"<span style="color:rgb(34,34,34);font-family:arial,sans-serif;font-size:13px;background-color:rgb(255,255,255)">One of the arguments being put forth is that members must not work on</span><br style="color:rgb(34,34,34);font-family:arial,sans-serif;font-size:13px;background-color:rgb(255,255,255)">
<span style="color:rgb(34,34,34);font-family:arial,sans-serif;font-size:13px;background-color:rgb(255,255,255)">individual projects, because that would be a benefit to the member</span><br style="color:rgb(34,34,34);font-family:arial,sans-serif;font-size:13px;background-color:rgb(255,255,255)">
<span style="color:rgb(34,34,34);font-family:arial,sans-serif;font-size:13px;background-color:rgb(255,255,255)">versus the public, and somehow violate the 501c3 rules."</span><div><br></div><div>I'm sure this isn't the case. The organization's mission in general is to enable the members to do this. If the member's activity is 'operating a sweat shop' and a huge portion of the 501c3 organization's resources are devoted to this, the IRS will look askance because of the revenue being generated by the sweat shop _using_ the non-profit will go to a private source. That'll be a problem.</div>
<div><br></div><div>For 10 years we have operated a 501c3 hackerspace (and share our 501c3 with 38 other spaces at present) and have enabled the creation and formation of over 100 for- and non-profit companies, 1000s of products, art projects, and anything our members could dream up. The IRS has been over and through our content and finances, and never thrown a flag over this. </div>
<div><br></div><div>It's a great conversation to start and have!</div><div><br><div class="gmail_quote">On Thu, Jul 5, 2012 at 4:38 PM, Far McKon <span dir="ltr"><<a href="mailto:farmckon@gmail.com" target="_blank">farmckon@gmail.com</a>></span> wrote:<br>
<blockquote class="gmail_quote" style="margin:0 0 0 .8ex;border-left:1px #ccc solid;padding-left:1ex">Another options is 501(c)7 status. I've worked with several community<br>
and a shared-equipment group that went 501(c)7 It's the classification<br>
of an elks-club, or Rotary club, or other 'social club'.<br>
<br>
Benefits:<br>
- still tax exempt<br>
- Lots less paperwork. *LOTS*<br>
<br>
Drawbacks:<br>
- Can't beg for giant donations (they are not tax exempt)<br>
- Not as cool/sexy when applying for grants.<br>
<br>
Most hackerspaces get little to no donations anyway, so it might be a<br>
faster and easier way to get some nonprofit status. YMMV.<br>
<br>
hack on,<br>
- Far McKon<br>
<div class="HOEnZb"><div class="h5"><br>
<br>
On 7/5/12 4:02 PM, Buddy Smith wrote:<br>
> Hi Everyone.<br>
><br>
> I'm hear to ask questions to my fellow hackerspaces in the US. I'm<br>
> sorry if this is off topic for those that are not in the US.<br>
><br>
> Our local hackerspace is looking at becoming a 501c3, independent of<br>
> any other entity.<br>
><br>
> Is your hackerspace a 501c3? How does it affect the day to day<br>
> operations of your space? Are there limitations on the use of donated<br>
> versus non-donated funds? (Donations vs dues and class fees, etc)?<br>
><br>
> Are any US hackerspaces 501c7? That is designed for social clubs, and<br>
> may more closely fit the model of many hackerspaces.<br>
><br>
> One of the arguments being put forth is that members must not work on<br>
> individual projects, because that would be a benefit to the member<br>
> versus the public, and somehow violate the 501c3 rules.<br>
><br>
> (anonymous quote)<br>
> Basically, as a 501c3 organization, if there is an action that<br>
> benefits one or few members, it needs to be limited to a small portion<br>
> of the overall actions of a 501c3 in order to retain tax exempt status<br>
> plus accepting tax-deductible donations from the general public. The<br>
> rule is not set in stone, because individual 501c3s are so varied.<br>
> Generally, things that are not allowed include (but not limited to)<br>
> storage at below market rate, exclusive services to members (e.g.<br>
> full-service garage that isn't available to public), as well as<br>
> for-profit activities (ex. a significant portion of revenue from<br>
> selling t-shirts that were silk-screened on site).<br>
> (end quote)<br>
><br>
> There's more to it, but this is sufficient to start the discussion. I<br>
> look forward to reading your responses, and bringing them back to my<br>
> hackerspace.<br>
><br>
> --buddy<br>
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