Note - I am neither a tax or legal expert or professional. Please consult with the appropiate, licensed professional before you make any changes to your organization structure!
At the end of 2007, my sorority was officially incorporated. In years past (maybe 15-20 years ago) you could put off incorporation if you only had one, maybe two chapters. Of course nowadays, that is difficult to do and not recommended. The threat of litigation and the feeling of being limited from an operational standpoint are not things that should be pressing issues to young organizations.
Like many new groups, we opted to use an incorporation service. We decided to do some research on our own first, but overall, the process was pretty painless (and not too expensive). Now incorporation is at the state level. When our corporate certificate was issued, we were filed as a non-profit. However since the state we incorporated in has no income tax, our attention was then placed towards obtaining non-profit status with the IRS (so on a federal level). This is where it got interesting.
An attorney friend of mine let me have a handbook entitled "How To Form a Nonprofit Corporation". I found it very interesting, but it was quite clear that the book only addressed the formation of a 501(c)(3) organization. Ok, that is a commonly used term, so no big surprise there. But there was a surprise; because, the definition of a 501(c)(3) is:
The exempt purposes set forth in section 501(c)(3) are charitable, religious, educational, scientific, literary, testing for public safety, fostering national or international amateur sports competition, and preventing cruelty to children or animals. The term charitable is used in its generally accepted legal sense and includes relief of the poor, the distressed, or the underprivileged; advancement of religion; advancement of education or science; erecting or maintaining public buildings, monuments, or works; lessening the burdens of government; lessening neighborhood tensions; eliminating prejudice and discrimination; defending human and civil rights secured by law; and combating community deterioration and juvenile delinquency.
(The bolded part is my emphasis)
We were working with a legal office on the IRS application for 501 non-profit status. However the more I read in this book, the more I started to question if we would be approved for 501(c)(3) status. After an overview of our financial and activity records, they agreed that the sorority would be more suited for 501(c)(7) status, which is:
"[c]lubs organized for pleasure, recreation, and other nonprofitable purposes, substantially all of the activities of which are for such purposes and no part of the net earnings of which inures to the benefit of any private shareholder."
They key here is the distribution of revenue. If we had a budget where the majority of our funding could be funneled into "eliminating prejudice and discrimination", the 501(c)(3) status would be more suiting. However this is not currently the case with our current budget, and may not ever be.
What many older greek organizations have done are establish foundations which are 501(c)(3); probably because the bulk of any income coming into these foundations is then distributed out for the "charitable cause" of helping the sorority, providing scholarships, etc. I found this page online regarding an interesting question regarding the practice of having a 501(c)(3) pass money along to a 501(c)(7). I have also seen some organizations who are 501(c)(3) themselves. The details and specifics as to how they accomplished that I can't really fathom. I am definitely not saying that these organizations have done something improper. I simply do not have that great an understanding of the tax code to say anything one way or the other. If anyone out there is a member of such an organization and privy as to how this works, please feel free to comment. :-)
I must admit I have been pretty surprised regarding the common misconception that non-profit automatically equals 501(c)(3). Even in the office of the company we are working with, I've had administrative staff refer to my application as a 501(c)(3) application even after the determination that we would not be trying for that. Sorors in my sorority also question the designation. It seems to be a let down that donations and dues to the sorority will not be tax deductible. However since our dues in are less than $500 annually, they alone probably would be less than most of our sorors' standard deductible (unless they also have other significant charitible contributions).
I am also finding out that the 501(c)(7) status is not totally question-free for fraternities and sororities either though. In Rev. Rul. 66-360, 1966-2, it was determined that a sorority was not eligible for 501(c)(7) status! It seems that in this case, the IRS determined that the main function of the chapters was to fund the national headquarters of the sorority; whereas the point of a 501(c)(7) is to be organized for the exclusive purpose of fraternal bonding. Talk about a gray area! The only faux paus I can see this group could have committed is not allocating all of the costs out towards operations or for the public good. However it does bring into question programs administered by the national headquarters that will relay some cost benefit to the members; such as corporate discount programs and group rates. This is because dues paying members are "shareholders" and technically no shareholders are to take part in an fianancial gains (it's hard to say if "discounts" can be seen as fianancial gains).
In any case, no revenue generated by any kind of non-profit is taxable. Yet it is always advisable to file a tax return, even if your revenues are under $25,000.
March 23, 2009
March 12, 2009
Insurance for Multicultural Greeks
Philip Velez wrote a great article on insurance for fraternities and sororities. It should serve as a starting point to see what the main issues are. I would just like to expand on that and relate the experience of my organization and the road to getting insured.
It had been several years since my sorority expanded and we were held in high esteem by the administration of the schools were were present. Then, at one of the schools, there was a "changing of the guard" so to speak. The Greek Life office got a new director and suddenly every fraternity or sorority needed to be insured or would not be recognized.
Although we were not insured, my sorority agreed unanimously that we needed to obtain an insurance policy. We even suspended pledging until we could get insurance in place. At our upcoming conference, we were presented with a figure around $2,000 to get the insurance. Only later that year would we find out how "off" that amount was! Apparently this amount was what was being discussed around the Greek grapevine; and also this insurance was not general, but event specific.
However we soon found out that amount was way off. There were only two insurance companies we could find, MJ Insurance and Willis HRH that would insure a sorority. We went with Willis since they were able to get a quote to us much faster. The policy was > $5,000. Since we didn't just have that money laying around in a bank account, we needed to restructure our dues system in order to get the money by the next due date. However, we needed to deal with other costs as well; in addition to the bills we already had. That's when we decided to launch a campaign to get our alumna to become paying members again. Thankfully it worked, and we were able to obtain the insurance policy.
Being insured is a good thing for a fraternity or sorority. However it seems as if both the schools that require the insurance and the insurance industries are out of touch with the nature and needs of multicultural greeks. We operate on a smaller scale, we do not own real estate, and we do not have a hired staff of 20 or more people. Just as general liability policies can be easily secured for a business, a greek organization should also be able to go out there and have a wide variety of insurance products made available to them.
Another solution is that the schools can see to it that the members of it's multicultural greek council are insured. Of course in our case, this would not work in that not all of our chapters have a multicultural greek council. Then you have some sisters who would be covered and others who were not. There are other issues as well. But theoretically, it makes sense. If a university wishes to benefit from a comprehensive Greek life program, then they certainly should look into properly maintaining it.
In the meantime, we will keep doing what we are doing. And I think it is only fair to let people out there know that a good majority of the colleges and universities out there will not let you expand to their campus unless you can prove that you are insured. This alone, without a doubt, instantly stunts the growth of many multicultural fraternities and sororities.
It had been several years since my sorority expanded and we were held in high esteem by the administration of the schools were were present. Then, at one of the schools, there was a "changing of the guard" so to speak. The Greek Life office got a new director and suddenly every fraternity or sorority needed to be insured or would not be recognized.
Although we were not insured, my sorority agreed unanimously that we needed to obtain an insurance policy. We even suspended pledging until we could get insurance in place. At our upcoming conference, we were presented with a figure around $2,000 to get the insurance. Only later that year would we find out how "off" that amount was! Apparently this amount was what was being discussed around the Greek grapevine; and also this insurance was not general, but event specific.
However we soon found out that amount was way off. There were only two insurance companies we could find, MJ Insurance and Willis HRH that would insure a sorority. We went with Willis since they were able to get a quote to us much faster. The policy was > $5,000. Since we didn't just have that money laying around in a bank account, we needed to restructure our dues system in order to get the money by the next due date. However, we needed to deal with other costs as well; in addition to the bills we already had. That's when we decided to launch a campaign to get our alumna to become paying members again. Thankfully it worked, and we were able to obtain the insurance policy.
Being insured is a good thing for a fraternity or sorority. However it seems as if both the schools that require the insurance and the insurance industries are out of touch with the nature and needs of multicultural greeks. We operate on a smaller scale, we do not own real estate, and we do not have a hired staff of 20 or more people. Just as general liability policies can be easily secured for a business, a greek organization should also be able to go out there and have a wide variety of insurance products made available to them.
Another solution is that the schools can see to it that the members of it's multicultural greek council are insured. Of course in our case, this would not work in that not all of our chapters have a multicultural greek council. Then you have some sisters who would be covered and others who were not. There are other issues as well. But theoretically, it makes sense. If a university wishes to benefit from a comprehensive Greek life program, then they certainly should look into properly maintaining it.
In the meantime, we will keep doing what we are doing. And I think it is only fair to let people out there know that a good majority of the colleges and universities out there will not let you expand to their campus unless you can prove that you are insured. This alone, without a doubt, instantly stunts the growth of many multicultural fraternities and sororities.
Rishona's Intro
Without a doubt, if there was no such thing as a “multicultural sorority”, I would not be a greek today. This in no way implies any fault with any other kind of fraternal organization. It just simply means that we all have unique needs, and without a doubt, there are unique needs which multicultural fraternal organizations can (and do) meet.
I am Black American woman who was born at the close of the 1970s. My father was an immigrant with African and South Asian ancestry that seemed way to exotic for the Southwestern Pennsylvanian town I grew up in. My mother’s family reaches back into slavery in the American south until the 1920s when her grandparents join the “great migration” to the North. Growing up I was involved in a myriad of extra-curriculars where many times, I was the only Black child there. In high school, I developed an identity that revolved around rock, punk, and reggae & ska music. As an adult I converted to Judaism and adjusted my ears to the sounds of Cuban-American Spanish that was spoken around me while I lived in South Florida.
All of this contributes to “my” culture. And there is no doubt that the vast majority of sororities out there would welcome me and allow me to feel at home. But only a “multicultural” sorority would have a specific mission that is in tune with the goals that I have guiding me through my life every day. But I have seen first hand that you do not need to be a microcosm of the United Nations in order to find a home with a multicultural organization. A few of my sisters did not have significant interactions with people of different backgrounds until their college years.
It is hard to believe that the first multicultural sorority, Mu Sigma Upsilon, was founded only a couple years after my birth. Yet it was not until the 1990s that the concept of a multicultural fraternity or sorority really took off. In many ways, this is simply awe-inspiring. In other ways, I feel as if my sorority experience is a little more than what I bargained for. You see, most alumnae of sororities who are inching towards their 30s might have an alumna membership and get together with sisters at an annual conference. They may be featured in the sorority magazine when they reach a personal or professional milestone. They give back to their communities and usher in the next generation of members. I do these things, but I am also constantly navigating the waters in regards to what is going on nationwide on college campuses regarding sororities. If this isn’t bad enough, you also need to keep an eye on pop culture – forget Animal House, we now need to see how sorority women are being portrayed on MTV’s Sorority Life and greek life in general in movies like The Fraternity. I also need to stay abreast of general legal and logistical issues that can possible affect my sorority. On top of all of this, many of my friends and family are wondering just why this “sorority thing” takes up so much of my time; being that I left the college campus quite some time ago. And this is not only because I am the National President of my sorority, Delta Gamma Pi – many of the alumnae in my sorority do this as well.
Back when I pledged in 2001, there seemed to be more exposure and some inroads being made regarding local sororities (sororities based at 1 campus) and smaller, non-NPC sororities. Today however it seems as if it is becoming harder for smaller groups to grow or survive. When I pledged my sorority, I started to believe that there is a great future for multicultural greeks. I still believe this, but I do not know if the general public shares this belief. However I know I am not alone. Thousands of men and women across the U.S. have rights to the greek letters of multicultural fraternities and sororities. We are not going away.
I am Black American woman who was born at the close of the 1970s. My father was an immigrant with African and South Asian ancestry that seemed way to exotic for the Southwestern Pennsylvanian town I grew up in. My mother’s family reaches back into slavery in the American south until the 1920s when her grandparents join the “great migration” to the North. Growing up I was involved in a myriad of extra-curriculars where many times, I was the only Black child there. In high school, I developed an identity that revolved around rock, punk, and reggae & ska music. As an adult I converted to Judaism and adjusted my ears to the sounds of Cuban-American Spanish that was spoken around me while I lived in South Florida.
All of this contributes to “my” culture. And there is no doubt that the vast majority of sororities out there would welcome me and allow me to feel at home. But only a “multicultural” sorority would have a specific mission that is in tune with the goals that I have guiding me through my life every day. But I have seen first hand that you do not need to be a microcosm of the United Nations in order to find a home with a multicultural organization. A few of my sisters did not have significant interactions with people of different backgrounds until their college years.
It is hard to believe that the first multicultural sorority, Mu Sigma Upsilon, was founded only a couple years after my birth. Yet it was not until the 1990s that the concept of a multicultural fraternity or sorority really took off. In many ways, this is simply awe-inspiring. In other ways, I feel as if my sorority experience is a little more than what I bargained for. You see, most alumnae of sororities who are inching towards their 30s might have an alumna membership and get together with sisters at an annual conference. They may be featured in the sorority magazine when they reach a personal or professional milestone. They give back to their communities and usher in the next generation of members. I do these things, but I am also constantly navigating the waters in regards to what is going on nationwide on college campuses regarding sororities. If this isn’t bad enough, you also need to keep an eye on pop culture – forget Animal House, we now need to see how sorority women are being portrayed on MTV’s Sorority Life and greek life in general in movies like The Fraternity. I also need to stay abreast of general legal and logistical issues that can possible affect my sorority. On top of all of this, many of my friends and family are wondering just why this “sorority thing” takes up so much of my time; being that I left the college campus quite some time ago. And this is not only because I am the National President of my sorority, Delta Gamma Pi – many of the alumnae in my sorority do this as well.
Back when I pledged in 2001, there seemed to be more exposure and some inroads being made regarding local sororities (sororities based at 1 campus) and smaller, non-NPC sororities. Today however it seems as if it is becoming harder for smaller groups to grow or survive. When I pledged my sorority, I started to believe that there is a great future for multicultural greeks. I still believe this, but I do not know if the general public shares this belief. However I know I am not alone. Thousands of men and women across the U.S. have rights to the greek letters of multicultural fraternities and sororities. We are not going away.
Why This Blog?
This blog was created mainly because there seems to be no comparable medium out there where multicultural fraternities and sororities can communicate. Also, judging the discussions that I myself have had with people who are interested in joining our ranks, and schools who are approached by those wanting to bring multicultural greeks to their campus; people on the outside do not have a clear view regarding us either.
When people think “fraternity” or “sorority” they picture big mansions on the green with an elite membership and some sort of high class network with privileges and fun times handed to you. This is a myth. Or maybe they think of step shows and color coordinated clothing with special cat-calls or pre-package dating opportunities with a favored brother/sister or auxiliary group. This is also a myth. These things may occur, but they are only the very thin surface of greek life. In addition, multicultural greeks seem to defy most of these inaccurate stereotypes and make folks wonder “why do you even exist”?
The answer lies in what is the core of every fraternity and sorority in existence and that is a fraternal bond formed among people with a common goal. You see, you can have a fraternity or a sorority without having a mansion, a foundation fund in the tens of millions, or trophies won from stepping competition. But you cannot have an organization with no mission. And all of those other things are wonderful; but they are additions to the concept, and not its core.
I hope that this blog will serve as a starting point from which others can learn about us and we can learn and support each other [in the multicultural greek community]. Any member of a multicultural greek organization may join in this project. Feel free to share successes and milestones, but please refrain from the promotion of upcoming events and digressing to gossip.
I hope others out there find this both helpful and to be a worthwhile undertaking.
When people think “fraternity” or “sorority” they picture big mansions on the green with an elite membership and some sort of high class network with privileges and fun times handed to you. This is a myth. Or maybe they think of step shows and color coordinated clothing with special cat-calls or pre-package dating opportunities with a favored brother/sister or auxiliary group. This is also a myth. These things may occur, but they are only the very thin surface of greek life. In addition, multicultural greeks seem to defy most of these inaccurate stereotypes and make folks wonder “why do you even exist”?
The answer lies in what is the core of every fraternity and sorority in existence and that is a fraternal bond formed among people with a common goal. You see, you can have a fraternity or a sorority without having a mansion, a foundation fund in the tens of millions, or trophies won from stepping competition. But you cannot have an organization with no mission. And all of those other things are wonderful; but they are additions to the concept, and not its core.
I hope that this blog will serve as a starting point from which others can learn about us and we can learn and support each other [in the multicultural greek community]. Any member of a multicultural greek organization may join in this project. Feel free to share successes and milestones, but please refrain from the promotion of upcoming events and digressing to gossip.
I hope others out there find this both helpful and to be a worthwhile undertaking.
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