quiltmonkey Posted October 21, 2013 Report Share Posted October 21, 2013 Rita's recent post about her guild having a lot of $$ tied up in CDs got a lot of us thinking. I responded to her post Also, for those of you interested, or want to forward this on to your guild's treasurer, below is a link to IRS requirements regarding non profit organizations: http://www.irs.gov/Charities-&-Non-Profits Below is my response to Rita R that was mentioned in a separate thread: "I have to add my $.02 regarding the $$ large bank account and this being a "non profit" organization. So, just to be safe, make sure your guild is filing it's "non profit" tax numbers to the IRS every year. Yes...truth... even non profits need to report to the IRS. It is wise to hire a CPA to review your records and file on your guilds behalf every year. I will add that our guild (which also has a lot of $$ in the bank) got in a lot of trouble with the tax accountant when the CPA discovered we were not filing with IRS and that we had a lot of $$ in the bank... just sitting there, stacking up and collecting interest. The CPA threatened that we would be fined for our disregard to following the IRS rules. Fortunately, we paid the CPA to fix our "tax issues" and we avoided the fines. BUT~~ that stated, from this point forward we WILL NOT go through this "headache" again with the CPA so we will continue to be in good graces with our CPA and the IRS into the future. Lesson learned! Don't keep a lot of $$ in the bank. Especially if it's a non profit. You need to report to the IRS every year, and you need to show due dilligence to prove that your guild's designated accounts (e.g. operating account, raffle account, etc.) you are making money and spending money. The funds need to be used. PAID DOWN ... or else, you will lose your 501c tax exempt status and YOU COULD BE FINED $$$$." Link to comment Share on other sites More sharing options...
ffq-lar Posted October 21, 2013 Report Share Posted October 21, 2013 Hi Shana and thanks for the information! I also belong to a guild that is cash heavy. The boards solution to the "problem" was to spend the money. Well, duh! But the solution we were allowed to vote in was to spend down the excess by discontinuing fund raising until the excess is reasonable. Huh?! Does that sound backwards to anyone else? Think of all the good things we could do if we offered more to the public and still continued to bring in more funds. It's like not growing food in your garden because you have a pantry full. I say share the wealth, but they seem to say spend the wealth on just us. *sigh* Link to comment Share on other sites More sharing options...
quiltmonkey Posted October 21, 2013 Author Report Share Posted October 21, 2013 Oh my goodness, Linda... Their answer to the solution is to discontinue fundraising? Huh? They don't "get it" do they? They don't "get" what a 501c non profit organization is supposed to be acting on behalf..... Here is a definiton I found on the Internet: Non-profit organizations provide programs and services that benefit the public. Not-for-profit organizations are set up to create a venture where any and all surplus money, beyond reasonable operating expenses, will be spent to provide services and programs, typically for education, social causes, the arts and scientific research. Nonprofits agree to organize and operate solely to fulfill a charitable mission. Nonprofit organizations have different missions, but they all share the same general purpose. Unlike for-profit businesses, nonprofit organizations are formed to benefit society in a tangible way. Well, my local guild's mission statement is to promote quilting. I think what non profit organizations (such as quilt guilds) they are supposed to act on behalf of ...example would be to help promote and teach and perpetuate the art of quilt making. And, with our funds, we are supposed to use $$$ toward promoting quilting in our local community by buying fabric and supplies to make quilts to donate back to the community (e.g. fire quilts, or to give to children or adults who are less fortunate... etc.) guilds can also offer quilting classes to teach others in our guild and to those in our community who might be interested in learning a new quilting technique. The funds can be used toward hiring instructors to come and teach in the community. The non profit guild is supposed to be the CONDUIT for the members in our community ~~~ the non profit guild is NOT supposed to use these funds to serve its guild members only. Oh boy...Sheeesh! Link to comment Share on other sites More sharing options...
LisaC Posted October 22, 2013 Report Share Posted October 22, 2013 Several years ago I applied for our archery club to receive the 501c3 status so we could apply for grant money from another large organization. We were denied that status because we were not 100% educational or 100% religious. We did receive another 501c tax status, which was not totally "not for profit". It worked for the organization which was really a lot like most quilt guild set ups. One really needs to read the fine print; and we did have to file yearly tax returns although we never had to pay tax. Link to comment Share on other sites More sharing options...
ffq-lar Posted October 22, 2013 Report Share Posted October 22, 2013 I'll have to see what our guilds classification is before I condemn the board! I know our mission statement is education/charity/community but it seems like the group has drifted away from the service that our mission statement claims. I wish I could be more active, but retirement is coming next year---yahoo! Link to comment Share on other sites More sharing options...
ThreadWaggle Posted October 22, 2013 Report Share Posted October 22, 2013 I guess it depends on how "reasonable operating expenses" are defined. We host a statewide event every 5 or so years. The seed money for the event is quite large as we rent out an entire college campus to hold the event. What is reasonable for one guild might not be the same for all. It is very important to fill out the taxes every year. Not doing so can result in large fines and the loss of nonprofit and/or 501©(3) status. That status is very important to our fund raising because in our state you have to have it to hold a raffle. We also get forgiveness of collecting sales tax once a year which we use for our auction. It takes more money to keep my guild going per yer then I made my first year out of college. Link to comment Share on other sites More sharing options...
Quilting Heidi Posted October 22, 2013 Report Share Posted October 22, 2013 They sure could buy a lot of fabric for charity quilts! Link to comment Share on other sites More sharing options...
ffq-lar Posted October 22, 2013 Report Share Posted October 22, 2013 They sure could buy a lot of fabric for charity quilts! We have an embarrassment of riches in the fabric for charity quilts department. Year before last we were given 600 pounds of quilt-shop fabric from the family of a member who passed away. Except for batting and extra-wide fabric for backers, the guild won't need fabric for a couple of years. Link to comment Share on other sites More sharing options...
Bliss Quilter Posted October 23, 2013 Report Share Posted October 23, 2013 I suggest bringing in more National Teachers Quilting/Longarm and someone that would teach new techniques. Even buy batting and extra-wide fabric for backers for that 600 lbs of fabric. Hope your guild wakes up soon before the Snoozing causes them to Lose the 501c classification. That would be such a shame. Link to comment Share on other sites More sharing options...
CWBowser Posted October 24, 2013 Report Share Posted October 24, 2013 We had the same questions about non-profit status and a large bank balance. The people from either IRS or New York tax department told them that the bank balance was okay because some organizations put money aside to build another building like fire houses. Someone from your guild has to contact the IRS and your state tax department. Good luck. Link to comment Share on other sites More sharing options...
Recommended Posts
Archived
This topic is now archived and is closed to further replies.