March Club Meeting 03/26/06

[Dan Michler]

What is the status of the fund raising?  Charitymania.com is invovled with a number of well established high profile groups that sponsor local youth sports teams.  These are long standing legitimate groups that use charitymania as a fund raising tool.  I think this is a great idea that gives the club an opportunity to raise some cash and to also raise the profile of the club.

Well Tom, we searched long and hard to find some reason that we could use to shut down this idea.  And surely enough a reason was found.  Thank god or we might have all gone to jail.

[mirth]

Dan, I have no idea what Tom originally said or why you had to edit his post, but I do think it is good we get this out in the open for everyone to know.
Maybe it will serve as a refresher for those who thought they knew but didn't think they had the whole story.


Discontinuum is an Illinois corporation, incorporated in 2002 under the State's Not for Profit Corporations Act. Most folks, including myself at the time, when they hear 'Not for Profit' they immediately think 'Charitable Organization' since most NFPs end up being such. However, this is not the case in regards to us.
In 2004 when Jim left the club we decided to resume our quest for recognition as a bona-fide charitable organization under section 501 of the US Internal Revenue Code, which cost us $150 just to file the paperwork. After 6 months we heard back from the IRS, when they wanted additional information about our organization, how we felt we would qualify under 501 ( c ) ( 3 ), and with some requested changes to our Articles of Incorporation. After discussion amongst Jon, Dan, Brett, me, and Bruce (acting as our unofficial legal advisor) we determined that we would not qualify for a Federal tax exemption under Section 501 ( c ) ( 3 ). There is another part of Section 501, part ( c ) ( 7 ) which is entitled 'Social and Recreation Clubs.'
On the surface, it sounds like a perfect match. Discontinuum is more like a Social & Recreation Club than an educational and charitable organization. But, once you start to read into the language you quickly discover that we could have to stop running best shot, tournaments, merch sales, the club website, and anything else we do for the general public from being publicly accessible. Anything and everything we do nowadays would be for members and members only. Doesn't sound so great now, eh?

So, we decided to forfeit the $150 filing fee & continue on as a tax paying Illinois corporation whose ideals and goals live in the NFP world.

'What does any of this have to do with selling raffle tickets?!' you ask?

Well, Illinois law is fairly clear on the subject of lotteries and raffles.
In order to sell shares in a raffle in Illinois, you need a permit from your local government.
To get the permit from your local government you need to prove you're a recognized Illinois charity or other tax exempt entity AND you need to have been in existance for a minimum of 5 years prior to applying for the raffle license. In our case, that would mean that if we qualified we could apply for the raffle license about this time in 2007.

Now, there is a possibility we can convince Illinois to recognize us as an exempt organization... This would mean we could be exempt from sales tax on purchases, we wouldn't have to pay income tax to Illinois (but uncle sam would still get his cut), and would receive all other benefits afforded to exempt organizations. We dropped the whole issue in early 2005 when we decided to stop seeking Federal exempt status.


So, there you have it. I don't know why there are some folks who think that this idea was intentionally/maliciously killed because that is not the case.
We are an Illinois corporation & we need to follow Illinois law.
I'm sure there are other things we do now that break the law. The difference is that we're unaware we're doing it. With the raffles we would be willfully breaking the law, and if caught all the directors would be liable.


I LOVED this idea & thought it would be a great way for us to provide added cash for events. Its unfortunate we can't do it.

[Dan Michler]

tom had his post inside another quote.  thats what i modified.

[mirth]

tags 76 thru 100 came in yesterday.