Tax issues

  • A majority of GCSAA-affiliated chapters are designated as 501c6 or 501c3 organizations. A section 501c6 covers professional membership and trade organizations. Contributions made to 501c6 organizations are not deductible as charitable contributions.
  • A section 501c3 covers charitable, education and scientific organizations. Dues paid to 501c3 organizations may be deductible as a business expense, except to the extent they support certain political or lobbying activities.
  • All nonprofits must file a Form 990 return, no matter what their size, level of assets or gross receipts. To learn more about the IRS requirements, visit the irs.gov website. 
  • Unrelated business income tax (UBIT) – Activities unrelated to the chapter’s purpose or mission are regularly carried on and are considered a trade or business, according to the IRS. This may result in unrelated business income tax (UBIT) by the IRS. If unrelated revenues subject to UBIT rise within 30-40 percent of the chapter’s annual budget, the IRS may question the chapter’s tax-exempt status.

Lobbying and political activity allowances

Please refer to this chart for lobbying practices allowed by tax-exempt organizations:

Type of organization Definition Lobbying Activities
501c6 Trade, professional membership and business leagues Unlimited
501c3 Charitable, scientific, educational or religious organizations Limited – It cannot be substantial, and cannot be related to directly or indirectly supporting a political campaign, candidate or political action committee (PAC)
501c4
501c5

Sources: Managing Chapter Funds by Susan S. Vowell, CPA, Professional Practices in Association Management by John B. Cox, CAE and Association Law Handbook Third Edition by Jerald A. Jacobs.

Chapter Financial Management Overview

 

Managing a chapter is like running a business. It requires fiscal responsibility. The board and staff are accountable to the membership for being good stewards of the association’s financial resources.
 

Fiduciary Responsibility

The treasurer, in particular, is responsible for reporting the association’s financial status to the board and membership. The treasurer should work closely with the chapter executive on the collection, allocation and investment of funds. An effective chapter should hire an accountant to file its taxes and should establish an audit committee to conduct an annual review of the association’s assets.