Incorporation

[tiwonge]

This doesn't really fit elsewhere, so I guess I'll put it here.

One of my goals for the summer is to establish some sort of Idaho Quiz Bowl Association. I've been spending the last few hours doing online research for it. (Luckily for me, there's a nonprofit resource group that meets the third Thursday of the month in the library--that would be this Thursday. Timely.)

This site (http://foundationcenter.org/getstarted/ ... index.html) seems pretty helpful, and takes one through a step-by-step process of setting up a non-profit group. Not all steps will be applicable in this case, but it's been good to read through them.

Incorporation in Idaho seems pretty simple. All it takes is $30 and a simple form to fill out. (The most complicated field of which is the name of the corporation which, for some reason, has to include words like Company, Limited, Incorporated, and such. This might end up officially being something like the Idaho Quiz Bowl Association, Incorporated.) I'm not sure that this gains anything, except official status. (I guess being a corporation gives some liability protection? I don't know.) It also takes 3 people, which shouldn't be a problem, either.

So, that's the easy part. The harder part--a part not necessary simply to file for incorporation--is to set up the governance. This is where I'm curious how other state associations (and national ones like PACE) function. Probably, I'm looking for a two-tiered system of members and a board/officers. Members elect board members yearly. I don't know if members should be nominated and voted on by the association, or if membership should be freely offered upon application (or maybe application followed by voting). One thing I was thinking of doing was extending one automatic membership position to any school (college or secondary school--Idaho's circuit is too small to differentiate between them, and I want to promote quiz bowl in general) with an active program (however that is defined). This position could be filled by a coach or a student. And then maybe extend special membership positions to people in organizations that have an interest in quiz bowl (such as the guy who runs INL, if he's interested). I'm not sure. I'm going to have to flesh this out a bit. I'm also not sure about board positions. If I think about positions (president, vice president, treasurer, secretary, public relations, to start), I've got more positions than potential members, for now. And I don't know how many people would be willing to take the extra work of a board position. Maybe I'll be surprised.

How do other organizations set up their governing structure? Is there a qualification for membership? Is there a regularly-scheduled meeting? Is it worth it to charge dues? (I think Illinois charges dues.)

Another step, eventually, in this process is to apply for tax-exempt status. This looks a lot harder, and is a bigger hurdle. The site above suggests that most foundations that grant money will only do it to tax-exempt organizations. (The only model I have for this in quiz bowl is the NHBB, which, as I understand it, has gotten some corporate sponsors. Is the NHBB tax-exempt? If so, how difficult was it? If not, did it cause an issue with corporate sponsorship?) It also requires a $400 filing fee with the IRS, in addition to dealing with IRS forms. (The site above suggested getting professional help with this.)

One of the reasons for incorporating is for monetary issues. Right now, I'm running it sort of as a side project of the BSU quiz bowl club. That's got some great advantages (I can reserve rooms for free, for example), but it's a pain to have to deal with the red tape of accessing the money that we've raised. It's essentially just sitting in our account as I pay for everything out of pocket. (We used some money to travel to the ICT last year, and I NAQT is a registered organization with the university, so I can pay them without too much hassle. Other than that, it's a big hassle to use the funds.) Also, I want to try to make it easier for teams here to travel to national tournaments, so if I can solicit funds, then I can issue grants or something to help teams cover travel expenses. I don't know how easy it would be to solicit money (and whether I'd need to be tax-exempt).

I'm not going to worry too much about the rest of the stuff on the site. We won't need offices (although I might want to get a PO Box just to separate it from my personal address?). I will list my personal address on the form filing for incorporation, though.

How are other state quiz bowl associations set up? Is there anything else to consider?

[tiwonge]

Also, it appears from my quick perusal of the IRS site, that if we don't file tax-exempt status and have money left over at the end of the fiscal year, we'd have to pay taxes on it. This may be additional reason to file as tax-exempt. (How do other organizations handle this? Or am I wrong in my understanding of this?)

Edited to add:
An alternative to filing as a non-profit, from what I read, is fiscal sponsoring, where another non-profit collects donations for us and then disburses them to us. I don't know if this is available in Idaho. (The one site I found that listed potential sponsoring organizations (http://www.fiscalsponsordirectory.org/) didn't have any listed for Idaho. I don't know if this is because it's not possible in Idaho (although it seems that this would be a national/IRS thing, not a state thing) or if they just didn't have any contacts here.) I don't know if there is any quiz bowl organization that has filed as a non-profit who might be able to sponsor state associations, or how much paperwork is involved in doing this.

[Stained Diviner]

IHSSBCA is a 501(c)(3). I was unaware that we paid $400, but that was done before I was a leader in the organization, so I'm not sure. You might be able to find a professor at your school willing to give you a little free advice/help on these types of issues if you don't have a family friend or somebody like that you can talk to. Given the small amount of money you are talking about, the tax rate might be zero or close to zero anyways.

Historically, IHSSBCA charged a membership fee because we had to. When we started out in the mid 1990s, many coaches did not have email accounts, and many coaches who had them never checked them. The only way to disseminate a tournament calendar and get people thinking about Scholastic Bowl (the term I'll use since we're talking about Illinois years ago) was to produce a paper newsletter and mail it to members. When we started, that was our primary expense. As time has gone on, our spending has gotten more diverse. In a typical year, we take in and spend about $15,000.

As far as governance is concerned, we have four elected positions, but in sixteen years we have never had a contested election. To be on our Steering Committee, you basically need to tell me that you are interested in attending at least half of our quarterly meetings and that you are interested in doing some work of your choosing for the Association. Those criteria get us about 10-15 coaches out of over 500 who want to be on the Steering Committee, which works fine for us.

I would strongly recommend holding several meetings before incorporating to talk about what needs to be done and who is willing to help do it. If you are the only one willing to work, then you might want to talk to your school about how they can handle your account better. (I'm not being facetious here--most coaches aren't looking for a role beyond coaching or perhaps helping out on a regional level, and lots of states could benefit significantly by having one person actively working to improve quizbowl.) If you do have a few people who are willing in starting something long term that will involve the work of many people, then you should talk about how you want to organize yourselves.

[Sen. Estes Kefauver (D-TN)]

MOQBA is not incorporated because there is no real reason to do so. I'm skeptical this is necessary to your goal of setting up an Idaho quizbowl association, unless you specifically want to do things only allowed to those kinds of organizations. If all you're trying to do is setting up a circuit, you can just get people together, call yourself something, write a simple constitution, and then go about setting up tournaments. I think that should be the goal of your organization, and then after you've already been an organization for a while and know better how you're going to go about business, maybe then discuss incorporation.

[tiwonge]

Is it necessary to be incorporated to open a bank account?

[Sen. Estes Kefauver (D-TN)]

No.

[tiwonge]

I'll take your word that it's not necessary. (I didn't know exactly what the purpose of incorporation is, either. I guess if the eventual goal is to get tax-exempt status, that's required.)

So, then, the first step is not incorporation (which isn't hard, although now that's $30 that I don't have to spend), but rather establishing a form of governance--some sort of constitution with bylaws describing how the association will work.

[Stained Diviner]

The first step is sitting down with a bunch of people who care and figuring out what your first project or two should be.

[theMoMA]

The primary benefits of incorporation are official status (and whatever normalcy/prestige comes along with that) and liability shielding (which varies by state). The gist of it is that the people running a corporation can't be personally liable for the things done in the ordinary course of business (with certain exceptions), while the members of a partnership (which is any unincorporated group of people operating together, like your Idaho Association would be before incorporation) can be held personally liable. Quizbowl isn't exactly the most litigious of endeavors, so I'm not sure how much you stand to benefit from protection against lawsuits. If you do incorporate, you should make sure to follow your bylaws and respect your corporate structure. You can lose the protection of incorporation in legal matters if you ignore these things. Also, I'm not a lawyer, and certainly not an expert on corporate law, so make sure to talk with someone who knows the nuances of Idaho corporate law if you have any questions about how to incorporate.

[Great Bustard]

The primary benefits of incorporation are official status (and whatever normalcy/prestige comes along with that) and liability shielding (which varies by state). The gist of it is that the people running a corporation can't be personally liable for the things done in the ordinary course of business (with certain exceptions), while the members of a partnership (which is any unincorporated group of people operating together, like your Idaho Association would be before incorporation) can be held personally liable. Quizbowl isn't exactly the most litigious of endeavors, so I'm not sure how much you stand to benefit from protection against lawsuits. If you do incorporate, you should make sure to follow your bylaws and respect your corporate structure. You can lose the protection of incorporation in legal matters if you ignore these things. Also, I'm not a lawyer, and certainly not an expert on corporate law, so make sure to talk with someone who knows the nuances of Idaho corporate law if you have any questions about how to incorporate.

To add to this, I think for quizbowl associations, the main benefit would be a capability of accepting donations as a registered non-profit. It would also make it easier to find sponsors, which could help in enhancing prestige and outreach.

[marnold]

I wouldn't ask these questions in the form of "how do established quizbowl organizations do this." I was on a real kick for awhile asking various quizbowl people how their organizations were organized and the answer was essentially always "extremely poorly" and pretty much everyone has Charlie Dees's blissful insouciance that things like liability or tax law don't apply to quizbowl for some reason. Like, the only quizbowl charity I can think of can't accept tax deductible donations, officers of HSAPQ can't name a single member of their board or what state they were incorporated in, etc. This is not legal advice, but I think you're doing the right thing doing the extremely easy paperwork to set yourself up properly rather than just winging it.

EDIT: I've been corrected about my faulty memory about what HSAPQ couldn't recall, so sorry to them. Suffice it to say though: it's like 15 minutes of work and if it allows you to solicit donations or keeps you from having to untangle paperwork in an audit or prevents your house from being seized if some kid slips and falls at a tournament it seems like it's worth it.

[STPickrell]

I wouldn't ask these questions in the form of "how do established quizbowl organizations do this." I was on a real kick for awhile asking various quizbowl people how their organizations were organized and the answer was essentially always "extremely poorly" and pretty much everyone has Charlie Dees's blissful insouciance that things like liability or tax law don't apply to quizbowl for some reason. Like, the only quizbowl charity I can think of can't accept tax deductible donations, officers of HSAPQ can't name a single member of their board or what state they were incorporated in, etc. This is not legal advice, but I think you're doing the right thing doing the extremely easy paperwork to set yourself up properly rather than just winging it.

EDIT: I've been corrected about my faulty memory about what HSAPQ couldn't recall, so sorry to them. Suffice it to say though: it's like 15 minutes of work and if it allows you to solicit donations or keeps you from having to untangle paperwork in an audit or prevents your house from being seized if some kid slips and falls at a tournament it seems like it's worth it.

Hey, this is a cool thread, seeing as I've set up a quizbowl-themed (for-profit) corporation and do all the paperwork-type stuff for HSAPQ.

Hopefully next year we can even institute direct deposit.

In my experience, I've put in way more work to get a tournament going/prepare 100s if not 1000s of questions than to fill out the various paperwork.

For the record, we're incorporated as a for-profit Virginia corporation. The corporate board of HSAPQ is the same as the editorial board, with me thrown in there for non-quizbowl paperwork purposes, and Will Butler for technical purposes.

Out of curiosity, is PACE set up as a 501(c)(3)?

[Mike Bentley]

I wouldn't ask these questions in the form of "how do established quizbowl organizations do this." I was on a real kick for awhile asking various quizbowl people how their organizations were organized and the answer was essentially always "extremely poorly" and pretty much everyone has Charlie Dees's blissful insouciance that things like liability or tax law don't apply to quizbowl for some reason. Like, the only quizbowl charity I can think of can't accept tax deductible donations, officers of HSAPQ can't name a single member of their board or what state they were incorporated in, etc. This is not legal advice, but I think you're doing the right thing doing the extremely easy paperwork to set yourself up properly rather than just winging it.

EDIT: I've been corrected about my faulty memory about what HSAPQ couldn't recall, so sorry to them. Suffice it to say though: it's like 15 minutes of work and if it allows you to solicit donations or keeps you from having to untangle paperwork in an audit or prevents your house from being seized if some kid slips and falls at a tournament it seems like it's worth it.

Hey, this is a cool thread, seeing as I've set up a quizbowl-themed (for-profit) corporation and do all the paperwork-type stuff for HSAPQ.

Hopefully next year we can even institute direct deposit.

In my experience, I've put in way more work to get a tournament going/prepare 100s if not 1000s of questions than to fill out the various paperwork.

For the record, we're incorporated as a for-profit Virginia corporation. The corporate board of HSAPQ is the same as the editorial board, with me thrown in there for non-quizbowl paperwork purposes, and Will Butler for technical purposes.

Out of curiosity, is PACE set up as a 501(c)(3)?

PACE is not a 501(c)(3) yet but we are actively working towards achieving this status. We hope that we will be able to at least have the application done by January 2013.