Note: Published too soon, so lots of edits from the first version. Sorry for any confusion.
I had a question from my earlier post about SQLOrlando with regards to setting up an umbrella organization, basically asking “instead of each Chapter doing all this work, why not have one org?”. Great idea, at least in theory (and maybe in practice).
Here in Orlando we have two PASS Chapters, neither is incorporated. We put both Chapter leaders on the Board of SQLOrlando. We treat SQLSaturday as a joint fundraiser. Any funds left after he event will be allocated to some combination of joint events and Chapter support – we’ll meet soon to hash out a plan. After that we’ll pay for expenses directly (order the pizza with the corporate card) or just reimburse as long as we capture receipts. We might also sponsor the groups (or other groups), though I see that requiring extra care (we want to be able to show (prove) that we’re not taking compensation). Tracking the money assigned to each group seems doable. Not painless maybe, but doable. Fairly easy if we only add funds once a year, maybe a little harder if a chapter gets a sponsor for a meeting and the money goes into the non profit. Still doable I think. Given that both groups are local and that we’ve all known each other for years, I have hopes of it working out well in Orlando.
If you aimed higher, say a state level org (hard to go wider because the rules vary by state, but not impossible), then the first consideration would be how much money. This non-profit thing is significantly easier if you stay below $50,000 in annual revenue. If you go over, then you have to do a real filing and not just the e-postcard. That adds expense (to have someone prepare the return), but that doesn’t mean you can’t do it, it’s just a decision that requires some thought. After that, I think its all about governance. Giving each participating Chapter a seat on the Board would be a good start, along with clear bylaws that covered distribution of funds (ranging from a lost receipt to a Chapter withdrawing). In the end it would either work, or a Chapter would withdraw, or the non-profit would close down. I think it would be simple enough to do, as long as the non-profit was just bring those people together and consolidating the money management. If the non-profit starts to do fund raising on its own, then I think it gets complicated. Can they sell sponsors a state-side option? How would the funds get split across member Chapters? Complicated.
Basic on my limited experience I can say that forming a non-profit is doable, but it’s a lot more work than NOT doing it. Joining a “co-op” type org as described above seems like an easy win for new Chapters, or ones with small amounts of income, or just no interest/energy for taking that big step to being a stand alone. But really, I think it just depends. Some groups will want to do their own thing, others won’t, depending on their size, maturity, goals, cross Chapter relationships, and probably a few more things. I think it probably also matters whether that org already exists and you just decide to join or not, versus the effort to get everyone to agree on the approach and then form a new non-profit. Looking back, had the option to join something like this existed already, I think we would have done so. Why not?
Is it legal? I have no idea. I think if the bylaws are well written and good records kept it seems like it would meet the intent of being a non-profit. I think as long as the Chapters are “unofficial” entities (not incorporated, LLC, etc) it seems ok, though I wonder about the Chapter agreement. Typically a non-profit would only have officers sign agreements and if that happens, it is one Chapter or many? How would PASS handle that, or would they care?
For us, just forming the non-profit was an experiment, we know we’ve got a lot more to learn. We have no language in our by-laws yet that handle any of the complexities I’ve mentioned above. The early steps are promising (it’s sooo nice to have the money NOT in my PayPal account!) and we’ll see how things go for the next year. It’s far too early to say “go do it this way”. If you’re thinking to try the umbrella approach just be a little cautious – do the reading, spend a $100-$200 to talk to an accountant or an attorney, then go forth and iterate, and take some time to share what you learn.
2 thoughts on “Non Profit Umbrella Org – Good Idea?”
Organizations are often about control, not finances. A non profit centralizes power in a way that many people don’t want.
Just like any org, its all about the vision and the leadership. There are good orgs and bad orgs. Good orgs can turn bad and vice versa. No guarantees. For this particular suggestion, what might make it a little less random is the combination of the by-laws and the board members (because they would be the primary stake holders). It’s easy to limit the scope, if that’s the route you choose to take. I think the more interesting question is what you might accomplish if you do more than just have a central bank account. Just the part of being formally bound as a group creates an interesting amount of conversation.
We’re barely into the experiment in Orlando, much to learn, and I’m not advocating this as the perfect solution or the solution for everyone. I think it’s fine (required) to go into something like this eyes open and to write by-laws that address concerns.
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