Chapter Structure

How are Chapters Structured?

Should our Chapter Incorporate?

Chapters are organized in two different ways;

  1. Voluntary Non-incorporated Organizations; or
  2. Incorporated Organizations.

Incorporation offers protection of personal assets and reduced personal liability to individuals serving as Chapter Officers and those serving on the Chapter Board of Directors.

To offer tax exemption to those who wish to donate, Chapters may wish to operate under the FNPS Group Exemption and avoid paying sales tax on items purchased for the Chapter’s use

Incorporated FNPS Chapters can operate as a 501(c)(3) organization by applying to the IRS; all Chapters, regardless of classification, can elect to participate in the Group Exemption 501(c)(3) status of the Society. The group exemption is known as “GEL” which stands for Group Exemption Letter. Chapters also may elect not to participate in the 501(c)(3) program at all. 

The following table may help make this clearer.

Chapter Structure Comparison
Chapter Type

501(c)(3) Tax Exempt Status

Voluntary Non-incorporated Not-for-profit Organizations

Non-501(c)(3) Chapter

OR

Group Exemption 501(c)(3) Letter (GEL) Program

Incorporated Not-for-profit Organizations

Chapter-level 501(c)(3) Tax Exempt Status 

OR

Group Exemption 501(c)(3) Letter (GEL) Program

Each configuration has repercussions for Chapter operations.

The primary operations affected are financial bookkeeping, payment of sales tax, accepting donations, and routine reporting to the State, IRS and to the Society. We will walk through this below.

FNPS Chapters as Voluntary Non-incorporated Organizations

Fictitious name. At the most basic level, the FNPS Chapter must file a fictitious name application with the Florida Department of State if the FNPS Chapter does not incorporate. The fictitious name is good for 5 years; then the Chapter must renew.  The Chapter's full, official name, as approved by the FNPS Board of Directors should be used.

The EIN Number. Upon approval of the fictitious name from the Department, the FNPS Chapter may apply on-line for an IRS Employer Identification Number (EIN). Why do you need this? Your bank will ask for your organization to get a “Employer Tax Number” (or they many call it a “Tax ID number” or even an “IRS ID number”). It’s officially called an Employer Identification Number (EIN). This number is similar to a Social Security Number for a business or organization. Even though your Chapter may have no employees and no business with the IRS, you need to get an EIN to open a bank account. And you need a bank account to receive FNPS Chapter membership support checks! They now have an “interview style” option for getting the number; they ask you questions, you tell, they fill out the form.

Links you’ll need

Get your Fictitious Name – http://form.sunbiz.org/fic_form.html
Get your EIN:
          Interview: http://www.irs.gov/businesses/small/article/0,,id=102767,00.html
          Quick form: http://www.irs-ein-online.com/.
          Tax Info for Charitable Organizations: http://www.irs.gov/charities/charitable/index.html

FNPS Chapters as Florida Not-for-Profit Corporations

Incorporation is a legal process that recognizes the FNPS Chapter as a separate legal entity with the powers and responsibilities of a natural person (Chapter 617, Florida Statutes). The incorporation process begins by contacting the Florida Department of State, Division of Corporations for instructions and copies of two forms, "Articles of Incorporation” and “Transmittal Letter."

There is a $35 filing fee, and $35 fee for Designation of Registered Agent (i.e., a business or individual designated to receive service of process (SOP) when a business entity is a party in a legal action). If you want a Certified Copy, you pay $8.75, and Certificate of Status is also $8.75. If you file and choose both the options the total will be $87.50.

The minimum requirements for incorporation are three directors, a registered agent, and the Articles of Incorporation, and a street address By laws are also required. 

An incorporated chapter doesn’t ordinarily need to file for fictitious name registration because they have a registered corporate name.  The Chapter's full, official name, as approved by the FNPS Board of Directors should be used.

So why would you Incorporate? So you could apply to be a 501(c)(3) organization of course! And so that you could learn all about Florida Statute Title XXXVI, Chapter 617.

Links you’ll need:

Florida Corporation Forms: http://form.sunbiz.org/cor_form.html
File Your Annual Report: https://efile.sunbiz.org/ubr001.html
Florida Statutes governing non-profit incorporation: http://www.leg.state.fl.us/Statutes/

How do we get 501(c)(3) Tax Exempt Status?

FNPS chapters can operate as a 501(c)(3) organization by applying to the IRS, or by participating in the Group Exemption (GEL) 501(c)(3) status of the Society.

Applying to the IRS 501(c)(3)

Incorporated FNPS Chapters that plan to for apply for a ruling of tax exemption from the Internal Revenue Service, better known as a 501(c)(3), should contact the US Internal Revenue Service for forms and instructions. It is a lengthy process and normally not completed until a FNPS Chapter has reached a certain sustainable membership and annual revenue. Until an incorporated FNPS Chapter has the IRS tax exempt status, documented by an IRS Determination Letter, donations to that Chapter are NOT tax deductible.

If you do establish your Chapter as a 501(c)(3), you will also need to apply for a Consumer’s Certificate of Exemption (Form DR-5 to be exempt from sales and use tax on purchases and rentals of tangible personal property if that property is used in carrying out the organization's not-for-profit activities.

Links you will need:

Instructions for Applying for 501(c)(3): http://www.irs.gov/charities/article/0,,id=96210,00.html
Application form for Certificate of Exemption (DR-5): http://dor.myflorida.com/dor/forms/

Group Exemption Letter (GEL) Program

Through the GEL program, FNPS extends its 501(c)(3) umbrella over participating Chapters. Basically, the benefits of Group Exemption are that the Chapter will be able to function as a 501(c)(3) without having to complete the application process or paperwork (although there are some additional reporting requirements). Key advantages are that Chapters can:

  1. solicit tax-deductible contributions, 
  2. apply for grants, and 
  3. avoid paying sales tax on items bought for the Chapter’s use (Chapters are never exempt from collecting and remitting Florida sales tax for sales to the public: See Sales Tax below). 

To apply for the GEL Program you will need to provide FNPS with:

  • a copy of the chapter’s organizational registration (fictitious name  or nonprofit corporation annual report)
  • a copy of the chapter bylaws (signed by two officers); 
  • last year’s revenue and expense statement, and balance sheet
  • a detailed description of the chapter activities including the "who, what, when, where and how's", by the percentage of time devoted to each of these activities/categories (percentages must total 100%)
  • a list of your officers, names and addresses
  • compensation, if any paid to any chapter officers
  • a description of any facilities used, owner of the facilities, cost for use, and any lease or rental arrangements. 
  • Proceeds from any publications including royalties must go to the organization. 
  • a completed and signed Chapter Checklist 

Links you will need:

Checklist for the GEL Program
 Chapter Description Template
Chapter Group Exemption Policy Statement

Let’s add the requirements and benefits of each status to our table.

Chapter Type Requirements, Pros, and Cons

Chapter Type

Required

Pros

Cons

Voluntary Non-incorporated
Not-for-profit Organizations
Non-501(c)(3) Chapter

Apply for a fictitious name

Apply for an EIN 

Apply for FL sales tax number for submitting sales tax.

Do not need to file articles of incorporation with the state, or annual report and fees

Do not need to submit annual registration to Dept of Ag. Consumer Services

Do not need to submit financials to state

Can conduct charitable gaming, e.g., raffles

Contributions are not tax deductible

an only apply for grants that do not require 503(c)3 status

Not eligible for FL sales tax exemption on purchases.

Voluntary Non-incorporated Not-for-profit Organizations
Group Exemption 501(c)(3) Letter (GEL) Program

Apply for a fictitious name

Apply for an EIN 

Apply for FL sales tax number for submitting sales tax.

Annual registration with FL Dept of Ag, Consumer Services under Solicitation of Contributions 

Do not need to file articles of incorporation with the state, or annual report and fees.

Able to solicit tax-deductible contributions

No sales tax on items bought for chapter’s use 

Able to apply for grants

Do not need to file IRS forms – For one-time application submitted to FNPS Treasurer 

Must file annual financial report to Society

Charitable gaming is prohibited which includes raffles 

Incorporated Not-for-profit Organizations
Chapter-level (independent) 501(c)(3) Tax Exempt Status 

File Articles of Incorporation with the state

Apply for an EIN 

Apply to the IRS for not-for-profit 501(c)(3) status

Apply for FL sales tax number for submitting sales tax.

Apply for FL sales tax exemption (good for 5 years)

File an annual corporation report and fee with the state 

Annual registration with FL Dept of Ag, Consumer Services under Solicitation of Contributions Act

 IRS forms to retain 501(c)(3) status annually

Able to solicit tax-deductible contributions

No sales tax on items bought for chapter’s use

Able to apply for grants

Must apply for 501(c)(3) status, and file forms with IRS annually, requiring extensive documentation

Charitable gaming is prohibited which includes raffles 

Incorporated Not-for-profit Organizations
Group Exemption 501(c)(3) Letter (GEL) Program

File Articles of Incorporation with the state

Apply for an EIN 

Apply for FL sales tax number for submitting sales tax.

Annual registration with FL Dept of Ag, Consumer Services under Solicitation of Contributions Act

Able to solicit tax-deductible contributions

No sales tax on items bought for chapter’s use

Able to apply for grants

Do not need to file IRS forms – one-time application to FNPS Treasurer

Must file annual financial report to Society

Charitable gaming” is prohibited which includes raffles 

 

Note: there are alternatives to plant raffles which can bring in more $$ than a raffle -- find an entertaining auctioneer and get a competition going for the plants instead of raffling them off.

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