The Non-Profit Conundrum

One definition of a conundrum is “a logical postulation that evades resolution.”

You would think whether or not the Sarasota Sailing Squadron was a non-profit organization (501(c)(3)) or should create a non profit organization is a conundrum because we have been talking about it for over 20 years; one score; a fifth of a century; 30% of the Club’s existence.

Some are now asking, “But aren’t we already a non-profit?”

The Sarasota Sailing Squadron is a 501(c)(7) which is described as a “social and recreation club organized for pleasure, recreation and other non profitable purposes and no part of the net earnings shall benefit any private shareholder”.

In short, we exist to provide services to our members.

This is not the same as a 501(c)(3) which is a tax exempt organization working with matters of public interest typically in the arts, charities, education, research and environmental protection. No income tax is due on monies generated and people can make tax deductible donations provided the organization is fulfilling certain requirements like providing service for the public and not just members.

Historically, we've hit a dead end in our discussions about turning the Club in to a 501(c)(3).

“Could we still serve beer?” is the question that resonates over the decades but practically speaking a conversion would be impossible because all of our activities serve dues paying members and not a “greater good”.

Several months ago the current Board of Directors formed an ad hoc Non Profit Committee led by Mike Halliday to explore opportunities if we were to create a new 501(c)(3) rather than continue down the dead end road of a conversion. And last month the Board, after hearing this committees first presentation voted to loan the Committee $5,000 to be used for the creation of a 501(c)(3).

There is a lot of work involved and the current Committee road map includes creating Articles of Incorporation, legal review of Articles, incorporating in State of Florida, obtaining a Federal Employer Identification Number, preparing financial statements for the current year and proposed budgets for the next 2 years, applying for IRS 501(c)(3) approval and finally, creating Bylaws.

This last step; creating Bylaws, should be of the most importance to our membership.

This is the document I suggest be subject to Sarasota Sailing Squadron Board approval. And based on the amount of work required to get to this point it could be put in front of the next Board of Directors which would be fine with me.

Involving the next Board will only broaden the base of people who understand and potentially support the benefits of creating a 501(c)(3).

The Bylaws is the instrument which will detail Mission Statement, Board of Directors, how money is distributed, etc…until then we are simply building a boat.

We are building a boat and have time to determine who sails it and where it should sail.

A proposed mission statement is still in draft form but it includes elements of our Club’s mission like promoting recreational sailing, racing, cruising, sailing instruction, boating safety, and youth sailing. Also being proposed is enriching the local community by providing affordable sailing instruction, participation in sailing competitions, water safety education and increased environmental awareness through improving the relationship between boaters and marine ecology.

This is not part of any final document yet but I think you can see how symbiotic a potential “foundation” can be.

A 501(c)(3) can apply for grants and receive donations creating a pool of funds which can be used for a variety of activities and projects which will benefit the Sarasota Sailing Squadron and the community at large.

Imagine this…what if money this organization generates can be used to develop a classroom(s) on Squadron property to further educational goals…what if this organization can generate money for our next building project which may include more boat storage and a public presence on our southern border (see Long Range Plan)…what if this organization could help fund the eradication of exotic species around Squadron property and Ken Thompson Park…what if this organization is better suited to provide funding to the Youth Sailing Program thus freeing up member generated monies currently used for this purpose…what if this organization can provide scholarship dollars to low income youths wanting to learn sailing and seamanship…what if this organization can provide funding to create an adult sailing program lost since Red Cross moved out?

The opportunities are endless and our membership stands to benefit from such development which is currently only possible with your money received in the form of dues and expenses.

If we do not head down this path costs will go up as we simply try to maintain what we have for a limited number of people. This is becoming increasingly hard to do as evidenced by the State recently deciding we do not provide enough “public good” to be a candidate for a fee waived mooring field. But if we do go down this path we have the chance to become an even greater asset to the community in which everyone benefits.

Sure, there will be some muddling forward as I am fond of saying. We may even need to make changes along the way. And although this sets up a pretty good sailing analogy I am more reminded about something Nancy Detert said.

Nancy Detert, one of most successful State (and local!) legislators recently had her “no texting and driving” bill passed in Tallahassee. But her proposal was modified in the final stages potentially alienating her support. Ultimately, she voted for “her bill”, unwelcome modifications and all. Her quote to the media was classic and should be remembered.

When asked about supporting a bill she felt was negatively impacted by changes she said, “I decided not to let the perfect get in the way of the possible.”

I would hope our membership feels the same way about the creation of a 501(c)(3).


The Non-Profit Conundrum — 6 Comments

  1. I have to say I am on the fence about this one. I would like more information on the impact on the existing club. I am all about community – I am a school teacher, and have worked with underprivileged children for a number of years.
    I don’t think we should look at the SSS as “just a service to it’s members” as a bad thing. There are lots of clubs out there that just serve their members. That’s all good stuff.
    On the other hand, I would love to see funding for education, scholarships, environment, etc. around the SSS.
    $5,000 is a bit steep, we need a financial report on what $ is used for, but I would like to see this investigated, have complete transparency as to what the impact to the SSS existing club is, and then presented at the Annual Membership meeting for a vote BY MEMBERS. If we are going to do something this big, then it should come from the MEMBERS, educated to make the decision, and not from a majority vote of a BOD which is actually just 7 people.
    I also beleive this BOD has enough going on right now to pass such a vote on their own. The trust of the members, and the moral of the club needs to be healed BEFORE we advance in other directions.

  2. At my last club we considered this issue and determined that having the club own the 501 c 3 was the best structure. The 501c3 could then undertake all of the charitable activities of the club without creating any ambiguity about its purpose or relationship to the parent club.

  3. I think a 501 (c)(3) would be good for the Squadron and some level of funding from the Sqadron might be appropriate but I think $5, 000 is too much. Simply forming the corporation should not cost anywhere near that amount.

    The Squadron could possibly be a Member of the 501 (c)(3) but cannot own or control it. In my opinion, the Squadron can cooperate with the 501 (c)(3) and maybe contribute to specific projects but should not be the sponsor or primary source of funding. The Squadron itself is not a charitable organization and I do not think the membership wants it to become one. I know I do not. I will make my charitable contributions as I see fit.

    Is the $5, 000 a loan? I believe it could be and that a loan would be the proper form of contribution to an organization the Squadron will neither own or control.

  4. with regard to: “Your resignation and that of your consorts would be appreciated. By the way, I haven’t seen any apology or rescinding Laurel Kaiser from her expulsion from the Board without membership approval.”
    Getting a little excited here, aren’t we? Maybe even losing focus, e.g. what does the issue regarding Laurel Kaiser have to do with forming a Non-Profit?

  5. I strongly support the formation of a 501(c)3. It is also okay to have both corporate structures with different boards of directors. It would greatly enhance the ability of donors to support SSS with tax deductible contributions including the donation of boats, etc. I have managed and worked for 501(c)3 organizations which are able to apply for grants from foundations which usually only provide them to non-profit charitable organizations.

  6. No way! Revoke the $5000 “loan”‘, disband the committee and leave the SSS alone. Your resignation and that of your consorts would be appreciated. By the way, I haven’t seen any apology or recinding Laurel Kaiser from her expulsion from the Board without membership approval.
    Bill Waggener member since the 1970’s