The club will need to determine if it will be a nonprofit organization and get its nonprofit designation from the IRS or through the RRCA’s group exemption with the IRS
. New members are highly encouraged to utilize the RRCA group exemption benefit of membership.
Some clubs elect to organize as an LLC and are not eligible for nonprofit status. Theses clubs are considered for-profit entities.
Some clubs/social running groups/crews start out as unincorporated associations, which is when two or more persons are joined by mutual consent for a common lawful purpose, whether organized for profit or not. If the purpose for the association is to benefit the public some way, and does not include earning a profit, the association’s members have formed an unincorporated nonprofit association. The biggest drawback to the unincorporated nonprofit association is that it has no legal existence, therefore its members generally can be personally liable for its debts and liabilities.
Should you incorporate?
Incorporating is a state process. Incorporated organizations must adopt formal governing procedures including by-laws, hold regular meetings, maintain minutes, and keep the state informed of changes in board officers. The incorporation process registers and protects the organization’s legal name. In most circumstances, regular members, board members, and employees cannot be held personally liable for a corporation’s debts and activities. The corporation itself is liable while members’ personal funds and assets are protected. However, members can be held liable for intentional negligence and misappropriated funds. Foundations, government agencies, and banks are often more willing to do business with incorporated nonprofits than unincorporated organizations. They recognize nonprofit corporations as legally responsible and more likely to meet their obligations.
Joining the RRCA
After the infrastructure of the club has been established it is time to join the RRCA to access the many great benefits we have to offer your club.
Once you join the RRCA and have obtained your nonprofit status and insurance you will really be ready to get going with your club activities, which should include some long range and short-term planning at by the board of directors. Be sure to form volunteer-run committees, appoint some program directors, solicit donations, pursue sponsorships, and create a calendar of club activities.
Once the running club is established it must be continuously cared for in order to stay in good standing from an IRS standpoint and from a civic standpoint. The minutes taken at club meetings are the permanent record of the proceedings and should be clear, accurate, brief and objective. Minutes should be shared with club members.