In August, the 1,000-member Fort Collins Board of REALTORS®, Colo., received final IRS approval for its Future of Housing Community Foundation, a 501(c)(3) organization, which aims to raise tens of thousands of dollars each year to support local housing and affordability efforts.
“We decided to establish a foundation because our budgeted community investments over the years were becoming something we just did because we had always done it,” says association CEO Clint Skutchan, RCE. The foundation will serve to formalize the association’s commitment to community outreach, boost its public profile as a contributor to the community, and enable the association to leverage additional dollars from the state and national levels, he says.
Taking a more focused approach, the Michigan Association of REALTORS®’ new Michigan REALTORS® Relief Fund was established earlier this year to expedite the receipt and donation of charitable aid from Michigan REALTORS® and others to the water crisis in the city of Flint. The new fund, also a 501(c)(3) organization, will be ongoing and provide housing-related assistance to victims of disasters and for other charitable purposes, says association Director of Communications & Marketing Joe Kras.
“Using the foundation approach enables us to better define the scope of our outreach as opposed to raising money for all different kinds of causes,” says Kras.
When an association files its 501(c)(3) paperwork with the IRS, it is required to define a relatively narrow scope of the organization’s purpose.
There are many reasons to establish a charitable giving vehicle such as a public charity, private foundation, community foundation, or a donor advised fund. Usually the most compelling reason to establish a 501(c)(3) is to offer donors a tax write-off. Yet, these organizations also are exempt from paying federal income tax and sales tax on certain purchases.
If you see a 501(c)(3) in your association’s future, there are legal requirements and other important points to consider.