501 (c) 3

Thanks for the update.  I will be reporting on this at our Board Meeting on Saturday.

How will the 501-c3 status affect individual kiwanis clubs? Will we be able to use a tax number to encourage more tax-free donations?

Assuming the 501(c)3 status is eventually approved for Kiwanis International, would individual clubs still have total control (within IRS regulations) over how their Special Account funds are used?  Or, would Kiwanis International dictate their use beyond what is already policy in the bylaws, or levy the clubs for some of those funds?  Will KIF be a player in this plan?

Has the IRS given you any indication when we might expect a final ruling?

It is great to hear that this process is moving forward. Do you have any comments on how 501 C-3 status of Kiwanis Clubs may affect the 501 C-3 status of individual Kiwanis Club Foundations ( ie if a club has both what are the potential conflicts?)

P. Scott,

From a legal standpoint, there would be no affect on your club foundation.  Having stated this the reason most club foundations exist are because of the limitations the 501c4 designation places on the clubs fund raising ability.  If the clubs are also granted 501c3 status I imagine many clubs would choose to fold their foundations into their club

Jeff, COO, Kiwanis

This is great.  Keep up the good work.  This will really help the individual clubs with fund raising.

This is a must to increase fundraising. Today wouldn't be soon enough. Kirkland is celebrating 60 years of Kiwanis this year!

What is the delay?????? Hasn't it been "pending" for years now?!

We have been waiting for since I attended a seminar in Montreal on 501(c)3 status. Should we go ahead and form one on our own and not wait for the ruling on Kiwanis?

What should be our first step?

Mark,  

I have had similar questions from other Kiwanis Clubs.  Since the IRS is unable to give us any timeline relative to when this process may be completed I would recommend you move forward on your own.  My understanding it is fairly painless and quick to create a new 501c3. Our hold up is we have been a c4 for most of our history and are asking for a change in tax classification.

See the link below from the IRS' web site and it should tell you everything you need to do to submit your application.  

www.irs.gov/.../0,,id=96109,00.html

If you have a member in your club that is an attorney and is willing to guide you through the process it will be even easier.  

Having this designation would be very helpful to our club.  Many business supporters require this for matching funds.  What are the benefits to the club with the 501 c 4 status?

This is great news!  This is the first I have heard of moving to 501c3 on a national basis.  It will certainly help with fund raising from individuals and others not able to take advantage of 501c4.

My question is about dues - how would you expect dues to be treated if we are granted 501c3?  What is the status now under 501c4?

Now I'm confused.  I was a club delegate to International last July and got the message to wait for International to get 501 c 3 status.  Are you now changing your recommendation?  Are the clubs not also 501 c 4?  Would it not be just as hard for individual clubs to change status as it is for International?  

Mary Ellen, I can probably provide some clarity.  If you are not in a hurry to get 501c3 status I highly recommend you wait.  There are some clubs that want to create a Foundation and have been waiting to see what happens with International.  Since I can not give them a firm time as to when we will be recognized there is no problem with doing it themselves if they choose to do so.

All clubs are currently 501c4 under our current group exemption.

It is fairly difficult to change your status if you are already a 501c4 but very easy to create a new 501c3 entity.  This is why many clubs create new foundations.

We have used the KI EIN (tax ID number) for years when conducting our business.  Do we now need to apply for our own, separate EIN for our club so that I can file my club's Form 990-N e-postcard when it is time?

Brent,

Yes, your club should apply for their own EIN as this will minimize any confusion with the IRS.  If you would like to contact the finance department at the Kiwanis International office and give us your club name we can check our records to see if we have any EIN already on file for you.  Thanks for the question.

This is typical of the federal government.  Almost three years and still no answer for what should be a simple routine question.  No wonder the congressinal approval rating is in the teens and the president's is in the low 20s.  And to think that the only choice for the next president is one of three senators.  I know the bureaucrats have to justify their existance but this is ridiculous.

Please, help me check if the Kiwanis Club of Cambria Heigths, Queens, New York has an EIN number or some form of number that I can use at a catering place where I plan to have an "Everyday Heroes" award luncheon. I have asked the leaders before me for the past ten years what the club's IRS status is, to no avail until I came across this. What  paper document can I present to this catering hall?The tax status is what I want to be able to assure members and supporters. We want to be able to send more kids to camp, support "Learning for Life" etc. I thank you in advance for your help.

Philo E.,

Many clubs have their own EIN numbers but you are also covered as a 501(c)(4) under Kiwanis International's group exemption.  Call the Finance Dept. (1-800-Kiwanis x153) at Kiwanis Intl. and they will be happy to give you that number.  

Rob, it looks like the last update on the 501(c)3 issue was late 2007.  Is there any more recent news?  Our club has been holding off forming a 501(c)3 Foundation for a couple of years thinking this would be resolved before now.  Any encouragement that we will soon see some action?  Thanks.

Our club has wrestled with this (c) 3 issue for years ,we just did not know our status. With every administration the question came up, do we file a return?  Are we a (c) 4 or a (c) 3?.  From what I read  from this site is that we have always been a 4 by piggy back with Intl but we could be a 3 if we wait. Our problem is that we sponsor the local July 4th and are losing sponsorships because we are not  a  3. So your advice is not to wait and go ahead and apply on our own.

Rob, it's October and a Happy New Kiwanis Year to you!  Since it is a new year year, I have to ask, what's new on the 501 (c)(3) front.

Ted

Ted,  I saw your question and thought I would respond on Rob's behalf.  Kiwanis currently has a list of questions that the IRS would like answered as soon as possible.

Rob and I recently returned from a meeting with the Internal Revenue Service and our understanding is this should be our last round of questions.  After which, they will make a determination one way or another.

Will K International release clubs from the 501c4 group so

they can seek 501c3 on their own without a foundation?

Is it possible?  

To Jeffrey Oatess:

As a local K board member, I would be interested to know if IRS gave you any idea how much longer this will take to resolve now that you have presented them with what should be the last information they require.

It is possible for a club to gain 501c3 status by its own accord.  Through the process of tax reclassification we have come to find out that a handful of clubs have already done so.

We would suggest you remain under the 501c4 group exemption until you are approved by the IRS for 501c3, at which time you would stand on your own.

Terry,

In the latest round of questions that the IRS sent to us, they asked that we contact 25 clubs and get some very specific information related to the activities of the club.  This will take some time.

The last time we spoke with our contacts at the IRS they said that if the most recent round of questions are answered to their satisfaction they don't anticipate reqiring any addtional information.

What are the questions? Send the questions to every US Kiwanis Club and ask club secretaries for the answers. Club secretaries are amazing. You'll get 25 replies in short order. Let's get this moving!

Richard,  

Thanks for your enthusiam!  I guess I should have been more clear in my previous post.  The IRS asked us to get information from 25 clubs (that they chose).

They are very specific questions for very specific clubs.

These tax issues always confuse me.  I hope a 501 (c) 3 will be clear.  The example is the local Shrine Club is a 501 (c) 10 and is able to sell food at events for their club activities as everything they do seems to be considered "fraternal".  I am told in Kiwanis to be careful to use ANY funds from the general public ONLY for community service.  

The November 2007 501(c)(3) update had some additional history, etc. on this subject -- is the November 2007 update still available/accessible (and where/how)?

Forget the comment I just posted -- I thought I was looking at a new (November 2008) update, but now I see it is the update from a year ago. has there been any new progress/developments on the 501(c)(3) application?

Although KI is still working on getting 501 (c) 3 status, do they have any other tax exempt status, like 501 (c) 4, etc.?

Thank you, Rob.  Now, can you tell me how our club goes about getting a letter/form indicating that KI is a 501 (c) (4) organization?

Thanks again, Rob.  We would appreciate getting this as soon as possible.

I am trying to nail down exactly what we must file by Feb. 15th, 2009.  Am I correct that if we don't have a federal EIN, that we should apply for and get one?  (Notify KI of that number) Also, if our income from all sources - dues, fund raising, ect exceed $25,000, then we must file a Form 990 by Feb 15th?

Cathy,  Contact Joanne Fregeau in our Finance Dept. and she will get you the information you need.  She can be reached at 1-800-KIWANIS x 153.

Lenn,  

All clubs need an EIN and need to report that number to Kiwanis International.  My understanding is you have been in contact with our Finance Department regarding your EIN number.

As for your second question, every club must submit a 990, as the rule changed about a year ago.  If your club has total receipts of $25k or more you need to submit IRS form 990-EZ.  If your club has receipts less than $25k they need to fill out form 990-N (e-postcard).  Both are available at www.irs.gov .

Has anyone contacted Senators Bayh or Lugar to assist in pushing this through?  This process is coming up on 4 years now.    

I think that some of the member groups that are part of the "Service Club Leaders Organization" are already classified as 501 (c) 3 not-for-profits. Since the purposes of most community service organizations is quite similar, why could Kiwanis not use this compelling information when seeking similar status from the IRS?

In our most recent meeting with them, the IRS was very clear that no amount of political pressure would speed the process or sway the outcome of the decision.  The request is either proper under US tax law, or not.

Although it's true that several other service clubs have gained 501(c)(3) tax reclassification, they are small organizations, comparatively.  Optimist Intl., has been trying to gain tax reclassification for over 5 years and was recently denied by the IRS.  This is disconcerting as they are a large service organization and are very similar to us in mission.

The problem with the switch to 501.c.3 standing from 501.c.4 lies in the mission to influence the communities in which we operate. While striving to achieve our mission of creating better and safer communities for children it is sometimes appropriate to advocate for changes in public policy that affect our communities. This advocacy - also called lobbying in some quarters - can jeopardize 501.c.3 standing. Among other reasons, that is why many clubs choose to have a separate foundation from their club with a separate board of directors. It is also why Optimist whose community advocacy mission like ours fits the definition for a 501.c.4 organization. not a 501.c.3 organization. We have a 501.c.3 foundation. Many clubs do also. I have done the process for a variety of community-based agencies. Forming a corporation and filing the forms for a 501.c.3 recognition is not expensive and requires very little time for a simple entity.

Does the cost of trying to get a 501(c) 3 for our club come out

of our Administrative Account?

I noticed back in Jan 09 that you mentioned making available a form/letter verfiying the Kiwanis International status of 501 (C) 4.   I'm needing this form to apply to private foundation.  They asked for 501 (C) 3... I know thats not available.  

Byron,  

Contact Joanne Fregeau in our Finance department and she will get you the documentation you're requesting.  jfregeau@kiwanis.org or 1-800-KIWANIS, ext. 153.