Creating a non-profit organization

From FIRSTwiki

None of the information below is legal advice, and it should not be construed as such.

Teams can become legally recognized non-profit organizations.

Legal Issues

There are a few methods to becoming legally "non-profit" and using the non-profit categorization to the team's benefit.

School-wide

All public schools have non-profit status. School-administered teams can get the permission of the school to use its Tax ID. This Tax ID indicates the non-profit status of the whole school. When sponsors use this to verify your non-profit status, however, their money will be going to the school as a whole. This might be discouraging for some sponsors. This method is almost always cost-free.

Incorporation

The information in this section will vary somewhat from state-to-state. Washington State is used as an example.

Incorporation allows the team to be collectively owned, instead of owned by specific people. It allows the team to continue operations, even if one of the major entities (person or people) leave the corporation. Of all the business structures, this one allows the most flexibility and shows the most professionalism. It is also the most enticing for a prospective sponsor, since they know that their money will be used for the specific cause they intend it to be used. Once a team becomes a non-profit corporation, it is completely independent of the school(s) it is from. However, incorporation is also the most expensive method of becoming a non-profit organization, with one-time fees of about $200 and periodic license renewal fees. The process of becoming a corporation is complicated and long. First, one must file an application to start a business with the secretary of state's office. After that, a license for incorporation must be obtained from the state's department of licensing. If the team has students/adults from more than one state, it may need to apply with the federal government also.