To: All GFWC-NC Affiliated Organizations

To: All GFWC-NC Affiliated Organizations

From: GFWC-NC Headquarters

Re: Possible Group Exemption

Due to the recent changes in Internal Revenue Service Laws, which for several years have been more restrictive on nonprofits and as a result more confusing and costly. GFWC-NC is willing to try Group Exemption under the following conditions:

1. Enclosed/attached you will find a draft copy of Articles of Incorporation or Organization that will require the blanks be filled in, signatures, the club’s address, and EIN/TIN* (see below) number, financial information, and of course a vote by your club membership of approval. If your club is already incorporated please indicate in that manner, sign, and return the form. There are Articles of Amendment the club will need to fill out with this language and submit to the Secretary of State’s office.

2. How will this effect your club? If the club votes to approve this document, the club must abide by its rules, which include changing its fiscal year to run July 1 to June 30. It is a requirement of the IRS that all subordinate organizations have the same fiscal year as the organization filing the group return. In addition to the completed form, GFWC-NC Headquarters (HQ) will annually need a copy of the club’s last year-end financial report. GFWC-NC has to gather and remit this information 90 days prior its tax return which will be due November 15th.

3. This means clubs will not have to worry about filing the e-Postcard, nor filing the 1023 application for nonprofit tax-exemption if they have gross receipts over $5,000. Some clubs may already have their tax-exempt status and will want to keep it and that is good. This is mainly for new clubs and clubs that have never filed before and do not have the extra money. However, we are asking clubs that fall into the $25,000 and over category who have to file a 990 or 990 EZ to please continue to do so. Also clubs that are already classified as Private Foundations do not qualify under the group exemption. However, I do recommend that you look over the language in this document to make sure your club is in compliance. Although the IRS recommends all nonprofits be incorporated, as of 2006 the State of North Carolina recognizes Unincorporated Nonprofit Organizations consisting of two or more members joined by mutual consent for a common, nonprofit purpose and they do not have to be registered with the Secretary of State’s Office. (In this case you are signing Articles of Organization). You may also want to readjust your purpose or mission. I have some red flag words below and tips for helping other classified 501(c)s to become (3)s. A 501(c)(3) designation is the classification your club wants and the only one where donations are tax deductible.

When your club makes the changes go ahead and send them to GFWC-NC as I can file at anytime, but in the mean time remember to file the proper 990 Form (e-postcard) by the date required (15th day of the fifth month following the end of the club’s fiscal year). Missing deadlines can cost not only a club’s exemption status, but $20 a day in fines up to $10,000. GFWC-NC can put the club on as a subordinate or take it off at any time, but must report annually so we’ll need the same information every year to ensure the club is in compliance.

While you are making this change, it might be a good time to look at updating the club’s name. Trying to find clubs who already had their 501(c)(3) IRS status or had filed their e-Postcard was quite a challenge with all the various names currently used by clubs. Other organizations that always go by the parent organization name like Rotary Club, 4-H, etc. are very easy to locate. The addition of GFWC would add identity to your club and make it easier to locate. Another reason for changing the name is that the status of some organizations is questioned by the IRS based on just their name, like League, Civic, and Social. These are all associated with other forms of 501(c)s. I recently had an attorney call looking for a club that didn’t even have the word club in its name. Someone had left the club a nice sum of money and mentioned GFWC-NC and the club name. Had the attorney not been able to find GFWC-NC on the website, she would never have been able to locate the club. If the name of the club is changed in the bylaws or a document like the one attached, please let both GFWC-NC Headquarters and the IRS know ASAP. If you are attached to your club name for historical reasons, then on your legal forms put the name of your club Doing Business As (DBA) GFWC and the name of your club.

Buzz Words that are 501(c)(3) killers:

Civic, Social

Political

League / Association

Welfare/ Well being

Philanthropic / Benevolent

Common good

Betterment / improvement

Good Words for 501(c)(3)

Charitable

Educational / Literacy

Prevention of cruelty children / pet

Common Goal

Fellowship

Must have nondiscrimination statement

*Getting an EIN/TIN

Every organization must have an Employer Identification Number (EIN) whether or not it has employees. If your club does not have an EIN number it should complete Form SS4 Application for Employer identification Number. If you have a club bank account and the account begins with 56- that is your EIN. When requesting an EIN number contact any IRS office or call 800-TAX FORM, 800-829-4933, or visit their web site at www.irs.gov. You must have an active number to change names on bank accounts and to be recognized by the IRS.