The procedure for RRCA member clubs and events to obtain federal tax-exempt status simpler than applying directly to the IRS for tax exemption, and there is no additional cost for members.
There are some very straightforward requirements your organization must comply with in order to be included in the RRCA’s group exemption.
A nonprofit organization is one that is created for a specific charitable purpose and governed by a group of individuals who do not benefit financially from association with the organization.
These individuals make up an independent board of directors for the organization and become financially responsible for governing and managing the club or event(s).
Nonprofit designation does not forbid the organization from making a profit, however, any profit earned must be invested back into the operation of the club and/or event(s) and cannot inure to board members that voluntarily serve the organization.
RRCA member clubs and events wishing to become a nonprofit organization can do so in one of two ways:
- A club or event can either apply for federal tax exemption directly through the IRS, or
- It can apply to become a subsidiary organization under the RRCA’s group exemption with the IRS.
- No federal income tax on related business income
- Contributions to your club are tax deductible for the donor — Race entry fees are NOT tax deductible. Consult a local accountant to determine if a portion of your club membership dues are tax deductible.
- Non-reimbursed expenses incurred by your board of trustees are deductible on their personal income tax returns.
- Enhances ability to apply for government and private grants.
- Greater commitments from sponsors and other civic and public groups.
Make sure to inquire about your state’s tax exemption filing requirements and sales tax exemption rules. Your nonprofit status may qualify your organization for certain state sales tax exemptions.
Nonprofit organizations may not engage in candidate endorsement.
Obtain Nonprofit Status via RRCA's Group Exemption
Understanding RRCA’s Group Exemption
The RRCA is a 501c3 organization with a group exemption status with the IRS. The RRCA is the central organization and members qualifying for nonprofit status may request to be an affiliated organization and received IRS 501c3 status via the RRCA.
According to the IRS, group exemptions are an administrative convenience for both the IRS and organizations with many affiliated organizations. Affiliates in a group exemption do not have to file, and the IRS does not have to process, separate applications for exemption. Consequently, subordinates do not receive individual exemption letters from the IRS.
Only entities organized as legitimate nonprofit running clubs or nonprofit events will be eligible for nonprofit status through the RRCA’s group exemption with the IRS. The RRCA reserves the right to reject any organization in the nonprofit group exemption that it believes does not meet the requirements or purpose of being a nonprofit running club or event.
We encourage you to contact the RRCA with questions about club or event bylaws and the letter of intent to join the RRCA’s nonprofit group as an affiliate member.
Submit a member application through our online membership system before submitting the required materials outlined below.
Adopt a set of bylaws to govern your running club or event(s) in complaince with RRCA requirements.
RRCA encourages members to use our Sample Club Bylawsor the Sample Event Bylaws. Our samples include required bylaw items for your organization.
Bylaws must include:
- A purpose statement that has a similar mission to the RRCA.
- A statement outlining your organization is an affiliate organization of the RRCA.
- Clearly defined board of directors with no less than three unrelated individuals on an annual basis that are elected at least every other year.
- You must make the template specific to your organization and remove all “help text” before submission to the RRCA. Bylaws submitted with our “help text” will be rejected and must be updated and resubmitted.
- If your organization will have paid staff/consultants, consult with the RRCA in advance before submitting bylaws to ensure proper structure is outlined that ensures board members are not profiting from service to your organization.
Set your fiscal year to match the RRCA’s fiscal year of January 1 to December 31 (required).
Adapt a Conflict of Interest Policy with disclosure requirements for your board of directors. We recommend using the RRCA’s recommended Conflict of Interest Policy as a template.
Obtain a federal employer identification number (EIN) through the IRS. Learn how to apply for an EIN number.
Draft a letter, signed by an officer of your organization, requesting tax-exempt status under the RRCA group exemption. Your letter must include the following information, ideally in bullet point format:
- Your organization’s federal employer identification number
- Your organization’s official name and address
- Your organization’s fiscal year (must be the calendar year Jan 1 – Dec 31)
- A statement that your organization is not a private foundation
- A statement that your organization has not previously applied and been rejected for tax-exempt status.
- A statement that your organization agrees to abide by the policies set forth by the RRCA and the IRS for nonprofit organizations
- A statement that “No substantial part of the activities of your club shall be to carry on propaganda, or otherwise attempt to influence legislation. The club or event MAY NOT participate in or intervene in any political campaign on behalf of any candidate for public office.”
- A statement of purpose for your organization that reflects the purpose set forth in your bylaws.
Upload the request letter, your club bylaws, and conflict of interest policy to your organization’s account in our membership system. Email [email protected] after you’ve uploaded your documents so they can be reviewed and approved.
Upon receipt of the required documents, you will receive a confirmation letter stating that your club is exempt from federal tax under our group exemption. You will receive a copy of the RRCA’s federal nonprofit determination letter for your records. At times, both letters will be needed to prove nonprofit exemption when working with local governmental agencies or corporate entities.
Affiliates in the RRCA group will not show up in the charity look-up on IRS.gov. If you need a letter of nonprofit status verification, please email [email protected].
Do not contact the IRS directly for a 501c3 verification letter, that request must be made through the RRCA.
If your club or event is receiving nonprofit status, IRS 501(c)3 designation, through the RRCA, the proper way to explain this to your members or local community is,
“Our club is an affiliate member of the RRCA. Through the RRCA, we are a 501(c)3 nonprofit organization.”
It is not enough to simply state that your organization is a 501(c)3 nonprofit organization if you are taking advantage of the RRCA group exemption.
This statement will help entities working with your organization to confirm your nonprofit affiliation with the RRCA.
If you need updated letters outlining your exempt status through the RRCA’s group, please email [email protected] to request updated copies.
DO NOT contact the IRS directly and ask for your club or event name to be included on the RRCA’s nonprofit exemption letter with the IRS.
If completing a W-9 form, use your IRS-assigned EIN number, not the RRCA EIN.
Renew your RRCA membership by January 1st of each year. Non-renewed clubs will be dropped from the group if they fail to renew during a 12-month period. Lapsed membership may affect your ability to access nonprofit status in the future.
ALL nonprofit organizations are required to file a tax return annually with the IRS. Failure to submit annual tax returns may result in automatic revocation of nonprofit status by the IRS. The RRCA may NOT reinstate your organization if the IRS revokes your status.
Ensure you have independent, individual members elected to your board of directors no less than bi-annually. Contact information for each board member should be reported annually through the RRCA’s membership system.
Provide an annual report, which includes financial statements, to your members on an annual basis.
First and foremost – DO NOT use the RRCA’s EIN number when trying to file a tax return for your organization. You MUST use the EIN number specific to your club or event that was issued by the IRS when filing your return.
If you have issues filing your return, contact the RRCA first before contacting the IRS. Tax return preparation should be a high priority for all nonprofit clubs and events. A
LL nonprofit organizations are required to file IRS Form 990 or 990-n annually by the fifteenth (15) day of the fifth (5) month after their fiscal year end. Learn more about filing requirements.
Nonprofit organizations who earn $1,000 or more from unrelated business activities (UBIT), must file IRS Form 990-T. Unrelated business income is income earned from activities not substantially related to the exempt purpose of an organization. Advertising income (in your club newsletter), t-shirt sales, etc. may be considered unrelated business income. State tax filing requirements for nonprofit organizations vary from state to state, and a tax adviser should be consulted to determine the filing requirements of each club.
The RRCA does not file tax returns on behalf of any member.
Due to fraud and abuse in the nonprofit industry, states’ attorneys general have cracked down on nonprofit fundraising.
Nonprofit organizations that solicit contributions are required by state law to file charitable solicitation registration forms. Information about state charitable registration can be found at multistatefiling.org.
The RRCA will file the charitable solicitation registrations for members taking advantage of the RRCA group tax exemption.
Although the RRCA files the master paperwork, some states require affiliate organizations of a parent organization to file an annual financial report as well. Check with your state to understand charitable solicitation registration rules.
Clubs or events that do not take advantage of the RRCA group exemption status should visit the site above to learn more about the topic and ensure compliance for your organization.
Audit Requirements: If your organization receives funds from a government entity you are required to have an annual independent audit. Some states also require larger nonprofit organizations to have an independent financial audit on file with the state agency. Review your State’s Attorney General website to determine if your organization is required to have an independent audit.