Nonprofit Law/Alumni Council
I am the treasurer of an all volunteer, unincorporated, nonprofit university alumni council in Washington, DC. We have been in existence since 1992 and were using the University EIN. We changed banks and were informed by our new bank that the University now required that each alumni council obtain its own EIN. I applied for a new EIN for banking purposes only. We have never had more than $5000 in our account and currently have only $902. We have over the past years given stipends of $500 to $1000 to summer interns who work with government agencies. We have no dues so our income comes from various alumni social events. I have checked into forming a LLC and getting 501(c)3 status but the costs appear excessive with a filing fee of $400 for 501(c)3 status alone! Given the fact that we make less than $5000/yr can we now just operate as we have been for the past 20 years without filing returns or any additional paperwork?
If you want donors to be able to deduct donations and not to have your sales income, if any, taxed as long as you comply with fundraising guidelines for 501(c)(3) organizations, you would need to make sure that your unincorporated nonprofit articles of association states that it is
organized under Internal Revenue Code Section 501(c)(3).
You must have the required clauses in the organizational
document See, starting in the middle column of page 26
of Publication 557 under "Organizational Test". Samples
start on page 77. Also you must operate as a 501(c)(3)
organization (see that publication 557 for the general
rules). I don't think that your organization would have a problem amending its organizational document if it does not presently comply.
Then you would be qualified as a 501(c)(3) organization. See the IRS Publication 557 "Tax Exempt Status for Your Organization" at:
in the right column on page 25 under "Organizations Not
Required to File Form 1023" discusses who does not need
to file and among those is "Any organization (other than
a private foundation) normally having annual gross
receipts of not more than $5,000. These organizations
are exempt automatically if they meet the requirements of
If you do not make proper Articles of Association then it still appears that you would not have any federal filings to make even though you would not be treated by the IRS as a 501(c)(3) organization. Donations will not be deductible, but the fund will not have taxable income if its only income is donations or fees and no profit goes to any insider and it conducts no activities other than disbursements for expenses and social events.
Narcotics Anonymous advises affiliates who have obtained an EIN (Employer Identification Number, also known as the taxpayer identification number) for banking purposes only:
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Any NA group that acquires an EIN should consider that the IRS
could at some point in time contact them and request valid
financial activity information. This is one reason that NA groups
will want to maintain detailed records, including treasurer's
records, bank statements, receipts and any other documentation of
their financial activities. We suggest that NA groups maintain
accurate financial records by using the group record worksheets in
the Group Treasurer's Workbook. The worksheets and other above
mentioned records should be kept for at least five years. Care
should be taken when assigning responsibility for storage of the
records, so that they remain available to the group if needed.
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Harvey Mechanic, Attorney at Law -
P.S. This response is intended to be a general statement of law, should not be relied upon as legal advice and does not create an attorney/client relationship.