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501-C-6 Organizations

  • 08/24/2012 2:53 PM
    Message # 1055567

    As former and current board members have identified "a 501-C-6 organization defines an association of persons having a common business interest, whose purpose is to promote the common business interest and not to engage in a regular business of a kind ordinarily carried on for profit."  In my brief research I have found that an organization may recieve income from nonmember sources however any income must be considered to be membership support.  Also, an organization can have net earnings in the form of an excess of income over expenses.  The IRS describes an activity that will jeopardize the 501(c)(6) status as "one that ceases to have as its purpose promoting the common business interest of persons engaged in a line of business"  Also, Form 990EZ, Line 4 has a specific line item for Investment Income due to certificates of deposits and other related earnings.  Again, the only reference to disqualification of our non-profit status in regards to income that I found is stated above.

    Although not a legal opinion it is my general finding that the income from an interest bearing account does not constitute disqualification of the 501-C-6 status as this activity benefits the membership as a whole and is not considered a primary "profit making" activity of the association.

    I have a few more resources to check including former board members who have expereince with this topic.  I hope to clarify more in the comming week.

    A majority of this information was collected from the following publication:  http://www.irs.gov/pub/irs-tege/eotopick03.pdf

    IRS link to Form 990EZ: http://www.irs.gov/pub/irs-pdf/i990ez.pdf.

  • 08/27/2012 10:52 AM
    Reply # 1057785 on 1055567
    Meghan Burns (Administrator)

    Thanks for looking into that Lance!

    Sounds like good news!

  • 08/27/2012 11:43 AM
    Reply # 1057838 on 1055567
    Jon Henderson recommended that we look at developing a "investment policy statement" which would let members know exactly what we can, cannot and are investing in....

  • 08/28/2012 8:03 AM
    Reply # 1058497 on 1055567
    Thanks for making the time to research this issue Lance. 
  • 08/28/2012 10:36 AM
    Reply # 1058703 on 1055567
    Glad to do it.  I reccommend that Tom move forward with a one page "Investment Policy Statement" to make the Association aware of what our investment intentions are.  Not sure what the next steps are.  Is this a board decision or does it need to go out to the members for a vote?
  • 08/28/2012 11:40 AM
    Reply # 1058747 on 1055567

    I support Lance's recommendation to move forward with development of an investment policy for MAGIP.  There were a few other articles on that site that provided additional information regarding investments and overall financial of Non-profits


    Being fairly conservative (cautious) when it comes to money and investment, I would like to see something that doesn't risk the financial stability of the organization, but compliments it with some return.  Low Risk I guess?


© Montana Association of Geographic Information Professionals

MAGIP is a 501(c)6 non-profit organization in Montana

Full Scope Association and Event Management

1236 North Ave. W, Missoula, MT  59801


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