To 501(c)(3) or not to 501(c)(3), that is the question
 

It has been suggested to me that I look into incorporating HFDS into a non-profit corp. Currently the club is an unincorporated not for profit association. While the formation of a non-profit corporation is actually quite easy, the proper governance of a non-profit corporation is the more difficult part.

Here are some basics:
(1) reviewable financial statements, HFDS has them thanks to the work of Conrad; (2) an organizing document such as by-laws or a charter, which HFDS has; (3) meeting at least annually which HFDS does; (4) taking written minutes of the meetings contemporaneously with the occurrence of the meeting, which HFDS will have to always do once a non-profit corp.; (4) policies that are in writing, HFDS only has the charter and the league policies that are in writing and will need more written policies in order to be ready to be a non-profit corp.

There are many policies of HFDS that are not in writing, and before becoming a non-profit corp., these policies will need to be reduced to writing, some examples are document retention policy, reimbursement policy, vendor policy, conflict of interest policy, etc. In the event of an investigation by the IRS or Texas Attorney General, the financial records should be consistent with the minutes of the meetings and with the written policies.

I will propose at the next meeting the creation of a Policy Handbook by HFDS to guide in the governance of HFDS as an organization into the future, and included in that proposal, there will be a re-confirmation of the club charter as well as a more extensive list of the sorts of policy topics that I will suggest that HFDS have in the Policy Handbook.

Thus, the question is can HFDS govern itself in a way to allow it to become a 501(c)(3). Does the membership of the club wish to commit the club to operating the organization in that manner? As I have always asked, what is the purpose of becoming a non-profit corp. with 501(c)(3) status, i.e. what is the benefit to be gained? Is it to become eligible for grants? if so, what sort of grants and for what purposes? Is it to allow donors to take the deduction on their taxes to allow fundraising efforts, and if so what are the goals of those fundraising efforts? Is it to have tax exempt income?

Ask the following questions: (1) what does the Houston Disc Golf Scene lacks in comparison to others cities; (2) what can the Houston disc golf community do to improve Houston Disc Golf; (3) how can HFDS play a role in improving Houston Disc Golf; (4) how does HFDS becoming a non-profit corp. assist any of these efforts?

Re: To 501(c)(3) or not to 501(c)(3), that is the question
 

IMO, for regular league nights, the 501(c)(3) status may not be worth the added burden. However, for raising money for a course maintenance fund and getting new courses in the ground, 501(c)(3) status could be beneficial and worth the added burden. The real question is has HFDS ever been in a situation where it could have gotten a grant / donation, but was unable to get it due to lack of 501(c)(3) status.

Does the Houston Parks & Rec Dept have 501(c)(3) status, and is it possible to piggy back off of their status. i.e., if HFDS has a fund raising campaign for a new course / course improvement, can its donors make a donation to the Houston Parks & Rec, restricted for the course / course improvement, and get the tax write off.

If the HFDS does go the route of a 501(c)(3) and needs assistance in financial statement preparation, I can volunteer for assistance.

Re: To 501(c)(3) or not to 501(c)(3), that is the question
 

Has anyone talked to Gordon Maxim-Kelley or Wade H. from Waterloo? They have done this and can give some feedback.

The one thing I recall was is HFDS really a charity? TSDGC isn't a charity event and historically that would have been the driving reason for taking that route. That allows bigger corporations to donate to the "charity".

Seems like we don't have the funds/need for this option. Just my thought.

Re: To 501(c)(3) or not to 501(c)(3), that is the question
 

We looked into the 501(c)(3) down here in the GTDG. We ended up not doing it because it didn't benefit our club but it would have created extra burden. The extra requirements are not impossible to do but most 501(c)(3)'s have a paid employee(s) to meet that demand.

The big question a club must ask themselves to determine if it should incorporate into a 501(c)(3) is: do you bring in more than $5,000 per year. If not, its not needed. If you do, then you must file with the IRS. Its that simple.

As far as big grants goes, many times that grant would go to the parks department anyways, not the club. However, if the club was trying to secure a large grant itself in order to keep in the bank and distribute at will, the grant would put it over the $5,000 threshold undoubtedly and now we've answered the question, need to incorporate into 501(c)(3). Public and private grants can go to nonprofit associations but many will require 501(c)(3) status or at least organizational documents similarly structured.

Re: To 501(c)(3) or not to 501(c)(3), that is the question
 

One question I had is whether a property owner can donate the use of land to a non-profit organization to operate a disc golf course and then claim a deduction on his taxes for the rental value of the property? Any tax people out there that can answer that question?

Often non-profits become a way for corporations and business to obtain advertising by sponsoring or making a donations to the 501(c)(3). Many businesses and other entities make 501(c)(3) status a requirement for charitable donations. As a corporate sponsor, The Club would provide some advertising for the entity.

There is a not-for-profit corporation called The Houston Parks Board which is a 501 (c) (3) which can be an avenue for making donations to improve the parks. Donations can be sepcifically earmarked for disc golf or a particular course or something like "concrete tees for the MacGregor Course."

As things exist now for HFDS that runs a few leagues and 2 or three annual tournaments with income less than $5,000, there might not be a need to incorporate as a non-profit, but if there are those that want to see HFDS as a fundraising vehicle for installation of or improvements to courses.

Re: To 501(c)(3) or not to 501(c)(3), that is the question
 

Discussion about this on the PDGA board as well: http://www.pdga.com/discussion/showt...81#post1428081