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Financial: Should we become a 501(c)3 non-profit corporation?



The following is a compilation of the responses I received to my original
post concerning our community choir considering the advantages (and
disadvantages) to filing Articles of Incorporation and applying for
501(c)(3) status (as a non profit exempt organization) with the Internal
Revenue.

Thank you to all those who responded!

Let music live!
Sam.

Sam P. Vladovich, Music Director
SPiRiTFUL VOiCES Community Choir
PO Box 720468
Oklahoma City, OK 73172-0468 USA
Phone: (405) 753-9134
Fax: (405) 753-9135
E-Mail: spiritfulvoices(a)yahoo.com

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
From:
Sent: Wednesday, January 30, 2002 7:47 AM


Hello! contact chorusAmerica - they have all the answers you need - a GREAT
resource. Their e-mail - Service(a)chorusamerica.org Good luck. Frances
Roberts

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
From: CBsings(a)aol.com
Sent: Wednesday, January 30, 2002 9:22 AM

Sam:

your first step should be to join Chorus America. It is a service
organization for choruses, similar to dance america, opera america and the
american symphony orchestra league. They can offer you all kinds of
assistance on issues such as this. We host a summer convention the first
week of June every year and this year we will be in Vail. Summer 2003, we
will be in Kansas City which will be just up the street for you. If you
would like more information, please contact the membership director, Melanie
Garrett at melanie(a)chorusamerica.org

good luck with your process!!!

charles bruffy
kansas city chorale
phoenix bach choir
chorus america, board

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
From: romefestival(a)yahoo.com
Sent: Wednesday, January 30, 2002 10:26 AM


Dear Maestro Vladovich,

Having a 501-c-3 stutus has only up sides.
You need the help of a lawyer. Seek a lawyer (member of choir or friend of
member) who will work pro bono.

Make a complete list of all the services the choir might provide in the
future so that your lawyer can include all possible future activities in
your original articles of incorporation. A broad range of benefits provided
by your charity will help you gain IRS approval.

Good luck!
Cordially,
Connie Galatilis, Administrator romefestival(a)yahoo.com

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
From: MLycanclef(a)aol.com
Sent: Wednesday, January 30, 2002 3:03 PM


Hello--

Here's what happened with my 50-voice women's community choir.

1. Did your community choir originally begin as a non-profit corporation?
If not, at what point did your choir incorporate (circumstances, time,
etc.)?

We began as an unincorporated project of the county women's center, and spun
off after two years.

2. What do you see as the advantages and disadvantages of filing for a
501(c)(3) status?

Advantages: Donors' donations are tax deductible, and you can tell them
that. Disadvantage: the process is unwieldy and full of legal
gobbledygook. Nolo Press in Berkeley, California, published a book on
incormporating non-profits we relied on.


3. Did forming a non-profit corporation adversely effect the spirit,
enthusiasm and sense of "ownership" of volunteer members?


Not at first. The members essentially noticed that I was doing everything
and burning out; they started up the necessary infrastructure, like keeping
a mailing list, writing a member handbook, and so on.

However, seven years into our all-member operating board structure, not one
single past president is singing with us now: they are all burned out. We
need to make a transition to a non-member board that can raise money to pay
for some of the things we are doing ourselves.

We purposely try to spread things like newsletter-labeling around into work
parties, for social/ownership purposes, and that works just fine. But with
a chorus of 50 voices, there are only so many individuals who are willing to
shoulder continuing and heavy organizational responsibilties. Short-run
needs swamp longer-run planning. And people joined the chorus so they could
sing, not so they could fill out tax forms.


4. What steps would you recommend to retain the spirit, enthusiasm and
sense of "ownership" of volunteer members?

Retreats, parties, tours, chorus exchanges--anything you can think of that
has a social/educational as well as musical component, so they are not
always looking at the backs of heads of the people in front of them, and
never seeing the faces

5. Would you provide us with a copy of your community choir's Corporate
By-Laws? (you may attach a MS Word, WordPerfect, or Rich Text Format
document with your private response)

Ours are the minimum our particular state requires: "at least three
directors" and so on.

And of course, go at once to Chorus America.

Best wishes,

Mary Lycan
mlycanclef(a)aol.com


~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
From: "Noble, Susan"
Sent: Wednesday, January 30, 2002 4:20 PM


I have long been associated with an all-volunteer chorus in the Boston area,
which was incorporated before I ever joined it, but I have been a trustee
and have some legal background. See comments below, in solid caps (I don't
mean to shout, just make them easier to read).

A couple of notes about things you didn't ask. I don't think you can get
501(c)(3) status if you are not a corporation, but they are two distinct
things. 501(c)(3) is tax status granted by the Internal Revenue Service,
and being a corporation is governed by state law (not necessarily Oklahoma
law, but state law all the same). And I'm pretty sure that most states
distinguish between "business" (for-profit) corporations and nonprofit
corporations. You do need to be aware that you will be subject to the laws
of Oklahoma, even if you should form a corporation under Delaware law, a
perfectly possible scenario (in which case you would also be subject to
Delaware law with respect to the corporation itself).


If you engage in public fundraising activities, there may be things you are
required to do or filings you are required to make, or even licenses that
you must have. For example, we are a Massachusetts corporation and are
required to file reports with the Attorney General of Massachusetts because
we solicit funds from the public. Also, there will be annual maintenance
requirements -- they are not usually very hard, but they have to be attended
to.

By-laws often spell out requirements of the law, as well as any additional
requirements you might want for your organization. Most states only require
a corporation to have a President, Treasurer and Secretary, but you might
want to provide in your By-laws for Vice Presidents or Assistant Treasurers,
or whatever. Our Chorus has a Board of Trustees, which has general
oversight of finances, fundraising and long-range planning, and an Executive
Committee, which does the day-to-day management, arranging rental of
rehearsal space, preliminary season planning and budgeting (subject to Board
approval), hiring of employees other than the Music Director, etc. Many of
those responsibilities are established in the by-laws. Our By-laws provide
that the Music Director is hired by the Board. Also, because recently our
recordkeeping has been done by people without a legal background, we have
incorporated a lot of detailed "how tos" for meeting notices, counting
votes, etc., in the By-laws.


I can't emphasize too strongly how absolutely important it is that you have
an attorney counsel you on this process. And even if you have among your
members an attorney, unless he or she is experienced at advising nonprofit
corporations, you would be well advised to seek out one who does have such
experience. In the Boston area, that sort of advice can be obtained
relatively inexpensively through an organization called "Volunteer Lawyers
for the Arts." There is quite possibly something comparable in Oklahoma.

Best of luck to you ... Sue Noble


1. Did your community choir originally begin as a non-profit corporation?
If not, at what point did your choir incorporate (circumstances, time,
etc.)?


OUR CHORUS EXISTED ABOUT 10 YEARS BEFORE INCORPORATION, AND I BELIEVE THE
INCORPORATION WAS DRIVEN LARGELY BY THE DESIRE TO GET 501(c)(3) STATUS. THE
OTHER ADVANTAGE TO INCORPORATING IS TO PUT SOME DISTANCE BETWEEN INDIVIDUALS
WHO MIGHT OTHERWISE BE HELD PERSONALLY RESPONSIBLE FOR SOME ADVERSE EVENT
AND LIABILITY.


2. What do you see as the advantages and disadvantages of filing for a
501(c)(3) status?


PERHAPS IT'S NOT SO IMPORTANT IN OKLAHOMA, BUT HERE IN MASSACHUSETTS IT'S AN
ABSOLUTE MUST FOR FUNDRAISING. AND I HONESTLY THINK IT WOULD BE AN ASSET
ANYWHERE TO BE ABLE TO SAY THAT "YOUR CONTRIBUTIONS ARE DEDUCTIBLE TO THE
FULLEST EXTENT ALLOWED BY LAW." IT SHOULD BE A HELP TO YOU IN SOLICITING
FOUNDATION MONIES AND, LATER ON WHEN PERHAPS YOU HAVE AN ENDOWMENT OR
PERMANENT FUND, IN SOLICITING ESTATE PLANNING CONTRIBUTIONS. YOU NEED TO
TALK TO AN ESTATE PLANNING LAWYER (MAYBE YOU HAVE ONE IN THE GROUP) ABOUT
THIS KIND OF CONTRIBUTION, BUT "PLANNED GIVING" IS IMPORTANT. OKLAHOMA CITY
IS NOT EXACTLY PODUNK, THERE'S LOTS OF REAL MONEY THERE, AND YOU'RE ENTITLED
TO SOME OF IT!

3. Did forming a non-profit corporation adversely effect the spirit,
enthusiasm and sense of "ownership" of volunteer members?


ABSOLUTELY NOT -- NEVER HAS, AND NEVER WILL. SPIRIT, ENTHUSIASM, AND SENSE
OF OWNERSHIP (OTHERWISE KNOWN, IN MY BOOK AS MORALE) DEPEND ON DIFFERENT
THINGS: THE QUALITY OF THE MUSIC DIRECTOR, THE CHARACTER OF YOUR FELLOW
MEMBERS, THE MUSICAL INTEREST OF THE REPERTOIRE PERFORMED, AND THE FEELING
THAT ONE IS UPLIFTING AN AUDIENCE. I'M GUESSING FROM THE NAME OF YOUR GROUP
THAT THERE IS A RELIGIOUS OR PRAYERFUL ELEMENT TO WHAT YOU DO, AND OBVIOUSLY
THAT WOULD ALSO BE VERY IMPORTANT TO YOUR MEMBERS. INCORPORATING SHOULD NOT
HAVE ANY EFFECT ON ANY OF THOSE THINGS.

4. What steps would you recommend to retain the spirit, enthusiasm and
sense of "ownership" of volunteer members?

WHATEVER YOU WOULD DO ANYWAY TO CONTINUE THE "MISSION" OF YOUR GROUP.
BELIEVE ME, PRIDE IN THE ORGANIZATION WILL INSTILL ALL THE OWNERSHIP THAT IS
NEEDED. MY CHORUS HAS ALWAYS BEEN COMPLETELY VOLUNTEER -- THE ONLY PAY THAT
ANY OF THE MEMBERS RECEIVE IS WHEN IT IS HIRED TO TRAVEL OUT OF TOWN. THEN
MEMBERS GET A PER DIEM FOR HOTELS, MEALS, ETC., BUT IT NEVER COVERS THE TRUE
EXPENDITURES, IT ONLY DEFRAYS THEM. THE PRIDE, SPIRIT, MORALE AND
SATISFACTION OF THE MEMBERS HAS ALWAYS BEEN ENORMOUS BECAUSE THE OTHER
QUALITIES I MENTIONED WERE SO HIGH -- FIRST-RATE MUSIC DIRECTOR, ALLENGING
AND SATISFYING MUSIC, INTERESTING FELLOW MEMBERS, AND GENERALLY A HIGH LEVEL
OF ESPRIT DE CORPS.


5. Would you provide us with a copy of your community choir's Corporate
By-Laws? (you may attach a MS Word, WordPerfect, or Rich Text Format
document with your private response)


I'M NOT IN A POSITION TO DO THAT. BUT THEY ARE SO VARIABLE, I'M NOT SURE
THEY WOULD DO YOU MUCH GOOD ANYWAY.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
From: "R John Specht"
Sent: Wednesday, January 30, 2002 10:35 AM


I cannot answer all of your questions, since my Chorus does not have
501(c)(3) (or whatever) status. However, we registered with our state as a
Charitable Organization under the NY State laws, and that was enough.
(This) allows our members, who donate freely but do not have dues to pay, to
deduct their contributions...There has been no issue of "ownership"-- we
have an elected Board of Directors (required, with a Constitution but no
need for incorporation) who listens to the membership, and this has I think
fostered whatever sense of ownership the members need.

I would encourage you to look into the situation in your state, to
see if such a registration is possible.


Best of luck,
John Specht

Dr. R. John Specht
Department of Music
Queensborough Comm. College
222-05 56th Avenue
Bayside NY 11364
Phone: 718-281-5079
rjohnmus(a)earthlink.net
jspecht(a)qcc.cuny.edu

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
From:
Sent: Thursday, January 31, 2002 9:21 AM


Hello from the Bartlesville Choral Society!

We've been non-profit pretty much from the get-go. I see no disadvantage at
all except that you have to have one person who'll take charge of the report
to the IRS every year. And this is very simple stuff, not even necessary if
you stay under the minimum amount of contribution.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
From: "Wright,Lorna J."
Sent: Thursday, January 31, 2002 9:48 AM


First you incorporate in your state. Then IMMEDIATELY file for federal
501c3 exempt status, or all your income will become taxable. The federal
paperwork required re-filing about 3 times, but we made it within the year.

It has made no difference to our choristers--it's just a piece of paper to
them. It helps raise funds because now they're legally tax-deductible.


~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
From: Brooks Grantier
Sent: Thursday, January 31, 2002 4:02 PM


Greetings,
You have a boat-load of questions there, some of which require detailed
answers. First, Yes, you do need to get a 501 (c) (3), if you raise or
spend any real money. Otherwise your tax situation is intolerable.
From our perspective: The Music Center of South Central Michigan is a
merger of five formerly independent (though friendly) organizations:
Boychoir, Girls' Chorus, adult Community Chorus, Community Music School, and
Symphony. The merging of policies, boards, finances, and legal matters was
a long and careful process. For info on our experience, contact our
Executive Director, Marjorie Weil, at the Music Center of South Central
Michigan, P.O. Box 1613, Battle Creek, MI 49016.
You may also want to contact our Community Chorus conductor, Brian C.
Clissold, same address. Good luck in your musical and policy future.
Brooks Grantier, The Battle Creek Boychoir, Battle Creek, MI

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Again, thanks to all who responded so quickly and with such insightful
information.

Let music live!
Sam.

Sam P. Vladovich, Music Director
SPiRiTFUL VOiCES Community Choir
PO Box 720468
Oklahoma City, OK 73172-0468 USA
Phone: (405) 753-9134
Fax: (405) 753-9135
E-Mail: spiritfulvoices(a)yahoo.com