501(c)3 Conversion

At this month’s board meeting Cheshire Law presented their updated analysis of our conversion to a 501(c)3 organization. The revised report is in the document library: Report from Cheshire law I do encourage everyone to read it, I admit it is about as exciting as reading the FAR/AIM, if you want the Cliff notes see pages 9-11, 24, 25 and 50. Bottom line is they believe we can receive 501(c)3 status and are recommending we apply as an “educational organization.” There are a number of advantages to being an educational organization, see page 24 of the report.

Before we apply for conversion to 501(c)3 status we need to amend the purpose and dissolution clauses in both our by-laws and our Certificate of Incorporation. FYI our Certificate of Incorporation. was filed January 8, 1942! These changes require a vote of the entire membership. We will be scheduling a special membership meeting to vote on this.  Please note the language of the proposed changes is not final. We will distribute the final proposed language before the membership meeting. If you have questions/concerns about this language please let me know and I will get answers and/or have changes incorporated. We have an ongoing FAQ page with questions already asked/answered, please check there to see if  question has already been asked. New questions will be add as we have answers.

Current Certificate of Incorporation purpose clause:

The purposes for which this corporation is formed are to instruct members and the public in the art of motorless flight and to construct, own, maintain, buy, sell and lease gliders, sailplanes, aircraft and flight maintenance equipment used in connection with them; and to conduct and participate in national and regional flight contests; and to own, lease, provide club premises and a social gathering place for the Council and to conduct all the transactions necessary and incidental to the foregoing, but not for profit.”

Suggest purpose clause:

“The Corporation is a nonprofit organization that is organized and shall be operated exclusively for educational and charitable purposes within the meaning of Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the ‘Code’). In furtherance thereof, but without limitation thereon, the objectives of the Corporation shall be to instruct members and the public in the art of motorless flight. The Corporation shall at all times be operated exclusively for educational and charitable purposes and may take any and all actions necessary, proper, advisable, or convenient for the accomplishment of these purposes consistent with the limitations set forth in this Paragraph Second. In furtherance of the foregoing, the Corporation shall have the power to do any acts and carry on any business and affairs that are not prohibited by the Code, by the New Jersey Nonprofit Corporation Act, or by any other law. Notwithstanding any other provision herein, the Corporation shall not carry on any activities not permitted to be carried on: (i) by an organization exempt from federal income taxation under Section 501(a) of the Code, as an organization described in Section 501(c)(3) of the Code; or (ii) by an organization, contributions to which are deductible under Sections 170(c)(2), 2055(a)(2), or 2522(a)(2) of the Code.”

And current dissolution clause:

None

Suggested dissolution clause:

“Upon dissolution or final liquidation of the Corporation, the Board of Directors, after paying or making provision for the payment of all lawful debts and liabilities of the Corporation and after obtaining approval of dissolution from the members of the Corporation, shall distribute the assets of the Corporation to [such organization or organizations as the Board of Directors shall select with the approval of the members OR the Soaring Society of America, Inc. or a similar non‐profit organization or organizations for the promotion of the art of soaring flight], provided such organization or organizations are organized and operated exclusively for purposes consistent with the purposes of the Corporation and are exempt from federal income taxation under Section 501(a) of the Code, as an organization or as organizations described in Sections 170(c)(2) and 501(c)(3) of the Code. Any assets not so distributed shall be disposed of by a court of competent jurisdiction of the county in which the principal office of the Corporation is then located, exclusively for one or more exempt purposes within the meaning of Section 501(c)(3) of the Code, or to a state or local government for a public purpose, or to such organization or organizations, which are organized and operated exclusively for such exempt purposes, as such court shall determine.”

Current By-Laws purpose clause:

“1.1 Purpose As stated in its certificate of incorporation, the purpose for this corporation is to instruct and assist its members in the art of soaring flight and to own, buy, sell, lease, construct and maintain the aircraft and facilities necessary to achieve this purpose.

1.1.1 The Council shall endeavor to participate in local, regional and national flight contests.

1.2 Premises The Corporation shall provide premises for the Council to conduct all transactions necessary and incidental to the foregoing and for a social gathering place for its members.”

Suggested By-Law purpose clause:

“The purposes of the Council are as provided in the Certificate of Incorporation, as amended.”

Current By-Law dissolution clause:

“8.2 Distribution of Assets After all debts of the Council have been fully satisfied, its assets shall be distributed as follows:

8.2.1 First, an amount equal to the lowest entrance fee in effect during the previous five (5) years for persons applying for active membership shall be distributed to each active member.
8.2.2 Second, the balance of the assets shall be distributed to the Soaring Society of America, Inc. or a similar non‐profit organization or organizations for the pro‐motion of the art of soaring flight; said organizations to be chosen by a majority vote of the members present at the meeting when the dissolution vote is taken.”

Proposed By Law dissolution clause:

8.2 Distribution of Assets. In the event of dissolution or winding‐up of the Council, the Council’s assets, after all debts and expenses of the Council have been paid or provided for, shall be distributed in accordance with the terms stated in the Council’s Certificate of Incorporation, as amended.”

A key point to note here is the by-laws will point to the Certificate of Incorporation concerning purpose and dissolution. The Certificate of Incorporation is a public document while the by-laws are a private document. The Certificate of Incorporation overrides our By-laws. While our by-laws will be part of our 501(c)3 application, the Certificate of Incorporation will receive the most scrutiny from the IRS.

How will this change how we operate? I expect very little to nothing will change. While it may not have been our intention, we have become a world class place to learn to fly sailplanes. We will continue to do just that. This includes learning to fly cross-country and working on advanced certificates such as Commercial and CFI-G.

In other club News:

Easement: We still do not have a fixed closing date for the easement. We still expect to close by the end of May.

Ruts:  There have a couple of case of members driving vehicles on “soft ground” and leaving deep ruts. Both on the field and near/on the road to the campers and cabins. Remember we are an all volunteer organization. We do not have anyone who’s job it is to go around and fix ruts. You create a run, it is YOUR responsibility to fill it in/smooth it out. This it best done as soon as possible after the rut is created. Once it has dried out, it is much more difficult to fix!

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