Sorry my introduction wasn’t terribly complete!
I’m with the School Factory – schoolfactory.org
Since 2010, we’ve been providing spaces with fiscal sponsorship and program hosting for 501©3 status, so we take care of all donations, grants, and compliance issues (as well as filing federal returns!) We’re doing this for 48 spaces now, in addition to mentorship and guidance on how to run a good space, based on our own experience from starting what amounts to the first co-work / maker / artist space in the U.S. back in 2002.
Through that process, we’ve been in and out of every aspect of IRS law on the issue and have created a robust system for dealing with questions and issues, as well as handling the money quickly and accurately to avoid even being on the radar screen of the IRS.
Many spaces fail to comply by being too private-- in other words, the IRS looks at them and says, “You’re really just about a private club, offering benefit to members only.” If a space offers any kind of open classes, programming, or outreach then it’s much easier to comply.
Also, many spaces confound the governance model they use with the type of organization they are–non-profit doesn’t mean ‘don’t make money’ and doesn’t have to mean anything regarding a collective management structure. In the last several years working with more than 120 spaces, we’ve seen every kind of governance model coupled with L3C, B corp, and non-stock corps.
The C6 designation can be appropriate, depending on the situation. The difference seems to be in terms of the ability to advocate politically, among other things.
On Wed, Sep 2, 2015 at 3:55 AM, Jeannine van der Linden [email protected] wrote:
There is a fable going around that it is easy to get ©(3) status and that it is easy to maintain. This was true for a long time, and with the streamlined procedure it is in some sense stiill true. The trouble with all this is, when the IRS gets a new set of madates regarding enforcement then there will be audits. And in case of an audit all those ©(3)s are likely to have a problem. The problem is, in what sense are you a charity?
This section of the IRS code was intended for businesses founded for charitable, religious, educational, scientific, or literary purposes, or for purposes of testing for public safety, fostering amateur sports competition, or preventing cruelty to children or animals.
Very few coworking related businesses are doing those things as their purpose. Fostering community is not charitable in nature unless your community is a charitable community.
So in case of audit the chace is large of losing that status and all the headaches that follow.
I think the chance of audit is small. But why start by trying to shoehorn your space intoa category that it does not easily fit? A ©(6) is more appropriate and more suitable for a lot of spaces. The co-op is also in the rise and I expect to see more state level legislation in future in this area. Als LLC’s are often a good choice.
It is the case that changing business form is not difficult, But it is distracting and expensive.
I am interested in the L3C, because I think the notion of “low profit” companies is an interesting development in terms of how we think about doing business. But I am I confess a little wary about it in general, possibly it is my nature to be careful abotu Legislatures bearing gifts.
B Corps are also interesting I think for coworking spaces. Also new, but a little clearer in terms of the qualifications and governance.
On Wednesday, September 2, 2015 at 12:03:19 AM UTC+2, Bucketworks wrote:
Why a C6? Not a C3?