[Foundation-l] Chapter-selected Board seats - brainstorming

[Anthony]

On Mon, May 5, 2008 at 3:13 PM, Pharos <pharosofalexandria at gmail.com> wrote:
> On Mon, May 5, 2008 at 2:50 PM, Anthony <wikimail at inbox.org> wrote:
>   > On Mon, May 5, 2008 at 12:36 PM, Pharos <pharosofalexandria at gmail.com> wrote:
>
> >  >  The WMF wouldn't "create" affiliates; these would be created by local
>  >  >  Wikimedians, and recognized and accorded "group exemption" status by
>  >  >  the WMF, as it may see fit, in its capacity as 'de facto' "Wikimedia
>  >  >  US".  This isn't some crazy new legal theory.  The US affiliates would
>  >  >  have the same relationship to the WMF as chapters of the American Red
>  >  >  Cross do to it.
>  >  >
>  >  Correct me if I'm wrong, but aren't the chapters of the American Red
>  >  Cross created as separate corporate entities?
>
>  They're separate entities, but they do not have to be incorporated.
>  That's the whole point of "group exemption", that some American Red
>  Cross post in a small town does not need to be incorporated to share
>  non-profit status.
>
A group does not have to be incorporated in order to obtain a
501(c)(3) exemption.  They can create articles of association and
obtain an EIN as an unincoporated association and file for a
determination letter using that EIN.

I seriously doubt any American Red Cross chapters have done this, though.

See IRS Publication 4573 (http://www.irs.gov/pub/irs-tege/p4573.pdf)
and IRS Revenue Procedure 80-27
(http://www.irs.gov/pub/irs-tege/rp1980-27.pdf).

"The IRS sometimes recognizes a group of organizations as tax-exempt
if they are affiliated with a central organization.This avoids the
need for each of the organizations to apply for exemption
individually.  A group exemption letter has the same effect as an
individual exemption letter except that it applies to more than one
organization."

The purpose of affiliation is to avoid the need for filing separate Form 1023s.

>  > The decision of whether
>  >  or not to be an affiliate should come after the corporation is formed
>  >  and the initial membership and board are determined.  Then the board
>  >  (of the chapter) can talk to the WMF about whether electing to be an
>  >  affiliate makes sense, and the membership can vote on this decision as
>  >  well.
>
>  We certainly do plan to apply to the WMF in this way, but again we do
>  not have to be incorporated (though we would have a board and bylaws)
>  under "group exemption".
>
Right.  You don't *have* to be incorporated.  But depending on what
types of activities you plan on engaging in, you might want to.  This
is true regardless of whether or not you intend to obtain a group
exemption, though.

>  >  My understanding is that "affiliate" is a federal tax distinction, and
>  >  nothing more.
>
>  We have been using terms a bit loosely.  From now on, let's call them
>  "group exemption organizations".
>
Fair enough.  But again, this is just a federal tax distinction.  It
lets you file a bit less paperwork to get your 501(c)(3) determination
letter.  Of course, if the gross receipts of the organization are less
than $5000/year, there is no requirement to get a determination letter
in the first place (IRC 508(c)(1)(b)).
And if your gross receipts for the year are less than $5000, then