If anyone has experience I would like to know if a model railroad club can be formed as a 501C non-profit without using a lawyer? Also for a formal club with rents etc what are the typical dues $$$ you are paying. Thanks in advance for any replies, Dave
Varies state to state. My dues are $20.00 PLUS NMRA membership. We started a club, no dues, meet at ritating house to work on railroads and then go to train shows. The FREE group has more fun and less trouble.
To go 501C is a very fine line, I do not know ow to do it without a barrister.
There must be one on the forum [oops]
Yes, it can be done without legal assistance. The problem is that each state has different rules. What a club I belonged to in 1980 that had a educational/charity expemtion is not the same as what you may need. Is there another club in your state that is incorperated this way? Maybe drafting something off of their documents will work…
The other key issue is to protect the officers from any libility lawsuit. You may need to get a libitlty insurance rider depending on who you are renting from. Our current club is in an office park in a small town - $300/month, and we needed a $500,000 libility policy. the insurance was another $300/year. Divide $3,900/year by the number of members, plus the cost of building the layout(assesments). I had $520 invested the first year! Startup is expensive…
Jim
An important point of clarification…
501c3 status is a federal thing. You may not need this. It can be done without an attorney, but you do need to pay close attention to a number of complicated pieces of paperwork. If you are granted 501c3 status by the IRS, it is only temporary. Then you have five years until you have to do a major audit, etc to prove that you have lived up to their requirements. This will invitably cost some big bucks. If you succeed, then your organization will be granted permanent 501c3 status.
Ask me how I know? I am a director of a 501c3, although I am glad I wasn’t our treasurer. Our audit cost about $6,000. In our case, we needed 501c3 status, because we act as a fiscal sponsor to some 40+ projects all over the world. But let’s not talk politics…
[censored]
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<><>Essentially, what a 501c3 does is makes contributions to your organization tax-exempt, etc in the eyes of the IRS, as well as giving it corporate cover for liability purposes. You will still need Board of Directors insurance to cover other aspects of liability.
In actuality, if you simply want to organize a club that is not intended to make a profit, you should look into the STATE level. I’m only familiar with Illinois, but most states offer some sort of private association organization under state law. General liability still needs to be covered by insurance (somehow those folks always get their cut) but is not required, only recommended if you have the public on your property, rental or owned. This status will often allow you to avoid sales tax on equipment purchases, etc, but does not allow a federal tax deduction for contributions, etc like 501c3 does.
So it really depends on what is provided by state law in your state and whether you want to go through the extra record keeping and reporting required by 501c3 status. It is worth the trouble if you need it, but definitely too much of a PITA if you don
[quote user=“mlehman”]
An important point of clarification…
501c3 status is a federal thing. You may not need this. It can be done without an attorney, but you do need to pay close attention to a number of complicated pieces of paperwork. If you are granted 501c3 status by the IRS, it is only temporary. Then you have five years until you have to do a major audit, etc to prove that you have lived up to their requirements. This will invitably cost some big bucks. If you succeed, then your organization will be granted permanent 501c3 status.
Ask me how I know? I am a director of a 501c3, although I am glad I wasn’t our treasurer. Our audit cost about $6,000. In our case, we needed 501c3 status, because we act as a fiscal sponsor to some 40+ projects all over the world. But let’s not talk politics…
[censored]
<><>
<><>Essentially, what a 501c3 does is makes contributions to your organization tax-exempt, etc in the eyes of the IRS, as well as giving it corporate cover for liability purposes. You will still need Board of Directors insurance to cover other aspects of liability.
In actuality, if you simply want to organize a club that is not intended to make a profit, you should look into the STATE level. I’m only familiar with Illinois, but most states offer some sort of private association organization under state law. General liability still needs to be covered by insurance (somehow those folks always get their cut) but is not required, only recommended if you have the public on your property, rental or owned. This status will often allow you to avoid sales tax on equipment purchases, etc, but does not allow a federal tax deduction for contributions, etc like 501c3 does.
So it really depends on what is provided by state law in your state and whether you want to go through the extra record keeping and reporting required by 501c3 status. It is worth the trouble if you need it, but definitely too much