501c3 Considerations

August 1, 2017
Having done one of the coaching seminars, I'm familiar with some of the discussion behind seeking non-profit status, and it is true that it is much easier to get corporate sponsorship and community development grants to support a club if you have a good grant writer within the club.

However, I have been on the board of several non-profits and have founded two non-profits. I don't think that jumping straight into non-profit is the correct solution. There are a couple of ways to get the benefits of non-profit without having to go through the trouble of founding one from scratch. 

The first is to have an existing non-profit become the umbrella organization that grants, donations and sponsorships can flow through. Many times this can be a church youth group, a city recreation program or a booster club. A local (for-profit) BJJ club had mats donated to them from the local police academy because they help with the annual 'continuing education' of the officers every year, but the donation didn't go to the club, rather, it went to the facility that they train in, which is a non-profit location.

The other way is to set up the club as 'contracted services' for a non-profit. As an example, there is a local non-profit that has the mission of providing youth programs to develop positive character in disadvantaged kids. They take in funds and grants and support youth programs, and in the case of that particular non-profit, they support theatre, painting, music, and a couple of martial arts programs. The programs are their own for-profit stand-alone program, but they take on some kids under a scholarship program and are eligible for grants because they have been contracted to provide the program for the scholarship kids for length of the scholarship, which is typically a school semester. That was just a tldr, and the actual way you do it is complicated and needs to have i's dotted and t's crossed, but it is still less complicated that founding an independent non-profit organization.

What none of that addresses though, is that whichever path is taken requires that you have a good grant writer to get the funds coming in. Without that, a non-profit status is useless.