[hackerspaces] 501c3 and hackerspaces in the US

James Carlson james at schoolfactory.org
Sat Jul 7 00:24:00 CEST 2012

We haven't been restricted in our use of 501c3 in any way for the last ten
years. The IRS looks for certain things through their 'red flag' detector,
and if you do them with money you've received through the c3 as a donation
or otherwise, it will likely trigger action:
* Political engagement with a specific candidate (not allowed with c3)
* All your donations entirely coming from a single source (then you're not
a charity, you're a foundation)
* Any money earned ever being paid to board directors
* Money earned being more--a lot more, by ratio--than money given (you
receive 5% in gifts and 95% from selling a product)
While a c3 must be organized for these 'scientific, educational, artistic
purposes' it's always possible to define what you do in those terms in some
way, and even brings additional discipline to the work of the org. We've
never found ourselves running afield of our designation. (Of course, if we
tried to open a health clinic, we would. Or if we tried to get involved in
politics. But we have other reasons for avoiding all that.)

On Friday, July 6, 2012, Bert Hartmann wrote:

> MakerBar has thought long and hard on this recently, and decided that
> 501(c)7 was the right classification for us, due to the extra restrictions
> on 501(c)3. 501(c)3 must be strictly for scientific, educational, artistic,
> etc. purposes, which we didn't believe everything we did would be
> "strictly" in that classification.
> To answer your question, it doesn't matter how the money came in though,
> everything is restricted to your purpose the same (unless there was some
> additional restriction given by the donor).
> One thing to note that we hope to take advantage of is the ability for any
> (or most) 501 non-profits to create a 501(c)3 fund, which can behave like a
> 501(c)3 in terms of donations and tax implications, but allows the legal
> organization to remain some other classification, so you can continue to
> operate outside most of the additional restrictions most of the time,
> assuming you have enough funds outside of the 501(c)3 fund. This should
> allow MakerBar, for example, to create an educational fund, donations to
> which would be tax deductible.
> Hope that helped,
> Bert
> On Fri, Jul 6, 2012 at 12:46 PM, Buddy Smith <buddy.smith at ieee.org> wrote:
>> Are there any limitations on the use of donated funds, versus member
>> dues, etc?
>> --buddy
>> _______________________________________________
>> Discuss mailing list
>> Discuss at lists.hackerspaces.org
>> http://lists.hackerspaces.org/mailman/listinfo/discuss
-------------- next part --------------
An HTML attachment was scrubbed...
URL: <http://lists.hackerspaces.org/pipermail/discuss/attachments/20120706/045307e8/attachment-0001.html>

More information about the Discuss mailing list