. While Tides procedures (which also
cover staffed projects) are somewhat more involved than would likely be needed
for LUG's, there are still a number requirements which would be needed in
order to legally protect the umbrella. To take full advantage of the 501(c)3
umbrella's benefits would quite likely require more responsibilities and
organization than anybody has dared even suggest for WPLUG.
That said, it is an interesting proposal of which a great many LUG's should be
able to avail themselves with great benefit. I think it would be both safe
and wise for WPLUG to ask to be kept informed as the proposal moves toward
reality.
Dave
============
James O'Kane wrote:
> Could people think about this and reply to me within 24 hours, so that I
> can get back to her with our psudo-official thoughts?
>
> -james
>
> ---------- Forwarded message ----------
> Date: Wed, 21 Mar 2001 12:38:43 -0600 (CST)
> From: Kara Pritchard <kara at luci.org>
> Reply-To: lugs at linuxusersgroups.org
> To: lugs at linuxusersgroups.org
> Subject: Tax Status, parent organizations, and more
>
> US LUGs,
>
> I've moved forward with forming a formal full 501c3 Non Profit charitable
> parent organization for LUGs. I need to know, before going forward with
> application fees, etc how many are interested, and what services they
> want.
>
> In short, the parent organization would accept children organizations who
> could then benefit from the charitable organization status. This means,
> you can accept donations from vendors or other sponsorships and they can
> receive deduction for the donation. This allows for larger contributions
> such as ongoing sponsorship of servers, meeting rooms, event cash
> sponsors, and more.
>
> There are some formal guidelines which have to be followed though, and as
> soon as I get all that legal infoz, I'll forward them. Essentially your
> group (which can be like what we're doing and having larger groups, such
> as SILUG for all the southern illinois groups, instead of each wee LUG
> doing their own) will need a board, will need to file annual taxes, and
> the whatnot. However, would reap benefits of being able to be an official
> NFP organization, participating in larger events, being recognized in your
> community, etc.
>
> So, what things does your LUG do, would like to do, or would like help
> with, that this parental organization could do? Some initial thoughts I
> have listed below. Not all are related specifically to the tax status, but
> do support it indirectly :
>
> * Accept formal sponsorships from companies
> * Organize fund raisers
> * Use an entity to pass sponsorships, speakers, etc through.
> * Speaker's Bureau
> *
>
> --
> Kara Pritchard Phone: 618-398-7360
> Author, RHCE Exam Cram
> Director of Exam Development http://www.lpi.org/
> Site Manager http://www.LinuxUsersGroups.org/
> --
>
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